Saudi Aramco delays oil development projects

PROJECT DELAYS: Saudi Aramco delays two oil production development projects as demand for oil falters on back of global crisis. (Getty Images)

Two projects to increase Saudi Arabia’s oil production capacity have been delayed on the back of OPEC quota cuts, it was reported on Sunday.

The cuts have been announced during the final stages of the largest investment plan by state owned Saudi Aramco, which will push capacity to 12.5 million bpd this year.

The first is an on-going project by SNC-Lavalin, a Canadian engineering firm, which has almost completed the first phase of a contract to boost output from the Shaybah oilfield by 50 per cent to 750,000 bpd.

However, a further 250,000 bpd expansion plan has been delayed until the global crisis recovers, according to a report in Saudi daily Al Watan, covered in UAE daily The National.

The second Aramco project to face further delays is the Manifa offshore oilfield project that was awarded to Saipem, the Italian oilfield services group, last July to produce 900,000 bpd by 2011.

Aramco halted the work after oil prices collapsed last year, and on Friday it emerged that the delay will last another 12 to 18 months, according to Pietro Tali, CEO in comments made to Reuters on the sidelines of an oil conference in Paris.

“Our strong feeling is that they will go for the solution we proposed, which is to stretch the duration of the project and to move the procurement scope from a lump sum to an open book,” he said

The delays come after an OPEC agreement six months ago to cut production quotas in response to the downturn in global oil demand on the back of the economic crisis.

Since then Saudi Arabia has cut output by nearly two million bpd, to less than eight million bpd, inline with its OPEC reduction quota.

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