Saudi Aramco will renegotiate some contracts and postpone some projects due to falling oil prices, the head of Saudi Arabia’s state oil company said on Tuesday, stressing the top crude exporter will not single handedly balance the global oil market.
Brent crude oil has slid nearly 60 per cent since June on ample global supplies and OPEC’s decision to keep its production ceiling unchanged. On Tuesday, Brent settled up $1.44 at $49.60 a barrel.
OPEC’s largest producer, Saudi Arabia in November refused to cut its output to arrest the price slide and decided instead to focus on market share.
Saudi Aramco Chief Executive Khalid al-Falih, speaking at a conference in Riyadh, did not specify which projects or contracts would be affected by low prices.
“We will have to adjust to the realities of today. We will push some projects into the future, we will stretch some of them, we will renegotiate some contracts,” Falih said.
“I think we got spoiled with $100 oil and we were focused on building capacity and we lost focus on fiscal discipline.”
Last week, Reuters reported that Aramco had asked oilfield service companies for discounts in the wake of the oil price slide.
Falih said the imbalance in the oil market had nothing to do with Saudi Arabia, and a fair price is what would ultimately balance supply and demand, a sign Riyadh is sticking to its strategy of allowing the market to stabilise itself.
“Saudi Arabia has a policy, the policy is set by the government through the Ministry of Petroleum, and they have said that Saudi Arabia will not single handedly balance the market,” he said.
“The math will tell you that our exports… are gradually declining. So the reason for the imbalance in the market absolutely has nothing to do with Saudi Arabia.”
Saudi Arabia pumped 9.61 million barrels per day of crude in November and exported 7.3 million bpd.
Falih said production is currently at 9.8 million bpd while production capacity is 12 million bpd.
Asked what a fair price for oil is, he said: “It will be the price that ultimately balances supply and demand. I don’t think anybody, no single person, can dictate what that price is. I would be foolish if I did that.”
Aramco has already invested $3 billion in developing unconventional gas resources and has earmarked an additional $7 billion, he said.