The Kingdom of Saudi Arabia, the second-largest member country of the Organisation of the Petroleum Exporting Countries (OPEC), holds around 17% of the world’s proven petroleum reserves. The oil and gas sector accounts for about 50% of gross domestic product and approximately 70% of export earnings.
Monthly export figures provided by Riyadh to the Joint Organisations Data Initiative (JODI) show that Saudi Arabia’s April 2021 crude oil exports were at 5.408 million barrels per day (bpd), down from 5.427 million bpd in March, while crude output edged lower to 8.134 million bpd in April from 8.138 million bpd the previous month.
However, Goldman Sachs Group Inc. has recently indicated that it expected the Kingdom’s oil production to rise by about 500,000 bpd to 10 million bpd by the end of 2021 and 10.5 million in 2022, with Goldman boosting its growth forecast for gross domestic product to 4.5% this year, compared to an earlier 2.5%.
Since the forecast revision, OPEC and its non-OPEC allies reached a deal to phase out 5.8 million bpd of oil production cuts by September 2022 as the commodity prices hit their highest levels in more than two years.
Currently, Saudi Arabia is the seventh-largest natural gas market globally. Natural gas used to meet growing domestic energy demand to power industries such as steel, aluminium, and water desalination. State energy giant Saudi Aramco has been capturing and using gas to generate additional value streams beyond crude oil since the mid-1970s. It is the sole natural gas supplier to Saudi Arabia.
Aramco began producing commercial quantities of crude oil in 1938 and is continuing to redefine the benchmark for global energy production by capitalising on its reserves’ size and quality, expertise in exploration and recovery, and its state-of-the-art, integrated upstream and downstream network.
Despite the dual shocks of the COVID-19 pandemic and lower oil prices, Aramco has posted a 30% year-on-year increase in net income to $21.7 billion in its 2021 first-quarter financial results primarily driven by a more robust oil market and higher refining and chemicals margins, partly offset by lower production.
Earlier this year, Aramco closed a $12.4 billion pipeline infrastructure deal with a global investor consortium including EIG and Mubadala, in which the consortium has acquired a 49% stake in Aramco Oil Pipelines Company, a subsidiary of Aramco, paving the way forward for its portfolio optimisation strategy by continuing to identify value creation opportunities.
Meanwhile, in December 2020, state news agency SPA announced the discovery of four new oil and gas fields: the Al-Ajramiyah oil well, northwest of the city of Rafhaa, with tests showing a rate of 3,850 barrels per day (bpd), non-conventional oil in the al-Reesh oilfield, northwest of the city of Dhahran, and non-conventional gas in the Al-Sarrah reservoir at the Al-Minahhaz well, southwest of the Ghawar oilfield, and at the Al-Sahbaa well at 32 million standard cubic feet per day.
Saudi Aramco’s newly discovered oil wells
Saudi Arabia is also at the forefront of the digitisation of the industry with the rapid adoption of technologies such as Artificial Intelligence (AI), the Internet of Things (IoT), 5G, cloud computing and big data allowing the state oil giant to respond swiftly to changes in the market and minimise the environmental impact of their activities.
Aramco’s dedicated 4IR Center is at the epicentre of the company’s digital transformation programme, where, for example, a futuristic AI hub is focused on developing advanced analytics and machine learning solutions. Big data is also used to improve CO₂ sequestration, carry out data modelling for reservoir management and forecast production performance. Also, the World Economic Forum has recognised the NOCs ‘Uthmaniyah Gas Plant as a “Lighthouse” manufacturing facility – a leader in 4IR technology applications. Earlier this year, Saudi Aramco, STC and Huawei signed a Memorandum of Understanding (MoU) to launch a joint innovation programme to study the application of 5G technology in the oil and gas industry and eventually develop relevant and innovative solutions.