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Saudi Arabia - Expansion Background.

In the 1970s, the then US-controlled Aramco was to expand its oil production capacity to 20m b/d by the late 1990s. Several factors combined to limit its capacity from more than 11m b/d in the early 1980s to 7.5m b/d in late 1989. After it was taken over by the state, becoming Saudi Aramco (SA) in 1988, the idea was to have a sustainable capacity of 10m b/d by 2000. But the actual projects were not to be planned before a programme launched in 1990.

In September 1990, a month after Iraq invaded Kuwait and oil exports from these two states were suspended, SA advanced its target to end-1995. The 10m b/d level was reached in June 1995 with completion of SA's programme. It already had the potential to pump up to 10m b/d in late 1994. The costs of expansions, the Petromin/Samarec refineries (later absorbed by SA), SABIC and base/lube oil projects were in late 1991 put at $34-50bn. But actual costs came to much less than that. Some projects were scaled down and others were cancelled in response to falling oil prices.

SA's programme offered big opportunities to firms operating in services and building sectors, with US firm being the main winners. The focus was on bringing back shut-in facilities, construction of additional GOSPs and massive water-injection facilities to maintain reservoir pressures. New water treatment facilities included tankage, filtration, chemical treatment, pumps, piping, metering and controls. The plan called for the drilling of 226 development wells and re-completion of 108 more.

E&P costs were $2-4bn/year in 1992-1994. It was estimated that spending for E&P, maintenance and support would range from $2.6bn to $4.3bn per annum in 1992-1995. The main SA upstream contracts had been awarded by late 1991. Their cost was estimated at $3.5 bn. The following were the main projects:
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Publication:APS Review Oil Market Trends
Date:Oct 3, 2011
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