"Saudi Aramco"… Three Takeoffs in 2006
Walid Khadduri Al-Hayat - 27/03/06//
Last week, "Saudi Aramco" concluded with its Japanese partner, "Sumitomo Chemical," financing contracts to initiate the "PETRORabigh" project in Rabigh, one of the world's largest export-oriented refinery and petrochemical complexes, then opened its "Haradh-3" Project for oil production. In truth, these two projects form an integral part of a wide scale expansion and development campaign in all respects according to the international petroleum standards. They also reflect three basic fields where Aramco can excel in the upcoming period.
First, the production capacity will be boosted from its current 11-million-barrels-per-day to 12.50 million in 2009. Second, the foreign companies will start drilling in an attempt to find free gas in the Empty Quarter (Rub al Khali). Finally, in cooperation with international companies, the refineries and petrochemicals are likely to undergo a large expansion process in the Kingdom and aboard.
Such expansions take up great importance given the huge investments estimated at tens of billions of dollars and the diversified trends (oil, gas, refineries, petrochemical plants). In the same vein, the Kingdom is committed to expanding its oil productive capacity to meet the globally growing demand for oil and petroleum products and to supply gas for the mounting local consumption, especially in electricity and petrochemicals. Remarkably, the adopted administrative system perpetuates and protects the huge and diverse activities the company, a cornerstone of the global economy, undertakes.
As a matter of fact, "Haradh-3" Project, inaugurated last week, is expected to supply an additional 300 thousand b/d of Arabian light oil. Indeed, major oil companies constantly explore and develop new fields, with Aramco increasing its output in 2004 by 800 thousand b/d in the two fields of Qatif and Abu Sa'fah. Still, last week's momentous event heralds an increase in Saudi Arabia's current productive capacity from 11 million b/d to 12.50 million in 2009. Even more, the "Kharsaniah" field is projected to produce 500 thousand b/d of light oil in 2007, while, following the expansion of the fields in "Shaybah" and the central region, some other 300 thousand b/d will be produced in 2008. Likewise, the light oil output in "Kharis" field is expected to increase by 1.2 million b/d in 2009. On the other hand, there are other projects to extract natural gas fluids in addition to producing more ethanol used as a petrochemical feed.
In truth, once expanded, the productive capacity can meet the continuously growing demand for oil and compensate for the declining production capacity in old fields. Besides, such expansion comes as the best response to those who, by embracing the "peak oil" theory, claim that the Kingdom of Saudi Arabia, with its current reserves, can no longer increase its productive capacity. It is also a response to all those who doubt in the will and intention of the producing countries with abound reserves to spur their capacity, when need be, in line with their projects to boost the global demand.
In addition, international companies began last month drilling in the hope of finding free (non-associated) gas north and south the Empty Quarter (Rub al Khali). As usual, the exploration and prospecting projects generally take 5 to 10 years from negotiations to production. As proof, after three years of negotiations, Aramco concluded in 2003 gas agreements with Shell and Total then other agreements in 2004 to launch joint ventures with the Russian "Lukoil," the Chinese "Sinopec," and with a consortium grouping the Italian "ENI," and the Spanish "Repsol YPF."
In truth, after having recently focused on seismic survey and result analysis, these companies moved on to drilling, a process likely to last for years before any gas of commercial quantities is found.
The Saudi gas industry has passed through three basic stages. First, the associated gas was exploited. Then Aramco discovered the non-associated gas before it was being later explored by international companies in partnership with Aramco. The gas produced during these parallel stages is generally added to the Kingdom's gas industry to help it meet the mounting local demand in power plants and the petrochemical industry.
As concerns refining and petrochemicals, Aramco has simultaneously built, expanded, and developed many plants in an attempt to satisfy the global demand for petroleum and petrochemical products and to avoid the current shortage in the consuming countries, which has increased oil prices. Based on this policy, plants were built inside the Kingdom and abroad, while the initially existing ones were either expanded or developed, most often in partnership with renowned international companies to meet the market needs in the West and East.
With respect to refining, Aramco seeks, in partnership with foreign companies, to build new refineries in "Yanbu'" (Western Coast) and Jubail (Eastern Coast), with a capacity of 400 thousand b/d each. In addition, the "PETRORabigh" project will transform Rabigh Refinery into a huge petrochemical plant. Moreover, Aramco intends to develop Yanbu' Refinery and expand its capacity by 100 thousand b/d, then boost the production capacity of Ras Tanura Refinery.
Abroad, Aramco strives in cooperation with its partner Shell in Motiva Company to expand one of its refineries in the Gulf of Mexico to 300 thousand b/d. It has equally forged a partnership with the Chinese "Sinopec" and "Exxon Mobil" to expand "Fujian" Refinery adding to it petrochemical facilities. Let alone expanding a refinery in South Korea in cooperation with the local partner there.
All these projects combined will spur Aramco's total capacity with the decade's end by some 50%, up to 6 million b/d.
In comparison, each major oil company, like Exxon Mobil, Total, Chevron Texaco, Shell, and BP, produces between 2 to 3 million barrels of oil per day. Meanwhile, Aramco is increasing its capacity to 12.50 million b/d. In addition to gas production and refining capacity, this difference alone can give us an idea of the company's size and role at the international level.
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