Saudi Arabian Oil Company (Aramco) plans to increase gas production by 50-60% by 2030, CEO Amin Nasser said Wednesday. The announcement comes in the context of challenging energy markets and the transition towards clean energy. Saudi Energy Minister Prince Abdulaziz bin Salman said Saudi Arabia was no longer the “likely producer” but OPEC+ playing that role.
During his speech at the eighth OPEC International Symposium in Vienna, Saudi Arabia’s Energy Minister Prince Abdulaziz bin Salman stressed the continued challenges facing energy markets. He noted that IEA data and reviews lead to market imbalance.
These plans to increase gas production are part of Aramco’s efforts to achieve the goals of the Kingdom’s Vision 2030, which aims to diversify the economy, reduce dependence on oil, and enhance renewable and clean energy capabilities. The news comes as the world shifts towards renewable and clean energy, and countries focus on investing in alternative energy. The announcement reflects Aramco’s commitment to providing natural gas as a clean alternative to oil, and to meet the growing energy needs in the Kingdom and beyond. These plans are expected to help boost the Kingdom’s economic growth and enhance its role in the energy industry in the future.
Why don’t OPEC+ cuts boost oil prices?
The OPEC+ alliance, which includes the Organization of the Petroleum Exporting Countries and allies including Russia, has been cutting oil output since November to counter falling prices. However, its cuts have not succeeded in boosting oil prices permanently.
In a bid to raise prices, Saudi Arabia and Russia, the world’s two largest oil exporters, announced additional supply cuts. Although the market rallied after the move, it was short-lived.
At the same time, investors continue to reduce their credit positions, reflecting the extent of uncertainty in the oil market. The latest data shows lower credit positions in WTI and Brent. The number of contracts fell by 66,000 to just 231,000, just 48,000 more than the March 2020 low that followed the price plunge caused by the Covid-induced panic.
But why haven’t the OPEC+ cuts boosted oil prices? The answer lies in the multiple factors that affect the oil market, including supply and demand, geopolitical events, and global economic fluctuations. For example, rising production in non-OPEC+ countries, such as the United States, may increase supply and lower prices. Trade wars and geopolitical tensions could also lead to fluctuations in oil prices.
In addition, global economic developments are affecting oil demand. For example, economic crises can lead to a decrease in demand for oil.
OPEC+ and the Oil Production Reduction Agreement.
Aramco is the world’s largest oil company and manages the production of crude oil, natural gas, and fuel processing. Recently, OPEC+ issued a statement that OPEC+ member countries agreed to extend the production cut agreement until the end of 2024, after approval from all members. Saudi Arabia has announced a reduction in its production by one million barrels per day, starting in July for a period of one month, which can be extended, after it was producing about 12 million barrels per day in line with the Kingdom’s Vision 2030. This indicates the commitment of Member States to meet the challenges facing the global oil market.
Saudi Energy Minister Prince Abdulaziz bin Salman indicated that the Kingdom would extend its voluntary reduction of oil production by 500,000 barrels per day until the end of 2024, while Russia, Iraq, and Nigeria announced the extension of their voluntary production cuts.
As for the organization’s production target, a new production target of 40.46 million barrels of oil per day has been set, starting in 2024, a decrease compared to levels of 44.1 million barrels per day in October 2022. According to the OPEC statement, it was agreed to evaluate the member’s production by the end of June 2024 from three independent bodies, and the next OPEC meeting will be held on November 26 in Vienna.
This agreement comes within the framework of the organization’s efforts to stabilize global oil markets and enhance cooperation among member states to address common challenges facing this vital sector.
Saudi Vision 2030
Saudi Vision 2030 is the post-oil plan for Saudi Arabia announced on April 25, 2016, and coincides with the date set for the announcement of the completion of the delivery of 80 mega government projects, each costing at least 3.7 billion riyals and up to 20 billion riyals, as in the Riyadh metro project. The plan was organized by the Council of Economic and Development Affairs, headed by Prince Mohammed bin Salman, where it was presented to the Council of Ministers headed by King Salman bin Abdulaziz Al Saud for approval. It is shared by the public, private, and non-profit sectors.
During the past five years, many achievements have been achieved and several transformation enablers have crystallized, which have contributed to achieving tangible results at the level of the government work system, the economy, and society, and laid the foundations for success for the future. We have faced many challenges, gained many experiences that strengthened our confidence in achieving our goals, and worked to increase the effectiveness and responsiveness of the government, by investing in government digital transformation, creating opportunities for growth and investment, creating several new economic sectors, opening our doors to the world, and raising the quality of life of citizens, and all these achievements were made by the hands of the sons and daughters of this great country.
The Public Investment Fund established 5 regional companies to invest in the Hashemite Kingdom of Jordan, the Kingdom of Bahrain, the Republic of Sudan, the Republic of Iraq, and the Sultanate of Oman, with a total investment value of 90 billion riyals, and launched the Saudi Egyptian Investment Company, as part of the fund’s strategy to search for new investment opportunities in the Middle East.