Aramco to drop plans for 1mb/d of oil capacity expansion by 2027 Yesterday morning, Saudi Aramco, the world''s largest oil company, announced that it had received from the Ministry of Energy a directive to maintain its maximum sustainable oil production capacity (MSC) at 12mb/d and to cease increasing its MSC to 13mb/d by 2027. Aramco said it will update its capex guidance with FY23 results in March, where we suspect $5-7.5bn of annual upstream spending on oil expansion projects may be cut. While no rationale was given, the decision by the Kingdom comes at a time when balances suggest even erosion of existing spare may take time to achieve, a net positive for the oil price in our view. Safaniyah expansion likely cancelled alongside Manifa and possibly Zuluf slowdown While nearly 600kb/d of incremental supply from expansions of Marjan, Berri and Dammam is set for start-up in 2024/25, we think given an earlier stage of progress at Zuluf, Aramco may pursue less than the 600kb/d nameplate expansion. Meanwhile at the pre-FID Safaniyah oilfield, where Saipem and Subsea 7/LandT were reportedly amongst the frontrunners for c$10bn+ of offshore EPCI contracts scheduled for award as early as February, the 700kb/d expansion across two phases is likely to be called off entirely. Investment will however still be needed to offset decline, which attracts less attention than greenfield capex. Saipem reaction looks overdone to us, despite general negative read across to the space Hardest hit on the day was Saipem at which also announced what we deem to be a relatively minor operational incident during pipelaying operations offshore west Australia. After the -13% move, cEUR400m of market cap has been erased which we think is unjustified considering order intake from the Safaniyah project likely represents a small proportion of the Middle East and overall offshore opportunity set of cEUR31bn over the next 18-months (cEUR500-600m on our risked 2024 intake estimates),...