Daily Management Review

Saudi Aramco Assures Return To Full Capacity By This Month End


Assurance that its suspended production capacity would be attained again by the end of the current month was given by state owned Saudi oil giant Saudi Aramco bringing in relief to the global energy markets.
The drone attacks on Saudi oil facilities last Saturday had resulted in the largest every supply side reduction in the global oil market as well as heightening the tensions in the Persian Gulf. While Saudi Aramco had lost about half its production capacity or about 5.7 million barrels per day (mbpd), the attack had reduced global supply of oil by as much as 5 per cent,
And while the Yemen based Houthi rebels had claimed responsibility for the attacks, the US and Saudi Arabia had pointed the finger against Iran for the incident.
“Saudi Aramco President & CEO Amin Nasser said Tuesday that the Company’s production capacity, suspended earlier due to terror attacks on its plants at Abqaiq and Khurais, would be fully restored by the end of September," the world’s largest oil producer said in the first detailed statement after the attack.
The extent of the fall out of the attack by 10 drones at Abqaiq and Khurais oil facilities can be gauged form the fact that this is being described as a worse shock for the global crude supplies than the one that was experienced after the invasion of Kuwait by Saddam Hussein in 1990 and the Islamic Revolution in Iran in 1979.
A visit to Jeddah, Saudi Arabia and Abu Dhabi, United Arab Emirates is being undertaken by US secretary of state Michael Richard Pompeo even as the tension in the region grows.
“The Secretary will begin his trip in Jeddah, arriving September 18. He will meet with Saudi Crown Prince Mohammed bin Salman to discuss the recent attack on the Kingdom’s oil facilities and coordinate efforts to counter Iranian aggression in the region," the US State Department said in a statement.
About 10 per cent or about 100 mbpd is accounted for to the global oil supply by Saudi Arabia.  
“These synchronized attacks were timed to create maximum damage to our facilities and operations. The rapid response and resilience demonstrated in the face of such adversity shows the Company’s preparedness to deal with threats aimed at sabotaging Aramco’s supply of energy to the world," Amin Nasser said in the company statement.
The attack would affect three million barrels per day (mbpd) of Saudi Arabian crude supply for at least a month, said a report from S&P Global Platts.
“During the news conference, it was disclosed that production at Khurais resumed 24 hours after the attack. Meanwhile, Mr. Nasser stated that production at Abqaiq is currently 2 million barrels per day and its entire output is expected to be restored to prior rates by the end of September," the Aramco statement said.
“We have a hard-earned reputation for nearly 100 percent reliability in terms of meeting our international customers’ requirements and we have defended that," Nasser said in the statement.