Saudi Arabia to Double its Oil Refining Capacity--

[Gloria]

From the new World Media Watch up now at http://www.zianet.com/insightanalytical
Tomorrow at Buzzflash.com


3//The Daily Star, Lebanon Wednesday, February 15, 2006

http://www.dailystar.com.lb/article.asp?edition_id=10&categ_id=3&article_id=22196



SAUDI ARABIA TO DOUBLE ITS OIL REFINING CAPACITY

By Agence France Presse (AFP)

RIYADH: Saudi Arabia plans to double its oil refining capacity to six million barrels per day (bpd) within five years, Oil Minister Ali al-Nuaimi said Tuesday. The OPEC kingpin's "main goal is the stability of world oil markets. It is currently working on huge oil projects, including raising crude oil production capacity and doubling the capacity of oil refineries to six million bpd within the next five years," the state SPA news agency quoted him as saying.



Nuaimi made his remarks during a meeting with visiting Dutch Foreign Minister Bernard Bot.

Riyadh's objective is to "meet the world's increasing demand for oil," Nuaimi said.



(SNIP)

The Saudi and Dutch ministers discussed the importance of ensuring secure oil supplies and cooperation between their two countries in oil matters, including joint investments, SPA said.



(MORE)

[TomInTib]

1. The only way they will do that is if the price remains above $60.

And almost no one in the biz thinks they can accomplish this.

Except the Saudis.

The old guys are dead or dying, there are WAY too many clueless princes and they are spouting total bullshit to get foreign financing.

The Chinese/Japanese will never buy into this.

[Viva_La_Revolution]

2. Okay, here's my take on this spin...

double its oil refining capacity (refining capacity, NOT pumping capacity)

We already know that some of their oil is getting hard to sell, because of the amount of water they have to use, and it's sour, not sweet.

So my take is, nobody wants the sour at regular prices (I heard they were trying to sell it for under market $) so they have to refine it themselves.

but of course, I could be talking outta my ass.

what do you think?

[bpilgrim]

3. that is the first thing that crossed my mind, too...

this new s would otherwise be HUGH!$# ;->

peace

[hatrack]

4. Yep - no one else will take the sour heavy, so they'll do it themselves

And God knows, they've got the money just coming out of their asses at the moment, so why not? Beats going and trying to drill in Kashagan.

[Strelnikov_]

6. Sounds Reasonable. Creating A Market For Their Sour Crude

Smart businessmen.

[Wwagsthedog]

8. My thoughts are

that you aren't talking out of your hindquarters at all. According to my refinery engineer neighbor, most of the reason more resources haven't been put into expanding domestic refinery capacity are a result of developing the capabilitiy to reduce sulpher in heavier crudes from the likes of Saudi Arabia (Motiva) and Venezuela (Citgo). What this means is that the Saudis, without the environmental refining constraints found in the USA, will now ship us (and others) refined products instead of crude. etc., etc.

[4dsc]

10. Sweet versus sour crude

For those in the know, sweet crude, the stuff that's easy to refine and runs our society, alledgely peaked about 2000. The Saudi's have alot of "sour crude"(or crude thats high is sulfer content along with a bunch of other really bad chemicals) but today refineries are not set up to handle this sour crude. I guess the Saudi's will take care of it along with all the pollution accociated with it..

And you are correct, capsity and production are two different matters.. It is believe that the worlds largest oil field is going to collapse soon and then the SWHTF!!!

[hatrack]

11. Also, the bulk of what's been discovered in the Caspian is high-sulphur

Setting aside that what's been found up there is about 1/10th of what the more pie-eyed estimates were, the bulk of it is extremely sour and will need specialized refining capacity.

[Canuck55]

5. They would love if oil would stabalize @ $45.00

The profits aren't even an issue for them anymore, its the difference between crazy insane profits and beyond insanity profits. If they were cut off today it would be like 20 generations to spend it all. Over $45.00/barrel and the oil sands level the playing field in regard to reserves. $60.00/barrel also makes alternative fuels more than worth looking into. Saudi Arabia is absolutely nothing politically in the big picture if you take oil control out of it, and its worth more to them than the cash they'll never spend.

[Strelnikov_]

7. That Is Their Stated Position. Thing Is, OPEC Is Cutting Production

in March.

As someone noted on another board, is Opec cutting production, or is production cutting Opec?

This action is completely contrary to Opec’s stated polices, and actions, over the last decade. Their goal is to restrict supply just enough to keep the price high, yet not so high as to spawn development of alternatives (including conservation), as you note.

And all this in the face of high oil prices, record demand (desire) from China, India, and just as we are entering the ‘driving season’.

So, are they simply profiteering? Possible. Or are they masking the fact that they not only cannot produce more, but that they cannot even maintain the current rate of production.

http://www.businessweek.com/ap/financialnews/D8FF5P00D.htm?campaign_id=apn_home_down&chan=db

The Organization of Petroleum Exporting Countries has ruled out any change in production at its meeting this week but has a consensus to cut output in March, oil ministers from Venezuela and Saudi Arabia said Monday.

[rman]

9. Now they only need to double oil extraction capacity.

They can't refine oil that they don't have.

[happyslug]

12. May just be to get more of the profit out of its oil.

For example in 2005 Saudi Arabia produces 7.7 Million Barrels of Oil per day, and refined only 1.75 Million Barrels of oil per day. If you Double 1.75 Saudi Arabia is still only refining 3.50 Million Barrels of Oil per day (i..e only 1/2 of its production). If you add the 1.6 Million of Barrels per day the Saudis own outside Arabia you have 5.1 Million Barrels of Oil per day capacity, leaving only 2.6 Million of Barrels of Oil per day to export (or to reflect reduction in oil production).

Given the economic problems of Arabia, the Saudis may just be looking at ways to get its people working (Arabia has at least a 13% long term Unemployment, at least that is what the Saudis are willing to admit to). Thus the refining of oil will gets its people employment.

A second advantage is that once it can produce most of its own oil Arabia does NOT have to worry about shipping the oil to one country to process and than transship to a third country. To this can be added the Advantage that the Refined product can be shipped almost everywhere, thus putting refining in Countries that import oil (Like the US) out of business for lack of Crude. Either way the Saudis makes sure their retain control of their oil almost to the time it goes into your gas tank.

Given the Saudi's Economy I suspect Unemployment and a desire to retain control of the oil till it ends up in the tanks of the ultimate consumer is the reason Saudi Arabia wants to increase its Refining Capacity.

For more on Arabia and oil see:
http://www.eia.doe.gov/emeu/cabs/saudi.html

[VegasWolf]

13. Haven't they said this same thing like clockwork every Valentines Day,

and just like clockwork the media dutifully repeats it.