Saudi to build 5 new refineries
Posted: Wednesday, June 01, 2005
London
Saudi Arabia has plans to build five new refineries to help process a global surplus of heavy sour crude, a Saudi-based oil expert said.
"We're facing a situation where there is extra heavy crude and people don't want it," said Nawaf Obaid, a Saudi national security and intelligence consultant based in Riyadh.
He said Saudi Arabian refining capacity would be increased by about five new refineries with capacity of 300,000-400,000 barrels per day over a five-to-10 year period from 2006 onwards.
The new refineries would be both inside and outside the country and would aim to draw in foreign investment.
"There is definitely an incentive to export refined products, but it is not clear how many refineries will be inside Saudi Arabia and how many will be outside," Obaid said.
The cost was unclear and the new refineries were only at the planning stage, he told a briefing in London.
Saudi Arabia has said shortage of refining capacity was a key factor in pushing prices to a record of $58.28 for US crude in April.
The head of Saudi Aramco, Saudi Arabia's state-run oil company, said earlier this year, oil-producing countries would probably begin building refineries because of hurdles oil companies face in developing new plants in consuming countries.
Saudi Arabia, which has eight refineries and refining capacity of 2.1 million bpd, is also planning to upgrade its existing plants. In addition, a senior Aramco official announced in April plans to build a 400,000 bpd export-orientated refinery in the Red Sea city of Yanbu at a cost of around $4-$5 billion.
The planned refinery expansion would be in parallel with expansion of the country's upstream sector.
Saudi Arabia has been pumping around 9.5 million bpd since April and is expected to maintain output at that level in June, an Opec source said yesterday.
Total production from the 11-member Opec is running at just over 30 million bpd. The group's production is predominantly heavy sour crude, rather than the light sweet crude that much of the world wants.
Saudi Oil Minister Ali Al Naimi has said Saudi Arabia will work to keep spare capacity of at least 1.5 million bpd and possibly as high as two million bpd.
He has said Saudi Arabia's production will be increased from 11 million bpd now to 12.5 million bpd by early 2009.
Obaid said keeping two million bpd was expensive and the bias was towards spare capacity of one to 1.5 million bpd.
He said the government was budgeting $15-$18 million for investment in the oil sector up to 2009, an increase from earlier estimates of $12-$15 because of greater than expected technical difficulty.
Obaid said Saudi Arabia's expansion plans were sustainable if prices of US crude remained higher than $35, adding Saudi Arabia did not expect them to fall below that level.
Obaid was largely dismissive of concerns raised by Matthew Simmons, an investment banker specialising in energy, who has warned Saudi Arabia's oil production is near its peak.
"Matthew Simmons takes a view that there needs to be more transparency in the oil industry," Obaid said. "I believe Saudi Arabia is the wrong example. Russia is more alarming." -Reuters
tradearabia.com
-----------------------------------------
May be related to this...
"So let me begin by explaining what the Saudi Minister is talking about, since it is not really evident from what he said. As Aramco first began developing the Saudi oilfields it found, back in around 1957, an oilfield at Manifa. In the map we posted on June 2nd it is the one marked in black. And the reason that it is marked in black is that, although the Oil Ministry list it as one of the sources of the oil that will allow them to reach 11 mbd (also in that entry), the very significant 1 mbd that could come from that field is not currently refinable. To requote from Prospect Magazine as we did on April 4th.
Beneath the seabed off the coast of Saudi Arabia is an oil field called Manifa. It is giant, and its riches are almost untapped. There is, however, a snag. Its oil is heavy with vanadium and hydrogen sulphide, making it virtually unusable. One day the technology may be in place to remove these contaminants, but it will not be for a long time, and when, or if, it becomes possible, it will do no more than slightly reduce the rate at which the world's oil supplies slip away towards depletion. Even this field has one advantage over the massive reserves of oil which middle east suppliers are said to hold, ready to secure the future of industrial civilisation. Unlike those fantasy fields, Manifa does actually exist.
Were the world to develop a place to refine this oil (which would take several years), the Saudi Arabian Oil Ministry could almost immediately start pumping it, since the field is developed. But there isn’t, and they can’t. Which must be quite frustrating, since they keep commenting on it."
Message 21417742 |
