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Aramco mulling future of refinery

The installation may be around for a few more years as a new refinery is being built in Jizan for the Western Region

July 2015

State oil giant Saudi Aramco is considering whether to close its 90,000 barrel per day crude oil refinery in Jeddah after several years because of age and environmental concerns, Reuters quoting industry sources said.


The refinery, which started operating in 1967, serves much of the country’s western region and its closure would increase demand at other Saudi facilities. It produces liquefied petroleum gas, gasoline, diesel, asphalt and jet fuel, and exports naphtha.


Aramco was originally considering whether to close it in 2018 but now looks likely to postpone the closure to as late as 2022 because of growing domestic demand for oil products and since construction of a new refinery at Jizan, also on the Red Sea coast, has been delayed, said one source.


Another said Jeddah’s growth had left the refinery in the middle of the city, which created environmental issues that contributed to a likely decision to close it.


The sources declined to be named because they were not authorised to talk to media. In response to questions by Reuters, Aramco said that it had no information to release at this time.


Aramco has said it plans to bring the Jizan refinery online by 2018. However, industry sources said this was now expected to be delayed by at least two years for several reasons, including technical problems with building infrastructure in the sea.


A Singapore-based trader said Saudi Arabia’s new Jubail and Yanbu refineries, operated by Aramco, France’s Total and China’s Sinopec, would likely supply gasoline output lost by the eventual closure of the Jeddah facility.


He said the impact on the international naphtha market would not be big as the refinery exported only about 40,000 tonnes per month.


The United Arab Emirates’ Ruwais refinery is to raise yearly naphtha exports to over 10 million tonnes from the current 7.5 million tonnes, traders have said.


The Jeddah refinery is next to, and supplies feedstock and power to, a base oil refinery run by Luberef, a joint venture between Aramco and Jadwa Industrial Investment Group. Luberef makes a total of around 550,000 tonnes per year of oil lubricants from its two refineries at Jeddah and Yanbu.

 




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