Saudi Sweet Oil Supply Too Low to Offset Libya, al-Husseini Says
Saudi Arabia, the world’s biggest crude exporter, won’t be able to produce enough low-sulfur blends to replace lost Libyan output for refiners in Europe, said Sadad al-Husseini, a former Saudi Aramco executive.
The country doesn’t have enough Arab Super Light to create sufficient amounts of low-sulfur, or sweet, oil similar to Libya’s grades, al-Husseini, Aramco’s former executive vice president for exploration and development, said today by e-mail.
“Although the sulfur in the new Saudi blends is low, many Libyan crude types are lower still, I believe as low as 0.07 percent sulfur,” said al-Husseini, who runs Husseini Energy, an energy consultant.
Saudi Oil Minister Ali al-Naimi said on March 8 that Aramco had developed light, sweet blends with specifications matching crude normally supplied by fellow OPEC member Libya, where production has dwindled because of an armed rebellion. Libyan exports slumped to 450,000 barrels a day in March compared with 1.6 million barrels in January, before the conflict began, according to the International Energy Agency.
One of the new blends has an API gravity of 41 degrees and a sulfur content of 0.7 percent while the other has an API gravity of 44 degrees and a sulfur content of 0.5 percent, the IEA said March 15.
“The equivalent to the ultra low sulfur Libyan crude is available in Central Arabia and is called Arab Super Light but the volumes are not enough to replace Libya’s production,” al- Husseini said.
Total, OMV, BP
Saudi Aramco can produce up to 100,000 barrels a day of Arab Super Light with an API of 40 degrees and higher from the Nuayyim field, according to company data. Oil is considered light if the API gravity is 34 degrees or higher, 31 to 33 is medium and 30 or below is heavy. Crude is considered sweet if sulfur content is less than 0.5 percent.
Saudi Aramco sold as much as 4 million barrels of the new blends after struggling to find buyers until last week. The light blends were sold to Total SA (FP), BP Plc, and OMV AG as European refiners seek alternatives to easily refined Libyan crude withheld from the market.
Saudi Aramco sold a 1 million-barrel cargo of one of the new blends to Total for delivery in Rotterdam.
The French refiner is replacing Libyan crude at its fuel- processing plants mainly with North Sea oil, Jean-Jacques Mosconi, the company’s head of strategy and economic intelligence, said May 9.
“Total should have modernized its refineries to add sulfur recovery from its diesel and gasoline processing,” al-Husseini said. “No new technology is needed but they were talking about shutting down refineries instead of expanding their complexity just a few months ago.”
To contact the reporter on this story: Wael Mahdi in Khobar at wmahdi@bloomberg.net
To contact the editor responsible for this story: Stephen Voss at sev@bloomberg.net
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