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Saudi oil and gas spending to surpass 2024 level

26 March 2025

 

When Saudi Arabia’s Energy Ministry directed Saudi Aramco in January 2024 to abandon its campaign to expand oil production spare capacity from 12 million barrels a day (b/d) to 13 million b/d by 2027, there were concerns that it would lead to a slow year for oil and gas project spending.

Indeed, as a consequence of that government decision, Aramco cancelled the tendering process for at least 15 contracts involving the engineering, procurement, construction and installation (EPCI) of structures at offshore oil and gas fields.

Since then, however, the Saudi energy giant has gone the other way. In its financial results for 2024, Aramco reported that it increased its capital investment last year to $53.3bn, which includes $50.4bn of organic capital expenditure (capex), marking a rise of 27% compared to 2023.

Offshore spending

The capex figure for 2024 includes an estimated $5bn that Aramco spent on EPCI contracts for maintenance, modification and upgrade of infrastructure at its offshore oil and gas fields.

Italian contractor Saipem was the biggest beneficiary of Aramco’s offshore spending, winning five of the eight Contracts Release and Purchase Orders (CRPOs) awarded last year.

In early May 2024, Aramco awarded Saipem the contract for CRPO 143, which involves replacing an oil line between the Berri and Manifa oil fields in the kingdom’s Gulf waters. Aramco then awarded Saipem the contract for CRPO 138, which involves laying a trunkline at the Abu Safah offshore field. The contract is estimated to be worth $500m.

The Milan-listed contractor then scooped three CRPOs in August, starting with CRPOs 132 and 139, the combined value of which is estimated to be about $1bn. In early September, Saipem began work on the two contracts, which involve the EPCI of structures to upgrade the Marjan, Zuluf and Safaniya offshore field developments.

Aramco also awarded the Italian contractor CRPO 127 in September. The $2bn contract involves the EPCI of topsides and jackets for wellhead platforms, a tie-in platform jacket and topside, rigid flowlines, submarine composite cables and fibre optic cables at the Marjan oil and gas field.

In late November, Aramco awarded three further CRPOs, worth more than $500m. China Offshore Oil Engineering Company won CRPOs 149 and 152, which are estimated to be valued at $30m and $250m-$300m, respectively. UK-based Subsea7 secured CRPO 153, which is understood to be valued at $200m-$250m.

Upstream increase

Saudi Aramco is expected to increase spending even further in 2025, based on its capital investment guidance in the range of $52bn-$58bn for 2025, excluding about $4bn of project financing.

It is anticipated that the majority of this capex budget will be allocated to upstream schemes, as Aramco is still responsible for maintaining Saudi Arabia’s spare oil production capacity at 12 million b/d. With Riyadh set to raise its oil production from April as part of a wider Opec+ plan, Aramco will be required to tap into its spare output capacity.

In its financial statement for 2024, Aramco said its spare capacity of 12 million b/d “provides flexibility to help meet potential oil demand growth”, adding that if necessary, using 1 million b/d of existing spare capacity could “generate an additional $12bn in operating cash flow, based on 2024’s average price” of $80.2 a barrel.

In addition, Amin Nasser, Aramco’s president and CEO, was quoted in the financial statement as saying that “global oil demand reached new highs in 2024, and we expect further growth in 2025”.

“With dependable and more sustainable energy key to global economic growth, we continue to make progress on projects to maintain our maximum sustainable crude oil capacity, expand our gas capabilities, achieve further integration of our upstream and downstream businesses to capture additional value, and help mitigate greenhouse gas emissions,” Nasser said.

Saudi Arabia’s offshore fields contain most of the kingdom’s hydrocarbons reserves and it has therefore been forecast that offshore EPCI projects will dominate Aramco’s upstream spending in 2025.

Aramco is in the bid evaluation and tendering stages for a total of 12 additional offshore tenders, including four CRPOs – numbers 145, 146, 147 and 148 – for work on the expansion of the Zuluf field development.

In December, contractors in Aramco’s Long-Term Agreement (LTA) pool of offshore service providers submitted bids for the four tenders, which are estimated to be worth a total of $6bn. The contract awards are due in the second quarter of this year.

LTA contractors also submitted bids in December for CRPO 150, a $350m-$400m tender involving the installation of structures at Aramco’s Northern Area Oil Operations.

Also in December, Aramco issued seven further CRPOs to its LTA pool of contractors. Bids for CRPOs 157, 158, 159 and 160 – relating to the EPCI of several structures at the Abu Safah, Berri, Manifa and Zuluf fields – are due to be submitted by 13 April.

CRPOs 154, 155 and 156 cover the next expansion phase of the Safaniya field. Offshore LTA contractors are due to submit bids for these three tenders by 31 July.

Gas focus

In line with its aim of increasing gas production by 60% by 2030, with 2021 as its baseline, Aramco is on course to further advance its Jafurah unconventional gas production programme. Located in Saudi Arabia’s Eastern Province, the Jafurah basin holds the largest liquid-rich shale gas play in the Middle East, with an estimated 200 trillion cubic feet of gas in place. This shale play covers an area of 17,000 square kilometres.

The Jafurah project is a key component of Aramco’s long-term gas production strategy. The company expects the overall lifecycle investment at Jafurah to exceed $100bn.

In February 2020, Aramco received a capex grant of $110bn from the Saudi government for the long-term phased development of the Jafurah unconventional gas resource base.

Aramco is estimated to have spent a total of $25bn on three development phases of the Jafurah unconventional gas reserve. Most recently, in July 2024, a consortium of Spanish contractor Tecnicas Reunidas and China’s Sinopec Group was awarded a $2.24bn contract to perform engineering, procurement and construction (EPC) works on the third expansion phase.

The fourth Jafurah expansion phase is estimated to be valued at about $2.5bn. The main scope of work involves the EPC of three gas compression plants, each with a capacity of 200 million cubic feet a day (cf/d).

Bids for the fourth phase of Jafurah were submitted in mid-January and are being evaluated by Aramco, with the contract award due in the second quarter of 2025.

Looking ahead, Aramco is preparing to start the tendering process for the fifth Jafurah expansion phase later this year. The project, which is in the front-end engineering and design stage, is expected to add another 200 million cf/d of output capacity at the Jafurah master development.

MEED’s April 2025 report on Saudi Arabia also includes:

> DOWNSTREAM: Aramco’s recalibrated chemical goals reflect realism
> POWER: Saudi power sector enters busiest year
> WATER: Saudi water contracts set another annual record
> CONSTRUCTION: Reprioritisation underpins Saudi construction
> TRANSPORT: Riyadh pushes ahead with infrastructure development
> BANKING: Saudi banks work to keep pace with credit expansion

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Indrajit Sen

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