FILE PHOTO: A view shows branded oil tanks at Saudi Aramco oil facility in Abqaiq, Saudi Arabia October 12, 2019. REUTERS/Maxim Shemetov/File Photo
DUBAI (Reuters) – Saudi Aramco has asked key energy service companies to support its plans to lift oil production to its maximum capacity of 12 million barrels per day from April 1 “for the foreseeable future”, a Saudi oil industry source told Reuters on Tuesday.
The state oil giant has also told the service companies to “avail the required resources, including workforce and equipment” to help it raise its production capacity to 13 million bpd, the Saudi source said.
Saudi Arabia announced plans to boost its crude supply and exports sharply after the collapse this month of a three-year deal to cut output between the Organization of the Petroleum Exporting Countries (OPEC) and other producers led by Russia.
The world’s top oil exporter is willing to maintain its survival-of-the-fittest oil strategy of using its vast supplies and financial muscle to drive out higher-cost rivals for the long term, OPEC and industry sources told Reuters.
Oil prices have lost about 70% of their value since a peak earlier this year, largely due to the collapse of the deal to cut output and the spread of the coronavirus.
The current oil supply cut pact, which expires on Tuesday, has been withholding 2.1 million bpd of oil production from the market, the bulk of which Riyadh has been shouldering.
The kingdom, OPEC’s de facto ruler, plans to boost its oil exports to 10.6 million barrels per day from May. The country is burning less oil for power generation and domestic consumption has fallen, a Saudi energy ministry official said on Monday.
Saudi Arabia said this month it had directed national oil company Aramco to keep supplying crude at a record rate of 12.3 million bpd in coming months and to export more than 10 million bpd from May.
The company is planning to raise its oil production capacity to 13 million bpd for the first time in more than a decade. It did not say when it can reach this target. The kingdom produces more than a tenth of global crude.
Reporting by Rania El Gamal; Editing by Alex Richardson