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article imageMiddle East refinery expansion plans experiencing complications

By David Goehst     Aug 3, 2015 in Environment
Cairo - Expansion to oil refining capacities hit an unforeseen snag, halting an already expensive importing chain responsible for gasoline production. Partially responsible for these snags is an increase in domestic energy needs amidst excruciating heat.
Excruciating Middle Eastern temperatures have thwarted forward progress in expanding oil refining capacities, which could cause a rippling effect in oil exports and gasoline prices in the Western Hemisphere. Several petroleum-producing nations have circled back to domestic production due to rising temperatures in areas like Saudi Arabia, Kuwait, United Arab Emirates and Oman.
A planned refinery complex in Jizan, a Red Sea port of Saudi Arabia, will not open next year as planned due to contractual issues between subcontractors. That particular facility would have the ability to produce 400,000 barrels per day and would significantly increase export revenue. Sheikh Saud Bin Saqr Al Qasimi, ruler of the United Arab Emirate of RAK, indicated another 200,000 barrel refinery would be put off two years for unknown reasons. The location of the UAE refinery is tentatively Fujairah, located on the Oman Gulf.
Yet another refinery in Kuwait, which would produce the sixth-largest volume in the world at roughly 615,000 barrels, has been pushed well into 2019 due to political disagreements. This project setback, despite 3.48 billion dinar in contracts, stems from minister of oil opposition. All told, these delays are symptomatic of an overall Middle East slowdown in oil production. Domestic energy usage has skyrocketed in the grueling July month, and is expected to continue into August.
Should plans remain intact, Saudi would become the world’s leading crude oil exporter by the end of 2017. Two recently added refineries, known as Yasref and Satorp, increased Saudi’s domestic refining capabilities to 5.4 million barrels per day, which is nearly double that of what it produced in the beginning of 2000.
UAE, through its Abu Dhabi National Oil Co, started an 830,000 barrel operation which doubled its capacity, but that production amount isn’t expected to increase until parliamentary opposition subsides and expansion continues.
Conversely, Iran had seen their oil production halved since 2012, but should increase their production by over 1 million barrels per day as OPEC sanctions have forced production to subside well under the 4 million per day norm. Those sanctions are set to be lifted later this month, according to one Iranian official.
More about Middle East, Oil refinery, Saudi arabia
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