Saudi Oil Rig Decline Due to Completed Projects and Reduced Production Capacity.

Saudi Arabia's oil rig count declined due to the completion of oil-field projects and the kingdom's decision to maintain its maximum sustainable capacity at 12 million barrels per day. Aramco CEO Amin Nasser stated that the rig count was a result of completing certain projects and reducing the MSC. Meanwhile, natural gas activity has surged, with Aramco planning to increase gas production by over 60% by 2030.

Saudi Arabia's oil rig count has experienced a significant decline, reaching its lowest level in over two decades. According to Baker Hughes data, the number of oil rigs operating in the kingdom fell to 20 in July, down from 46 in early 2024 [1]. This downturn is attributed to the completion of several oilfield expansion projects and Saudi Arabia's decision to maintain its maximum sustainable capacity (MSC) at 12 million barrels per day, instead of the previously planned 13 million barrels a day [1].

The decline in oil rigs is part of a broader strategic shift by Saudi Arabia towards natural gas and renewable energy sources. Aramco CEO Amin Nasser stated that the rig count decrease is a result of completing certain projects and reducing the MSC [1]. This move aligns with Saudi Arabia's Vision 2030, which aims to diversify the economy and reduce reliance on oil [2].

Concurrently, natural gas activity has surged in Saudi Arabia. Aramco plans to increase gas production by over 60% by 2030, which will displace 350,000 barrels of crude oil used for domestic power generation [2]. The Jafurah shale gas field, one of the largest of its kind in the world, is expected to start production by the end of 2025 and will play a crucial role in this transition [2].

Saudi Arabia is also exploring opportunities in blue ammonia and green hydrogen exports. The kingdom's first carbon-neutral ammonia shipment to Japan in 2020 marked a significant milestone, and recent exports of 138,000 tons of blue ammonia to South Korea highlight the growing export ambitions [2]. The Yanbu Green Hydrogen Hub, a $400 million project, is set to produce 400,000 tons of green hydrogen annually, processed into ammonia for global export [2].

The shift towards gas and renewable energy presents both risks and opportunities for investors. While traditional oil drilling faces declining returns and regulatory risks, sectors such as gas infrastructure, blue ammonia, and energy services offer long-term, high-margin opportunities [2]. Energy investors must adapt to this paradigm shift by reallocating capital towards these sectors.

References:
[1] https://www.bloomberg.com/news/articles/2025-08-01/saudi-oil-rigs-slump-to-lowest-in-20-years-outpaced-by-gas
[2] https://www.ainvest.com/news/saudi-arabia-energy-transition-oil-gas-implications-energy-investors-2508/