Saudi Aramco plans to spend more than SR500bn ($133bn) on oil and gas drilling operations over the next decade, according to Amin Nasser, the state oil giant’s CEO.

Nasser was speaking on Monday at the graduation ceremony for a new batch of students at the Saudi Arabian Drilling Academy in Abqaiq, outlining the importance of training new Saudi oil engineers to take over the work of maintaining Aramco’s oil production capacity.

“The academy will play a great role in closing the talent gas and equipping Saudi students with the skills and capabilities required by the drilling industry,” Nasser said, adding that Aramco “will spend more than half a trillion Saudi riyals on drilling activities over the next decade.”

Although it holds the world’s largest proven oil reserves, at more than 260 billion barrels, the expansion of Aramco’s drilling spend will help offset natural declines at the kingdom’s older fields, some of which have been producing continuously since the 1960s. This will help maintain Saudi Arabia’s production capacity, estimated at approximately 12.5 million barrels a day (b/d).

The announcement of a major spend on drilling follows a warning by Saudi energy, industry and mineral resources minister Khalid al-Falih in August, that the oil industry had lost around $1 trillion worth of investment since oil prices crashed in mid-2014.

"The situation becomes more disconcerting when seen in the light of global demand growing at the rate of one to 1.5 million b/d annually, and maturing oil fields around the world exhibiting steepening natural declines that must also be offset by continuing investment in the industry," Al-Falih wrote in Aramco’s 2017 review.

Aramco is committed to investing “throughout the cycle” to maintain its leadership position in the industry, he added.

By the end of the year, Aramco will add 300,000 b/d of capacity at the Khurais oil field taking it to 1.5 million b/d and it is already working on further expansions at other fields. It awarded a major contract to Baker Hughes earlier this month, to boost output capacity from its 500,000 b/d offshore Marjan field in the Gulf to 800,000 b/d. This is part of a wider offshore development which also includes the 800,0000 b/d Zuluf and 200,000 b/d Berri fields. Together they will add another one million b/d of capacity by 2023.

Further ahead, it also plans to increase production from the onshore Fazran field by 75,000 b/d in 2020; and start production from the Dammam field at 25,000 in 2021, rising to 75,000 b/d in 2026.