Saudi Aramco seeks discounts on drilling

State-run Saudi Aramco has asked oilfield service companies to extend discounts to next year as the oil giant cuts costs amid falling oil prices, industry sources familiar with the matter said.

“The oilfield service companies have been asked to give discounts and they will do it since discounts granted this year are due to expire by year-end. Other suppliers will be next,” said a source who declined to be identified.

In an e-mailed comment to a Reuters inquiry, Saudi Aramco said it had no information to release on the matter.

The rig count is holding steady and is expected to be kept steady next year, although it could go up if prices rise, a second source said.

Saudi Aramco wants to maintain the same activity at lower prices but “they can also save money through efficiency”, he said, while another source said some companies have been asked for steeper discounts.

“They issued a lot of tenders to keep rigs busy at low price. At the same time materials are low so they think projects overall should be cheaper,” said a fourth source.

“There are a lot of projects offshore to maintain potential on all fields … There are ongoing bids one after the other,” he said.

Earlier this year, Saudi Aramco made a similar request to cut costs on drilling services after oil prices tumbled from as much as $115 in the middle of last year. Aramco has also secured lower daily rates for rigs.

The collapse of crude prices has prompted some oil companies to cut spending.

Aramco is now deploying around 212 rigs for oil and gas, a level which has been held steady this year mainly to maintain maximum sustainable capacity at 12.5 million barrels per day, industry sources say.

 

Reuters