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 Arz News |
| Sohar Saudi to halt gasoline imports with low-octane fuel (11 October 2006) |
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Saudi Arabia, where high crude prices have caused oil demand to soar, may be able to temporarily stop importing over 500,000 barrels a month of gasoline when it starts selling a lower-octane grade at retail pumps from January. State oil firm Saudi Aramco this summer announced plans to begin offering 91-octane gasoline at domestic pumps for 20 percent less than 95-RON, its current staple, since most modern cars can run normally on the lower-quality grade. One industry source said the kingdom expected more than half its drivers to switch fuels immediately, changing the balance for a country that consumes about 300,000 barrels per day (bpd) of the motor fuel. "If there are no refinery outages, Saudi will be sufficient to meet domestic demand," an industry source familiar with the move told Reuters. "It will go from net short to balanced." The 91-RON fuel is easier to produce and requires fewer octane-boosting components, which are difficult to make with Saudi Arabia's mainly heavier, sour crudes. The industry source said 60-70 percent of drivers are expected to use the cheaper grade. Analysts say production may increase by 5-10 percent, or up to 30,000 bpd, thanks in part to blending some of the kingdom's massive naphtha surplus into the gasoline pool. Output already got a fillip earlier this year after Aramco revamped its 35,000-bpd platformer at its Yanbu refinery into a 40,000-bpd-plus continuous catalyst regeneration unit (CCR). That upgrade caused months-long hitches at the facility, forcing Aramco into a summer spate of gasoline imports that boosted prices and reinforced the view of the Middle East as an increasingly key piece of the global oil product trading puzzle. Although it is the world's biggest exporter of crude oil, Saudi Arabia has struggled to keep up with rising domestic demand for certain fuels amid a petrodollar-driven economic boom and a young, wealthy car-addicted citizenry used to cheap gasoline. From next year, Aramco will sell 91-RON gasoline at 0.60 halalas ($0.16) per litre, while continuing to offer its existing 95-octane grade at 75 halalas. It says on its Web site (www.9195.com.sa) that about 85 percent of cars in the kingdom should be able to run on the lower-octane fuel. But its self-sufficiency may be short lived if demand grows at 15,000 bpd or more a year, at least until nearly 1 million bpd of new refining capacity comes online around 2010. "The reduction of product prices, notably gasoline at the retail level, should keep demand growth this year for mogas at 6 percent or perhaps higher," said Al Troner of Houston-based consultancy Asia Pacific Energy Consulting.- Reuters |
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