DUBAI (Reuters) - State oil giant Saudi Aramco said on Monday it was likely to sustain higher oil output planned for April through into May, and that it was “very comfortable” with a price of $30 a barrel.
Aramco said last week it would be raising its output in April to a record 12.3 million barrels per day in a fight for market share with Russia that has helped to hammer global oil prices.
“In a nutshell, Saudi Aramco can sustain the very low price and can sustain it for a long time,” Chief Executive Amin Nasser said on Monday during a full-year earnings call with investors and analysts. “For the production in May ... I doubt it would be any different from next month.”
Nasser said that the boost in output and exports would reflect positively on the company despite low oil prices. Aramco has some of the lowest production costs in the world.
CFO Khalid al-Dabbagh said Aramco was “very comfortable” with oil at $30 a barrel and would still be able to meet its dividend commitments and shareholder expectations at that price.
“We are very comfortable that we can meet our dividend commitment, and we are very comfortable that we can meet our shareholders’ expectations at $30 (a barrel) or even lower,” he said.
Nasser said Aramco would draw 300,000 bpd from its huge inventories to hit that record supply in April, and could sustain its maximum output of 12 million bpd for a year with no need for further spending. Saudi Arabia, the world’s top oil exporter, has hundreds of millions of barrels of crude stored.
He also said Aramco was currently evaluating boosting its maximum oil output capacity by another 1 million bpd to 13 million bpd.
Saudi Arabia said last week it would launch a program to boost production capacity for the first time in more than a decade, signaling to Russia and other rivals it was ready for a long battle over production levels and market share.
Oil has fallen 39% to $31 a barrel since talks between OPEC and non-OPEC producers on March 6 collapsed without a deal to deepen or extend output cuts that had been in effect since 2017.
Saudi Arabia, OPEC’s de facto leader, wanted a deeper output cut to support prices, which had been hit by the coronavirus pandemic, but Russia refused to agree to further reductions.
Aramco has “massive capacity” to borrow, but does not need additional debt, Dabbagh said. The company said on Sunday it had a gearing of -(minus)0.2% at the end of 2019.
It also said it plans to cut capital spending in the wake of the coronavirus outbreak, while posting a plunge in profit for last year, missing forecasts in its first earnings announcement as a listed company.
Saudi Arabia’s decision last year to float shares in its state oil company - the most profitable company in the world - was one of the central elements in Crown Prince Mohammed bin Salman’s program for economic and political reform.
The record-setting IPO was touted as making the world’s biggest energy exporter more professional and transparent.
Additional reporting by Dahlia Nehme and Yousef Saba; Editing by Kevin Liffey, Kirsten Donovan