BAKU, Azerbaijan, March 16. The International Energy Agency (IEA) has outlined a mixed outlook for Saudi Aramco's production in its latest report, forecasting a modest recovery in the company’s crude output in the coming years, Trend reports.
After a 12% decline in crude production since 2022, largely due to Saudi Arabia’s compliance with OPEC+ production cuts, the IEA expects Saudi Aramco to increase its crude output by an average of 200,000 b/d in 2025, contingent on the unwinding of OPEC+ voluntary cuts.
Saudi Arabia, as the leading force in OPEC+, has been shouldering a significant portion of the group’s output reductions. However, the IEA suggests that as OPEC+ begins to reverse these cuts in April 2024, Aramco could raise production levels, with a potential boost to its overall supply.
The IEA’s report also highlights a shift in Saudi Arabia's strategy, with the kingdom focusing on expanding natural gas production to meet rising domestic power needs. Despite this, Aramco has opted to maintain its crude production capacity at 12 mb/d, rather than expanding it to 13 mb/d as originally planned.
With Saudi Arabia’s oil production declining over recent years, Aramco has strategically increased its upstream capital expenditure, investing heavily in maintaining sustainable production levels and boosting natural gas output. However, as the IEA notes, free cash flow has been squeezed due to inflationary pressures and the company’s significant investments in upstream projects.
Looking ahead, the IEA’s forecast suggests that the production of ethane and natural gas will continue to grow, with Aramco focusing on major projects like the Jafurah gas development, which is set to help the kingdom achieve its 2030 goal of increasing the share of natural gas in its energy mix.
