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Saudi Arabia to double its oil refining capacity
AFP ^ | February 15, 2006

Posted on 02/14/2006 8:37:24 PM PST by jmc1969

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.

Nawaf Obaid, managing director of Saudi National Security Assessment Project, a government consultancy, told an oil conference in September the kingdom has earmarked $20 billion for the upgrade project.

The program would boost the capacity of eight refineries Riyadh owns inside and outside Saudi Arabia within five years, besides building new refineries locally and abroad, he said.

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.

Saudi Arabia currently has a refining capacity of around 3 million bpd through facilities both at home and overseas, of which around 2 million bpd are produced in the kingdom.

The Gulf kingdom plans to hike its output capacity from the current 11 million bpd to 12.5 million bpd in 2009.


TOPICS: Foreign Affairs; Front Page News
KEYWORDS: energy; oil; saudiarabia
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To: toomanylaws
I confer with people with known in FACTS in the oil industry. And I am not in the oil industry.

Have you ever read a Texaco Oil year-end statement? My wife wrote two pages of TIMM. It was signed by Peter Bijur, former CEO. She has presented proposals to the Board of Directors of Texaco.

Shame on me, I'm just a lowly steel guy that bought, supplied and managed 16,000 tons of steel supplying General Electric Large Steam Turbine, Electric Boat, and Sperry.

Further, I have seen the explorations on the Western Slope of CO. Oil shale.

BTW, ever heard of the Tartan platform in the North Sea? My wife was managing millions of dollars managing the reconstruction of that platform which fed five fuelling station in Europe.

If you want to duel, do your homework. I lived this/these scenarios for 30 years when my wife was IN THE BUSINESS.

41 posted on 02/15/2006 5:08:07 PM PST by Cobra64
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To: toomanylaws
Buy the way...

No sir. I think I will exit with the word, "bye."

42 posted on 02/15/2006 5:10:30 PM PST by Cobra64
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To: Cobra64
Well it takes energy to transform corn into a fuel combustion product that will ignite a combustion engine. Some folks need to take a high school physics class.

I read somewhere that farm equipment needed to grow the corn uses almost as much gas as the ethanol fuel produced.
Not too efficient.

43 posted on 02/15/2006 7:16:50 PM PST by Jorge
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To: Dog Gone
This story is about doubling gasoline production, not doubling oil production. Instead of exporting oil to us, they can export gasoline and make the refining profit as well.

Bingo.

US refineries are operating at nearly 100%, and any event, such as a major hurricane, will result in gasoline shortages.

Even though I believe Peak Oil is about to hit, it still makes sense to build more refineries to protect against refinery disruptions.

44 posted on 02/15/2006 7:29:47 PM PST by Mulder (“The spirit of resistance is so valuable, that I wish it to be always kept alive" Thomas Jefferson)
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To: Certain_Doom
But, but, PEAK OIL!

Peak Oil is for real and will likely be the defining event of a generation (or more).

According to the Department of Energy, the Saudis need to produce 13.6 million barrels a day to meet demand in 2010. This article says they plan to produce 12.5 million bpd by 2010, but I would be very surprised if they can pull it off. Their big fields are 60 years old and likely about to peak. Even if they do accomplish it, they are still 1 million bpd short. Where is that oil going to come from?

The DOE says they need to produce 19 million bpd by 2020 to meet global demand. According to Matt Simmons and others, there is no way they have the capacity for that.

45 posted on 02/15/2006 7:38:12 PM PST by Mulder (“The spirit of resistance is so valuable, that I wish it to be always kept alive" Thomas Jefferson)
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To: Mulder

Saudi crude oil exports to us will actually decline if they ship it as gasoline instead.

It's not a bad development. The barriers to building new refineries enacted by lefties and their cronies are real. The increasing demand for gasoline has to be met somehow.


46 posted on 02/15/2006 7:43:05 PM PST by Dog Gone
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To: MJY1288
All the talk about Ethanol is what brought this about

Saying you are going to produce more oil and actually doing it are two different things. Especially when all of your large fields are 60 years old, and haven't been independently audited in over 25 years.

In the short term, this announcement will probably drive prices down. That is simply noise, however.

I fear that the longer term impact will be that alternative energy efforts will be reduced since "the Saudis can meet demand" will be the new mantra. At least until they come up short in 2009. By then, it will be much more painful to transition to other energy sources.

