Saudi Aramco will renegotiate some contracts and postpone some projects due to falling oil prices, the head of Saudi Arabia's state oil company said on Tuesday, TradeArabia reported.
"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," said Saudi Aramco chief executive Khalid Al-Falih, speaking at a conference in Riyadh.
"The lower price environment is an opportunity for the industry as a whole to sharpen our pencils. I think we got spoiled with $100 oil and we were focused on building capacity and we lost focus on fiscal discipline."
Saudi Arabia is the world's top oil exporter. Oil prices fell nearly 60 per cent since June last year on oversupply and weak demand, trading around $47 a barrel on Tuesday.
Al-Falih said the imbalance in the oil market has nothing to do with Saudi Arabia, and a fair oil price is what would ultimately balance supply and demand.
"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," Al-Falih said, adding that Saudi Aramco is producing 9.8 million barrels a day.
"I would not venture to guess where the (fair oil) price will be but it will be the price that ultimately balances supply and demand, and I don't think that anybody, no single person can dictate what that price is. I will be foolish if I did that."
Saudi Arabia is the world's top oil exporter and largest producer in Organization of the Petroleum Exporting Countries (OPEC), which in November declined to cut its oil output to arrest the decline in oil prices and decided instead to focus on market share.
The drop in prices will curb investment in the industry worldwide, Al-Falih said. Saudi Aramco, as his company is known, will cut planned spending this year to less than its initial target, he said. State-owned Aramco plans to invest $30 billion to $50 billion a year to maintain crude output, transform itself into the world’s largest refiner and expand its trading and chemical businesses.
OPEC and the International Energy Agency, an adviser to 29 nations on energy policy, warn that a sharp decline in oil-industry investment will leave supply insufficient to meet demand. OPEC secretary general Abdalla El-Badri said yesterday that crude prices could reach $200 a barrel if spending dries up. IEA executive director Maria Van Der Hoeven said last week that producers must invest more to satisfy a forecast need for 14 million barrels a day of additional crude by 2040.
