Riyadh cites transition for oil capacity U-turn

Saudi Arabia’s U-turn on its oil capacity expansion plans was because of the energy transition, its energy minister said on Monday, adding that the kingdom has plenty of spare capacity to cushion the oil market.

The Saudi government on January 30 ordered state oil company Aramco to halt its oil expansion plan and target maximum sustained production capacity of 12 million barrels per day (bpd), 1 million bpd below a target announced in 2020 and set to be reached in 2027.

“I think we postponed this investment simply because … we’re transitioning,” Prince Abdulaziz bin Salman said at the IPTC petroleum technology conference in Dharan, adding that Aramco has other investments to make in areas including oil, gas, petrochemicals and renewables.

Saudi Arabia has said it aims to reach net zero emissions by 2060, with Aramco targeting net zero emissions from its own operations by 2050.

Prince Abdulaziz said that the kingdom had a “huge cushion” of spare oil capacity in case of major disruptions to global supplies caused by conflict or natural disasters.