General view of Saudi Aramco's Ras Tanura oil refinery and oil terminal in Saudi Arabia. Picture:P REUTERS/AHMED JADALLAH
General view of Saudi Aramco's Ras Tanura oil refinery and oil terminal in Saudi Arabia. Picture:P REUTERS/AHMED JADALLAH

Dubai — Saudi Aramco, the world’s largest crude exporter, awarded $18bn in contracts to boost output capacity at two offshore oil fields even as the kingdom and its oil cartel Opec partners restrict production.

Saudi Arabia’s state oil company will add a combined 550,000 barrels per day (bpd) of crude-production capacity at its Marjan and Berri fields, it said in a statement on Tuesday. It will raise capacity for natural gas output at the deposits by 2.5-billion standard cubic feet a day. Aramco awarded 34 contracts, with half of them going to Saudi firms, according to the statement.

McDermott International, Saipem of Italy, Norway-listed Subsea 7, Técnicas Reunidas of Spain and China Petroleum & Chemical were among the companies that won contracts, according to a photo Aramco provided of the signing ceremony. India’s Larsen & Toubro and Hyundai Engineering & Construction of South Korea also secured deals.

The statement itself didn’t identify the 16 companies that were awarded contracts, nor did it specify when the Marjan or Berri projects would be completed.

Aramco, known officially as Saudi Arabian Oil Company, plans to bring about 1-million bpd of oil capacity online by 2023 to compensate for reductions at some other fields. Aramco plans to maintain production capacity of 12-million bpd, even though it regularly pumps about 10-million bpd.

Saudi Arabia, with the world’s biggest reserves of conventional crude, has long drawn on its prolific deposits to help balance global oil markets. Riyadh seeks to keep some spare capacity ready and available for rapid use in order to respond quickly to any shortages. Opec and allies including Russia agreed this month to extend production cuts into 2020 to try to prop up prices amid surging US supplies.

“These two programmes will significantly enhance Saudi Aramco’s oil production and gas processing capabilities,” CEO Amin Nasser said in the statement. The field expansions will help meet “growing long-term demand for petroleum”, he said.

Marjan’s development will add capacity of 300,000 bpd of Aramco’s Arabian medium crude blend, according to the statement. The Berri project will contribute 250,000 bpd of additional capacity for Arabian light crude. Aramco produces more Arabian light than any other grade.