47 posted on 02/15/2006 7:43:19 PM PST by Mulder (“The spirit of resistance is so valuable, that I wish it to be always kept alive" Thomas Jefferson)
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To: Dog Gone
Saudi crude oil exports to us will actually decline if they ship it as gasoline instead

But total petroleoum exports will remain the same (or increase) when you add the refined and unrefined products. Plus, the Saudis will charge us extra to refine it.

It's not a bad development. The barriers to building new refineries enacted by lefties and their cronies are real. The increasing demand for gasoline has to be met somehow.

Short term, an increase in global refining capacity is good for the US, but it is foolish to forego building more domestic refineries. One bad thing that might come about as a result of this is that plans for domestic refineries are delayed even more, since "the Saudis will refine it, so we don't need to worry about it".

48 posted on 02/15/2006 7:50:48 PM PST by Mulder (“The spirit of resistance is so valuable, that I wish it to be always kept alive" Thomas Jefferson)
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To: thackney
This is taking the oil they normally sell and refining it. Then the refined product is sold at a higher value.

All the more evidence for Peak Oil.

Crude oil production is probably 10-100 times more profitable than refining. If you have plenty of crude oil, it makes no sense to refine it (beyond whatever amount your nation uses), since the resources invested for refining would be much better spent in getting the oil out of the ground.

On the other hand, if your crude production is peaking, then it makes sense to diversify into less profitable ventures such as refining.

49 posted on 02/15/2006 7:56:02 PM PST by Mulder (“The spirit of resistance is so valuable, that I wish it to be always kept alive" Thomas Jefferson)
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To: Mulder

We've been importing most of our gasoline imports from Venezuela over the past few years. Given the situation down there, I think having multiple sources of imported gasoline is an excellent idea.

We definitely need more refineries domestically, too. It was one thing to depend on imported crude. But now we could have all the crude in the world and still not have the domestic ability to turn it into enough gasoline for our needs.


50 posted on 02/15/2006 8:03:09 PM PST by Dog Gone
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To: toomanylaws
Do you suppose you could be a little biased towards oil companies? First it was neighbors now it's your wife.

Nope. I'm a dope.

51 posted on 02/15/2006 8:18:02 PM PST by Cobra64
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To: Mulder

That is not more evidence for peak oil. By your explanation, companies only invest in the most profitable industries. That the other industries exist and continue to grow shows that concept to be false. Why does any other company build and expand refineries anywhere else in the world?


52 posted on 02/15/2006 8:20:58 PM PST by thackney (life is fragile, handle with prayer)
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To: jmc1969

Let's see...GWB talks about a crash program to free us from Middle Eastern oil in 20 years, and SA suddenly finds a way to double their production capacity--totally in the face of all the current "peak oil" mania.

Can I be forgiven for seeing a little strategery here?


53 posted on 02/15/2006 8:24:43 PM PST by denydenydeny ("Osama... made the mistake of confusing media conventional wisdom with reality" (Mark Steyn))
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To: Dog Gone
Saudi crude oil exports to us will actually decline if they ship it as gasoline instead.

Exactly. They are proposing to increase gasoline production by 3 million barrels in five years but are only planning to increase crude production by 1.5 million. Crude exports from Saudi will decline by more than 1.5 million barrels if this pans out.

They need to do this as most countries don't want to build refineries for the increasingly sour crude coming from Saudi. Saudi's crude is sour and getting more sour and they need to insure that they have a place to refine it.

If the Saudi's were smart, they would work on LNG instead. There is a lot of wasted natural gas in the Saudi fields because there is no local market nor a way to transport.

54 posted on 02/15/2006 8:26:15 PM PST by larrysav
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To: denydenydeny
double their production capacity

They are not doubling their production of oil, only doubling the smaller amount they currently refine.

55 posted on 02/15/2006 8:46:35 PM PST by thackney (life is fragile, handle with prayer)
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To: jmc1969
Gotta watch this closely.

If they can really bring on line all that new light, sweet crude then Simmons and the peak oil people were wrong. If all they can get is the heavy sour stuff, or, even worse, they can't meet their goals of increased production, then we're all in deep, deep trouble.

Talk of alternative fuels is not the same as the real thing. Talk is cheap.

56 posted on 02/15/2006 8:57:52 PM PST by liberallarry
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To: larrysav
If the Saudi's were smart, they would work on LNG instead.

They are, or at least they're thinking about it. There have been ongoing negotiations with several global oil companies regarding a joint venture, although last I heard, the Saudis were still demanding too much of a cut to make it economical for the major oil companies.

57 posted on 02/16/2006 8:15:25 AM PST by Dog Gone
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