SaudiAramco

Aramcos
DownstreamStrategies
TheChangingRoleofNationalOilCompanies
inInternationalEnergyMarkets
BakerInstitute,RiceUniversity,Houston,TX
March12,2007

YoshikazuKobayashi
Researcher,TheInstituteofEnergyEconomics,Japan

SaudiAramcosdownstreaminvestments
SaudiAramcoplanssignificantexpansionsindomestic

andoverseasdownstreamcapacities.
Mainrefiningprojects
Location

Addedcapacity

Partner

Status

Fujian,China

+160kb/d

ExxonMobil,Sinopec Underconstruction

Seosan,ROK

+480kb/d

SOil

Yanbu,KSA

+400kb/d

Jubail,KSA

Startup
200809

BODapproved

2010

ConocoPhillips

MOUsigned

2011

+400kb/d

Total

MOUsigned

2011

PortArthur,US

+325kb/d

Shell

Planned

2010

Qingdao,China

+200kb/d

Sinopec,Localgovt

Planned

2012

Refining/petrochemicalintegrationprojects
Location

Plants

Partner

Status

Startup

Rabigh,KSA

Ethanecracker,HOFCC

Sumitomo Underconstruction

2008

RasTanura,KSA

Ethanecracker,Aromatics

Dow

2012

MOUsigned

Whyinvestindownstream?:Quantityreason
Upstreamcapacityexpansioncreatesadditionalmarketing

needsofcrudeoil.
n
n

SaudiAramcohastofindoutletstotaketheaddedbarrels.
Suchadditionaloutletsshouldhaveagrowingmarketsnearby
and/orhastoovercomeaNIMBYissue.
millionb/d
12.0

SaudiArabias
crudeoilforexport
(Estimate)
Note:

Allfiguresarepresenters
estimatebasedonpublicly
availableinformation.

10.0

~2011
11.0

2.02.5 11.011.5 2.03.0

2.0
9.0

8.0
6.0
4.0
2.0
0.0
Production Domestic Crudeoil
capacity refining
tobe
capacity marketed
asof2005

Net
Crudeoil
production tobe
capacity marketed
additions asof2011

Planned
refining
capacity
additions

Whyinvestindownstream?:Qualityreason
TheaveragequalityofSaudiArabianoilwillbecomelighter

until2009butwillbecomeheavierafterward.
n

Howtosellunpopularheavierandsourergradesisabigchallenge
forSaudiAramco.
SaudiAramconeedstosecurerefiningcapacitiesthatcanprocess
heaviergradesinordertoavoiddeepdiscountstosuchgrades.

Sharesofeach
gradesproduction
capacity(Estimate)
Note:

ASL
AXL

100%
80%

AL

Allfiguresarepresenters 60%
estimatebasedonpublicly
availableinformation.
40%
(ASL:ArabSuperLight,
AXL:ArabExtraLight,AL:
ArabLight,AM:Arab
Medium,AH:ArabHeavy)

20%

AM
AH

0%
2005

2009

2011

Implications
SaudiAramcoasadownstreammajor
n

Itsinfluenceovertheworldoilmarketincreasesasitbecomesa
significantproductsupplierbeyondacrudeoilsupplier.

Economicsofnewdownstreaminvestments
n

Profitabilityissubjecttocostinflationandlightheavypricespread
butmaybeenhancedifcombinedwithapetrochemicalproject.

Impactsontheworldproductmarket
n

AlargeportionofproductsofnewrefineriesinSaudiArabiawillbe
exportedtoEuropebecauseoftheirhighmiddledistillateyield.
ThetargetedmarketofnewAsianrefineriesisChinabutthe
KoreanprojectmayexportproductstoUSwestcoast,too.

Solutionstoanincreaseinheaviergradeproduction
n

Apackagedsolutionforheavyoilresourcesisapotentialitemfor
futurecollaborationwithSaudiAramco.