DUBAI, United Arab Emirates — Defying the weakness of crude oil prices, Saudi Arabia’s state-run oil giant Saudi Arabian Oil (Saudi Aramco) has pledged to invest $334 billion in oil facilities and projects during the decade to 2025.
With the announcement, the company left no doubt that it will continue spending huge sums of money to maintain and expand its production capacity. In selecting contractors for new investments, Aramco will place a high priority on their contributions to Saudi industries, as part of government efforts to shore up the country’s economy.
Abdulaziz al-Abdulkarim, Aramco’s vice president for procurement and supply chain management, unveiled the investment figure at a conference in Bahrain on Sept. 26, according to Reuters.
“Saudi Aramco is forecast to spend around $334 billion,” he was quoted as saying. “This will be spent on material and services to support service facilities, infrastructure projects, drilling and maintain [oil] potential projects, unconventional resources both in the exploration phase and development and several other projects.”
The senior Aramco official also said the company will pour money into projects related to unconventional resources, like shale gas. Aramco will spend 42% of the total on oil drilling operations and 31% on ground facilities, according to the company.
Pressured by low oil prices, Saudi Arabia recently abandoned its strategy of refusing to cut production in order to maintain market share. The move to drop the strategy, which had been in place since 2014, paved the way for the 14 members of the Organization of Petroleum Exporting Countries, led by Saudi Arabia, to reach an agreement on cutting crude oil production at an extraordinary meeting in Algeria on Sept. 28.
The deal has generated expectations of an improved supply-demand balance in the oil market, pushing up crude prices. On the other hand, Saudi Arabia has been stressing the importance of maintaining and expanding its production capacity from a long-term point of view. Saudi Energy Minister Khalid al-Falih has warned that a dearth of oil investment would cause the world to pay a hefty price in the form of a short supply of crude.
Aramco’s 10-year investment plan clearly reflects the country’s determination to maintain its status as the leading oil producer, providing energy to power the world’s economy. The OPEC deal on output cuts has apparently made no impact on the country’s stance.