Saudi Refineries

abarrelfullabarrelfull wrote on 16 Mar 2010 08:03
Tags: refinery saudi-arabia saudi-aramco

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The impact on the European refining sector of some of the developments in the Middle East is a big uncertainty. What is certain is that there will be some kind of impact. New refineries are either in contruction or planned, and the European market is one of the focuses of these investments.

This week we have an important development.

Saudi Aramco and Royal Dutch Shell’s joint-venture Sasref refinery has started commercial production at an ultra-low sulphur diesel unit, targeting European markets.

A shortage of low sulphur diesel in Europe, led to very strong margins in recent years, and has protected the margins somewhat in the downturn. Another 100,000 barrels per day coming into the market will create price pressure, even if only marginally.

This one is for the future.

Saudi Aramco and Total SA may start a joint refinery in Saudi Arabia earlier than forecast.

A few months here or there is immaterial, yet with the current stress that the sector is under, even minor news gains importance. Also for a sector used to seeing all projects miss their deadlines and their budgets, the idea that competitors might actually get to market ahead of schedule is a little scary.

Asia is also a major potential customer for the project.

The refinery will market most of its gasoline in Saudi Arabia or the Middle East, with jet fuel going to Asia and Europe. Liquid petroleum gas and chemicals will be sold to Asia, Shaheen was cited as saying.

At least the pain is to be shared.

There are a large number of Middle East Refinery Projects in the pipeline. I plan to take a closer look at them in a future blog.


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