Saudi Aramco recovers oil output faster than expected

Bloomberg

Saudi Arabia is recovering faster than expected from the biggest attacks ever on its oil industry, beating its own target for restoring capacity by about a week.
State oil producer Saudi Aramco has boosted total production capacity to more than 11 million barrels a day, according to people with knowledge of the situation. The news helped to push crude down by as much as 1.8% in London as the kingdom’s efforts to resolve the worst disruption of output in history help avert a global supply crisis.
The September 14 attacks caused severe damage to crude-processing plants at Abqaiq and the Khurais oil field and drove a record spike in oil prices. The precision strikes punched holes in towers and tanks that strip impurities, water and natural gas out of crude to prepare the oil for export.
Since then, Aramco has been working flat out to restore capacity, while maintaining normal supplies to customers by tapping inventories and ramping up other fields. It has now restored production at the Abqaiq and Khurais facilities to the levels they were operating at before the attacks.
Saudi Arabia has positioned itself as the swing supplier in global markets for decades by maintaining spare production capacity that would allow the kingdom to supply more in case of shortages.
Since 2017, it has been mostly pumping below the level it agreed with the Organisation of Petroleum Exporting Countries (Opec) and allies in an effort to trim excess global stockpiles.
The Abqaiq processing facility can currently produce 4.9 million barrels a day and Khurais can get to as high as 1.3 million, according to the people. Aramco has said full capacity under normal circumstances at Abqaiq is 5.5 million barrels of crude daily and about 1.5 million at Khurais.
Aramco has said it will bring back all the lost production by the end of the month, by when it will also restore capacity to 11 million barrels a day. The full capacity of 12 million won’t be available until November, it said September 17.
“We do not expect full Saudi spare capacity to be restored before sometime next year and we expect Aramco to swap crude quality around from lighter to heavier grades as it struggles to restart Abqaiq,” Sen wrote. About 2.5 million to 3 million barrels a day of the disrupted output has returned with the Khurais field and use of existing spare capacity, she said.
The Saudi interruptions come as the oil market grapples with supply disruptions around the world and concerns over demand growth. Sanctions have choked off exports from Iran and economic strife has resulted in output plunging in Venezuela.
Saudi Arabia and the UK are calling for an international response to the aggression for which they said the Iran is ultimately responsible. The UK is waiting for the release of one its oil tankers that was seized and is being held off the port of Bandar Abbas for the last two months.

Aramco to announce IPO plan in October
Bloomberg

Saudi Aramco will kick off its much-anticipated initial public offering (IPO) next month as the oil giant recovers faster than expected from the biggest terror attacks in its history.
The state-run company plans to announce its intention to float around October 20, according to people with knowledge of the matter. The firm, which is holding analyst meetings from Wednesday, is targeting a valuation of at least $2 trillion — more than double that of Apple Inc.
Aramco’s listing on the Saudi stock exchange could take place as early as November, though the timetable hasn’t been finalised, one of the people said, reports said.
Banks are working flat out to get the mammoth IPO done after drone and missile attacks on two Aramco facilities on Sept. 14 caused a record surge in oil prices and risked delaying the deal for a second time. A $2 trillion valuation would make Aramco’s the world’s most valuable firm and mark a victory for the offering’s architect, Crown Prince Mohammed Bin Salman, who first mooted the idea in 2016. Some analysts see a $1.5 trillion valuation as more realistic.
“Aramco seems to be making all efforts to restore full production as soon as possible, both to reassure its clients that it is a reliable supplier and to avoid any IPO delays,” said Richard Segal, a London-based senior emerging-markets analyst at Manulife Asset Management. “Listing in a couple months is realistic on the assumption that the paperwork is ready. They’ve had plenty of time for this.”
The eventual timing of the share sale and other details will depend on market conditions and investor demand, the people said. Aramco didn’t immediately respond to requests for comment.
More than 100 investment bankers, government officials and Aramco executives are gathering for two days of analyst presentations at the company’s headquarters in Dhahran in the kingdom’s Eastern Province, the people said. Members of Aramco’s management are presenting to banks’ research teams and global coordinators are briefing executives at the firm, they said.
At the same time, Aramco has been working hard to restore total production capacity, while maintaining normal supplies to customers by tapping inventories and ramping up other fields. The state-run company has now restored production at the Abqaiq processing facility and Khurais oil field to levels seen before the attack, according to people with knowledge of the situation.