Tuesday 19 March 2024
 
»
 
»
Story

Saudi Arabia's new refineries will limit the need for imports

Saudi's summer oil demand for power generation to climb

SINGAPORE, May 27, 2015

Saudi Arabia's demand for oil products could increase by up to 20 per cent this summer from last year as soaring temperatures stoke demand for power generation, but new refineries will limit the need for imports, traders and analysts said.
 
Requirements for fuel oil, the cheapest form of oil to burn to generate electricity, could climb by up to 20 per cent this year, although demand for pricier gasoil is likely to be unchanged from last year.
 
Imports of the middle distillate into the country are expected to hit a record low this year due to new refineries' ability to meet demand, potentially curbing Asian gasoil margins as this removes a major outlet for barrels, traders said.
 
Saudi Arabia has added 800,000 barrels per day (bpd) of new capacity in its refineries of Yanbu and Jubail over the past two years, reducing its reliance on imports and stalling term talks with long-term supplier Reliance Industries.
 
 
The country became a net annual diesel exporter last year for the first time since 2007, according to data published by the Joint Organisations Data Initiative (Jodi).
 
This summer, Saudi Aramco's trading arm probably bought about 300,000 to 1.5 million barrels of gasoil for May delivery in the spot market, down from the 5.7 million barrels imported in May last year, traders said.
 
For June, the company probably bought 1.2 to 2.5 million barrels of gasoil, down from 9.06 million in June 2014, they added.
 
Saudi Arabia's Yasref refinery, a joint venture between Saudi Aramco and China's Sinopec, started production last year and is currently running at more than 80 per cent of capacity, which has helped reduce imports, traders said.
 
Demand for fuel oil for power generation during summer in Saudi Arabia – which accounts for nearly a third of the region's requirements - is expected to reach between 420,000 and 430,000 bpd from 300,000 to 410,000 bpd last year, analysts from Boston-based ESAI Energy and Vienna-based Energy Aspects said.
 
Saudi Arabia exports most of its fuel oil surpluses, which are expected to decline by around 30 per cent to less than 100,000 bpd on average this year.
 
Despite the increases in refining capacity, fuel oil output had not increased, given refineries' ability to convert fuel oil into more valuable products, Megan Wu from ESAI Energy said.
 
"This is significant because fuel oil demand in the region is rising," Wu added. --Reuters
 



Tags: Saudi Arabia | summer | Imports | oil products |

More Energy, Oil & Gas Stories

calendarCalendar of Events

Ads