- Saudi Aramco refinery is joint venture with China's Sinopec
- Diesel from Yasref may put pressure on European refiners
Yasref oil refinery, a joint venture between Saudi Arabian Oil Co. and China Petroleum & Chemical Corp., is processing crude at full capacity of 400,000 barrels a day amid improving refining margins for the plant, its chief executive officer said on Tuesday.
Yasref’s refining margins have improved since August even as the global industry faces a significant capacity surplus, he said in an interview in Riyadh.
“I think we suffered back in August quite a dip in refining margin, but now we see them turning around,” Alshammari said in the interview. “Last month, we averaged much much better than August, and this month the numbers are much better. It’s still a tight-margin market.”
Middle Eastern oil producers such as Saudi Arabia have been expanding refining capacity to reduce costly imports of fuel needed to meet rising domestic demand and to produce cleaner-burning diesel that fetches premium prices in other markets such as Europe. Regional fuel imports are mainly gasoline and diesel, while exports from the Middle East include jet fuel, fuel oil and naphtha.
Kuwait Petroleum Corp. forecasts global refining capacity to increase by 3 million to 4 million barrels a day by 2020, with China, India and the Middle East accounting for most of the growth, Haitham Al-Ghais, the state-run company’s manager of marketing research, said Tuesday at a conference in Dubai. Kuwait plans to start operating the 615,000 barrel-a-day Al-Zour refinery by 2020, boosting the sheikhdom’s processing capacity to 1.4 million barrels a day from 936,000 currently, Al-Ghais said.
Yasref has been processing crude at full capacity of 400,000 barrels a day since July and currently produces 265,000 barrels a day of low-sulfur diesel and 91,000 barrels a day of 91-octane and 95-octane gasoline, Alshammari said at a conference in Riyadh. Yasref’s main international markets are Europe, Asia and Egypt, he said.
“Our target market for diesel is mainly Europe because we produce ultra-low-sulfur diesel that’s the cleanest diesel you can get,” he said. The plant’s output may put pressure on refining margins in Europe but probably not in Asia, Alshammari said.