Oil company boosting refining capacity due to increasing domestic demand.
Saudi Aramco plans to proceed with plans to boost its 3.7 million barrel a day refining capacity by 1.5 million barrels a day even as it struggles to find joint venture partners to help build the plants.
In a speech posted on the company website, Khalid al Falih, chief executive officer, said: “The development of three new, grassroots refineries at Jubail, Yanbu and Jazan and the large expansion at Port Arthur in the US will raise this refining capacity by about 1.5 million barrels per day."
ConocoPhillips, the third largest US oil company, backed out of the proposed Yanbu refinery joint venture with Aramco, saying on April 21 it plans to reduce its focus on downstream projects.
The kingdom failed earlier this year to identify suitable bids for the planned Jazan refinery, and commissioned state owned Aramco to build and finance the facility alone.
Aramco is boosting refining capacity to meet domestic demand and benefit from exporting high value oil products.
Saudi Arabia, holder of the world’s largest oil reserves and the biggest producer in the 12 member Organization of Petroleum Exporting Countries, imports refined products such as gasoline because it lacks capacity to meet demand at home.
The refineries at Yanbu, Jazan and Jubail will each have a capacity of 400,000 barrels a day. Jubail, on the Persian Gulf coast, is being built by Aramco and Total SA at a cost of more than $12 billion, Salem Shaheen, CEO of Saudi Aramco Total Refining and Petrochemical Co, said last month.
Saudi Arabia’s energy demand will rise to 8.3 million barrels a day of oil equivalent in 2028 from 3.4 million barrels in 2009 unless the kingdom becomes more efficient, al Falih said.
The increase in demand may be cut by 50 percent through improved energy efficiency, he said.
He added: “If no efficiency improvements are achieved and the business is as usual, the oil availability for exports is likely to decline to less than 7 million barrels per day by 2028, a fall of 3 million barrels per day, while the global demand for our oil will continue to rise."
The kingdom produced 8.2 million barrels a day of oil last month, according to Bloomberg data. Aramco’s production capacity is 12 million barrels a day, and the company has spare capacity of around 4 million barrels a day, al Falih said.
Aramco plans to produce 15.5 billion cubic feet a day of natural gas by 2015, up 52 percent from 10.2 billion currently, he said.
The additions comprise 1 billion cubic feet a day at the Khursaniyah field this year, 1.8 billion cubic feet a day at Karan in stages from 2011 to 2013, and 2.5 billion cubic feet a day at the Wasit gas plant in 2014, he said.
Natural gas liquids will increase about 28 percent from 937,000 barrels a day in 2010 to about 1.2 million barrels a day in 2015, al Falih said.