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Incremental change: maintaining low production costs and high recovery rates will benefit Aramco as it paces ahead with new oil projects.(OIL)
Saudi Aramco has several weapons in its arsenal which it employs to retain its over-riding position as the world's largest oil company and OPEC's unchallenged leader.
In the past two years, it has been able to maintain plateau production levels of about 9.5 million barrels a day (b/d) and spare capacity of 1.5 million bid to respond to any global oil market supply outages. Increasingly, however, it has focused on maintaining low production costs and maximising high recovery rates.
"[Oil production in] Saudi Arabia is quite a contrast compared with Iran and Venezuela [the two other OPEC majors]," says Khalid al-Falih, Aramco's senior vice-president of industrial relations. "We are using a systematic method of strategic investments throughout the value chain."
Aramco's biggest advantage lies in the upstream sector. Despite facing an annual production decline of 8 per cent and prolific output levels over the past 35 years, production costs are still one of the lowest in the world. "The indirect cost of production is well below $1 a barrel and with support services it is not more than $2 [a barrel]," he says. This is compared with a global average of $7.35 a barrel--including the costs of finding and direct lifting--according to US-based Gibson Consulting.
Healthy recoveries
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- Saudi Aramco Buys Into Chinese Refining.
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...Chinese refinery to Saudi Aramco. Sinopec and the municipal...preliminary deal with Saudi Aramco over the sale. The Qingdao...In April Sinopec and Saudi Aramco signed a memorandum of understanding...due to the low oil and gas production costs in the Arabian kingdom. The...
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- Magazine article from: MEED Middle East Economic Digest May 18, 2007 700+ words
...demand. In the past year, Aramco has announced an $18,000...content to rest on its laurels, Aramco is looking at an audacious...Gas is a new priority for Aramco because it now accounts for...rates and some of the lowest production costs in the world provide an effective...