October 14, 2019 [CNBC] – Saudi Arabia’s full oil production capacity will be recovered by the end of November, Saudi Aramco CEO Amin Nasser told CNBC on Wednesday.
“By September we will be, in terms of production capacity, at 11.3 (million barrels per day), by end of November we will be at 12 million barrels per day (bdp), which is our maximum sustained capacity,” Nasser told CNBC’s Steve Sedgwick during the Oil & Money Conference in London. Saudi Arabia is the world’s largest exporter of oil.
The OPEC kingpin has been pumping significantly below that 12 million bpd level as part of a coordinated agreement OPEC and non-OPEC producers to lower output and keep a floor under falling oil prices.
Aramco’s revenues were not reduced in the wake of the attacks, Nasser noted, and put its October production figure at 9.9 million bpd.
The CEO of the world’s largest oil company expressed his concern over an “absence of international resolve” against the perpetrators of September 14 drone and missile attacks on Aramco facilities that forced the company to shut down half of its production and sent crude prices up nearly 20%.
“An absence of international resolve to take concrete action may embolden the attackers and indeed put the world’s energy security at greater risk,” Nasser said.
The attacks had “no impact” on the planned public listing of the state oil giant, the CEO added, saying that if anything, they strengthened the company’s position with regard to the offering. The Saudi Aramco initial public offering (IPO), which has seen multiple delays since it was first suggested in 2016, would be the world’s largest.
“We are ready whenever the shareholders decide it is the time to list,” Nasser said.
Aramco is expected to file its IPO prospectus by the end of this month, according to reports.
The kingdom reportedly plans to list 1% of Aramco on its local stock exchange, the Tadawul, before the end of this year and another 1% in 2020 as first steps ahead of a public sale of roughly 5% of the company. Saudi Crown Prince Mohammed bin Salman has estimated the firm’s value at $2 trillion, while analysts put the figure closer to $1.5 trillion.
‘Many factors’ impacting the oil price
The success of the IPO depends in part on the oil price, which is down some 30% in the last year, despite heightened geopolitical tensions in the Gulf region.
Brent crude futures were trading at $58.78 a barrel on Wednesday morning at 11:15 a.m. London time, up nearly 1% from the previous day. Still, the international oil benchmark’s price is now lower than it was the day before the Aramco attacks, which Riyadh and Washington have blamed on Iran, a charge Tehran denies.
There are “many factors” impacting the oil price today, Nasser told CNBC’s Sedgwick, noting that the global economic situation as a whole was affecting crude prices. “I think market was very satisfied with Saudi Aramco’s response (to the attacks), but also… there is a tariffs dispute ongoing between two super global economies. All of these things are impacting price of crude.”
The CEO added that there is ample oil supply on the market, and that he expects demand to average at 1 million bpd.
In earlier comments Wednesday, Nasser said that there was “no doubt” Iran was behind attacks on Saudi Arabia, which struck multiple points at two of Aramco’s largest facilities: Abqaiq, the largest crude oil processing and stabilization plant in the world, and Khurais, the kingdom’s second-largest oil field.
Yemen’s Houthi rebels, who have been at war with the Saudis since 2015 and are backed by Iran, claimed responsibility for the strike, but numerous Western governments and security experts say the rebels could not have carried out such a sophisticated attack.
In late September, ratings agency Fitch downgraded Saudi Arabia’s long-term foreign currency issuer default rating from A+ to A, citing the “vulnerability of its economic infrastructure” and “deterioration in Saudi Arabia’s fiscal and external balance sheets.” Riyadh was quick to reject the downgrade, calling it “somewhat speculative.”
The Aramco IPO is part of the kingdom’s Vision 2030, an initiative spearheaded by the 34-year-old crown prince to diversify the country’s economy and reduce its reliance on hydrocarbon revenues.
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