RIYADH – Repairs to Saudi Aramco’s oil facilities in Abqaiq and Khurais could take months rather than just ten weeks, the oil company initially estimated.
According to contractors, quoted by the Wall Street Journal, the oil company is in urgent negotiations with equipment manufacturers and service providers and is willing to pay special rates for faster delivery and installation.
Even with the payment of urgent services, the repair work can take months, or even a year, because the equipment still needs to be manufactured, delivered and installed, the newspaper said, citing Saudi officials.
As a result of Aramco’s overly optimistic initial expectations, there may soon be another spike in oil prices.
Drone attacks on two Saudi Aramco plants led to oil production cuts of 5.7 million barrels per day, about half of the company’s total production.
Saudi Energy Minister Abdulaziz bin Salman tried to reassure markets by telling the media that more than half of lost production had been restored and promising that by the end of September the country would have a production capacity of 11 million barrels per day and that by the end of November would have 12 million.
However, according to sources, this is unlikely to happen, as the equipment that will replace what was destroyed by the attacks will have to be made to order, and this takes time.
Bloomberg estimated that Saudi Arabia has about 50 million barrels of oil stored internally and another 80 million barrels stored abroad. That would be enough to keep their exports at regular levels, but some feel that supply problems may start as early as late October. Despite this, prices have remained relatively indifferent to the latest updates.
Attack on Saudi Refineries
On 14 September two Saudi oil installations were attacked by drones and caught fire.
Saudi Aramco is the state-owned oil giant that operates and controls most of the kingdom’s refinery and oilfield production.
The Houthi-led Ansarullah Movement, against whom the Saudi-led Arab coalition has been fighting since 2015, have taken responsibility for the refinery attacks. The US blames Iran for being involved in the attacks without providing evidence, while Tehran refutes all charges.