Report: Two offshore projects likely deferred due to lower Saudi production target

Feb. 1, 2024

Safaniyah, Manifa expansion projects may be suspended as a result, says Evercore ISI.

Related To: Aramco

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Bruce Beaubouef * Managing Editor

DHAHRAN, Saudi Arabia – Saudi Aramco has been directed by the government of Saudi Arabia to stop its oil expansion plan and focus on a maximum sustained oil production capacity of 12 million barrels per day.

That figure is 1 MMBbl/d below a target announced in 2020, and, according to oilfield services analysis firm Evercore ISI, has led to the suspension of two offshore oil projects that would have started in 2025.

“We suspect the two projects that are most likely to be deferred are 1) the Safaniyah expansion project and 2) the Manifa expansion project,” Evercore wrote in its latest Offshore Oracle report. “Aramco’s capex plans may adjust lower or be offset by increased spending on gas plays, but we remain confident the long-duration offshore and international upcycle will continue and drive significant growth opportunities for oilfield services companies in 2024 [and beyond].”

The firm also noted that the shares of several large-cap, diversified oilfield services companies and offshore drillers, with large exposure to Saudi Arabia’s jackup market, were negatively impacted by the announcement. “We think the market overreacted and the jackup rig count will likely remain stable to modestly up in 2024, and other projects, including Marjan, Berri, and Zuluf, will continue to move forward,” Evercore wrote.

02.01.2024

About the Author

Bruce Beaubouef | Managing Editor

Bruce Beaubouef is Managing Editor for Offshore magazine. In that capacity, he plans and oversees content for the magazine; writes features on technologies and trends for the magazine; writes news updates for the website; creates and moderates topical webinars; and creates videos that focus on offshore oil and gas and renewable energies. Beaubouef has been in the oil and gas trade media for 25 years, starting out as Editor of Hart’s Pipeline Digest in 1998. From there, he went on to serve as Associate Editor for Pipe Line and Gas Industry for Gulf Publishing for four years before rejoining Hart Publications as Editor of PipeLine and Gas Technology in 2003. He joined Offshore magazine as Managing Editor in 2010, at that time owned by PennWell Corp. Beaubouef earned his Ph.D. at the University of Houston in 1997, and his dissertation was published in book form by Texas A&M University Press in September 2007 as The Strategic Petroleum Reserve: U.S. Energy Security and Oil Politics, 1975-2005.