Saudi Aramco has reportedly asked oilfield service companies to lower their charges in a move to reduce its costs due the fall in oil prices, Reuters said on Tuesday.
“[Aramco] are asking for 20% [discounts]; some complied, others negotiated, [it’s] part of a plan to reduce cost,” an industry source, who like others declined to be identified, told Reuters.
“Saudi Aramco is optimising costs to maintain the current production,” another industry source said.
“Will service companies be able to offer more discounts? If oil prices remain low, this could result in releasing some rigs.”
End of last year Saudi Aramco’s chief executive officer Khalid Al-Falih said in a letter to his employees the fall in oil prices could present producers with the opportunity to lower costs for their projects as suppliers and service providers lower prices.
“There is the potential to execute our projects at lower costs, as investment deferrals by others cause suppliers and service providers to lower prices,” Al-Falih said.
Aramco is expected to keep its overall rig count steady this year as falling oil prices caused International Oil Companies (IOCs) mainly in Europe and the US to reduce the number of their drilling rigs in order to make savings.
2014 saw the Saudi oil producer deploy 210 oil and gas rigs, making it an exceptionally busy year for the state-owned giant.
Industry sources told Reuters that it remains unclear how Aramco’s drilling plans for this year would look but that there was more focus on drilling for gas as domestic demand is rising.
One source revealed that he had already seen a few rigs moving to gas, while another said gas consumption in the Kingdom is getting higher.
It also came out that most of the oil rigs will be kept to maintain potential oil capacity, while exploration for tight and shale gas continues in 2015, a third source told Reuters.
“Aramco has 2mn barrels of spare capacity so a reduction in oil drilling rigs does not mean a near-term reduction in oil production,” said Sadad al-Husseini, a former senior executive at Saudi Aramco and now an energy consultant.
