Saudi Aramco to renegotiate contracts

“We will have to adjust to the realities of today. We will push some projects into the future, we will stretch some of them, we will renegotiate some contracts,” Falih said.

“I think we got spoiled with $100 oil and we were focused on building capacity and we lost focus on fiscal discipline.”

Falih said the imbalance in the oil market had nothing to do with Saudi Arabia, and a fair price is what would ultimately balance supply and demand, a sign Riyadh is sticking to its strategy of allowing the market to stabilise.

However, he added that the top crude exporter will not single handedly balance the global oil market.

“Saudi Arabia has a policy, the policy is set by the government through the Ministry of Petroleum, and they have said that Saudi Arabia will not single handedly balance the market,” he said.

“The math will tell you that our exports… are gradually declining. So the reason for the imbalance in the market absolutely has nothing to do with Saudi Arabia.”

The Organisaiton of Petroleum Exporting Countries in November maintained output unchanged despite a supply glut and weakened demand. Oil prices fell to a six-year-low this year after dropping by nearly 60% since its peak in June. 

Saudi Arabia pumped 9.61mn barrels per day (bpd) of crude in November and exported 7.3 million bpd.

Falih said current production stands at 9.8mn bpd, while production capacity is 12mn bpd. Saudi Aramco has already invested $3bn in developing unconventional gas resources and has earmarked an additional $7 billion, al-Falih said.

Asked what a fair price for oil is, he added: “It will be the price that ultimately balances supply and demand. I don’t think anybody, no single person, can dictate what that price is. I would be foolish if I did that.”