GCC oil producers are delaying some oilfield maintenance until next year to reduce costs and keep production high, according to a report by Reuters.
‘It was not possible to clarify which fields were affected as information is highly sensitive’, Reuters says in its report.
Apparently, OPEC members Saudi Arabia, the United Arab Emirates and Qatar are rescheduling non-essential maintenance work at oilfields originally planned for Q4 2015 later into 2016, due to low oil prices.
“The non-urgent maintenance is definitely being pushed. We see huge focus on production in Qatar, Abu Dhabi and Saudi Arabia,” said one industry source.
“They are delaying to keep production high, if they shut down now they will not produce, and they also have to preserve cash,” the source said.
Two more sources also told Reuters that Gulf oil producers are postponing some of their maintenance plans for oil rigs, wells and pipes that are not critical to production or safety of operations, but declined to give details.
“There is delay. The reason is low oil prices, they are trying to have some control over the cost,” another industry source said of Saudi Aramco’s maintenance plans this year.
However Gulf oil producers aim to keep pumping hard as they expect weak oil prices next year when sanctions on Iran are lifted, allowing it to export more to an oversupplied market, the sources told the news agency.
An industry source said: “Companies are trying to benefit from higher margins now as they expect oil prices to drop next year, when Iran comes back.”
The sources said delayed maintenance was also a way to rein in spending, when the work often involves bringing in specialist foreign companies.
“I think what people are doing is spacing out some maintenance, or being smarter about combining maintenance schedules as a way of bring prudent on costs,” said one senior oil executive working in the GCC.
One industry source said he had not heard of any upcoming planned maintenance at ADNOC’s oilfields and expects production from Abu Dhabi to hold steady in the fourth quarter. The UAE pumped 3mn barrels per day (bpd) in September.
Saudi-based sources have said the kingdom’s level of crude production was likely to stay around current levels in the fourth quarter, as a decline in domestic crude burning for electricity would be offset by rising global demand.
Saudi Arabia pumped 10.225mn bpd of crude oil in September. Qatar’s production was 663,000 bpd in September, according to official figures submitted to OPEC.
The collapse in crude prices since last year has prompted oil majors, service companies and even wealthy oil producers to cut spending and shelve some projects.
Middle East OPEC producers are reviewing oil investments plans and asking for cost cuts.
Iraq has told foreign companies that they may need to slash development spending next year.
Saudi Arabia’s Finance Ministry is telling government bodies to return unspent money which they were allocated in this year’s budget.
Saudi Aramco has said it would renegotiate some contracts and postpone some projects due to falling oil prices. It has asked international oil service companies for 25% discounts, industry sources have said.
ADNOC has also asked contractors for around a 10% discount for some of the maintenance and services they provide, another industry source said.
“They are saying ‘lower your prices’ for the new contracts, they are not expanding or awarding new projects, it is extremely slow right now,” the source said, referring to ADNOC.
“What’s my plan for 2016? One word: survival,” the source said.
