Analysis Oil & Gas Saudi Arabia hits brakes as others push oil output capacity By Eva Levesque February 20, 2024, 4:02 AM Reuters Workers work at Majnoon oil field in Iraq. The country aims to increase output to 7 million barrels per day. Saudi oil output staying steady UAE and others expanding Kuwait targeting 4m bpd Saudi Arabia may have shelved plans to raise oil output capacity but the UAE, Kuwait and Iraq believe global crude demand will grow and are gearing up for expansion, according to industry observers. Although Opec is implementing production cuts to stabilise the market over the near term, its core members are focused on longer-term commitments, said data company Kpler. Why the Saudis have to keep oil prices higher for longer IEA at odds with Opec over oil demand growth Some countries missing oil cut targets, says Opec Abu Dhabi state oil company Adnoc has heavily invested in recent years to ramp up oil production capacity to 5 million barrels per day (bpd) by 2027. It continues to invest in the oil and gas sector, increasing planned spending to $150 billion by 2027. As a result, Kpler is projecting that the UAE’s production capacity will climb by 130,000 bpd to 4.3 million bpd this year “amid the ramp-up at giant fields such as the offshore Upper Zakum”. Kuwait announced last October a target of reaching 4 million bpd by 2035. Nawaf Saud Al Sabah, chief executive of state-owned Kuwait Petroleum Corporation, said it would ensure about $11 billion of additional revenue for the state in the next five years. Kuwaiti production is currently at 2.5 million bpd, with current spare capacity of around 400,000 bpd, according to Kpler. Kuwait Petroleum Corporation is targeting an interim capacity of 3.2 million bpd by 2025 via higher heavy oil production from Ratga, offshore projects and renewed development of legacy oil fields. The corporation will invest $300 billion by 2035, Kpler said. Meanwhile, despite limited export capacity as a result of ageing and damaged infrastructure, Iraq aims to build capacity of 7 million bpd by 2027. The current figure is about 4 million bpd. “The region believes in Opec’s outlook, which sees liquids demand increasing until 2040,” said Aditya Saraswat, senior vice president of Middle East analysis at Rystad Energy. Saraswat said the future spare capacity would allow countries to react quickly once the supply from non-Opec producers plateaus or even decreases, because the investment is likely to be prohibitive. Christof Rühl, a senior researcher at Columbia University’s Centre on Global Energy Policy, told AGBI in December that the region’s low production costs allow it to compete for market share now. “You can bet that they are aware of the situation and creating capacity because they know tomorrow they will have to compete on volume.”
