Saudi targets 13.4mn-13.5mn b/d crude capacity by 2027

Saudi Arabia aims to increase its crude production capacity to 13.4mn-13.5mn b/d by 2027, according to a Saudi source, an upwards revision of its initial 13mn b/d target by that time.

Riyadh says it has 12mn b/d output capacity now, and self-reported a record average production of 12.007mn b/d to Jodi in April 2020 - when Saudi Arabia and Russia ramped up output in a battle to capture market share following the brief demise of an Opec+ agreement. Argus estimates Saudi Arabia's highest production level was 11.6mn b/d, also in April 2020.

Riyadh hopes its share of production from the Neutral Zone it shares with Kuwait will be 400,000-500,000 b/d by 2027. Analyst data suggest combined Neutral Zone production - comprising the 300,000 b/d offshore Khafji and the 250,000 b/d onshore Wafra fields - has sat near 300,000 b/d in recent months. Argus tracking puts average Neutral Zone exports near 122,000 b/d in the November-January period.

Kuwait's own expansion plans, revealed in October, include raising combined Neutral Zone capacity to 700,000 b/d by 2025. A joint Saudi-Kuwaiti committee met on 31 January to "explore future oil projects and plans" in the Neutral Zone, according to Kuwait's state-run Kuna news agency.

Including its share of the Neutral Zone, Kuwait aims for 3.5mn b/d of capacity by 2025 and 4mn b/d by 2035, oil minister Mohammed Abdul Latif al-Fares said last year.

Spare capacity is a hot topic in the Opec+ coalition, where several members will soon hit their upper limits - de facto non-Opec leader Russia has an Opec+ quota of 10.331mn b/d in March, just above its Argus-assessed 10.3mn b/d capacity. Much of the 19-nation group's remaining spare capacity is in the Mideast Gulf, but these levels could dwindle further when the baseline levels that decide the quota and compliance levels of Saudi Arabia, Russia, Kuwait, Iraq and the UAE are revised higher as of May. Saudi Arabia and Russia both accepted an 11mn b/d reference level until April this year, and this will rise to 11.5mn b/d as of May.

Saudi Arabia's plans for capacity increases come as Riyadh has defended the merits of going green, with state-controlled Aramco already signing agreements to explore partnerships in hydrogen.

"New and existing energy sources will both need to operate in parallel for a long time," Aramco chief executive Amin Nasser said last year.

By Nader Itayim and Ruxandra Iordache