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Saudi Arabia to finance three CPEC projects

Hon Indus Pakistan,

I am honoured by your post. Right or wrong my analysis follows.

For some reason, my countrymen are in the habit of getting carried away over the slightest piece of good news. Recently everyone was euphoric with the news that Exxon was on the verge of discovering oil deposits larger than Kuwaiti reserves near the Iran border. In fact, Exxon has not even started drilling and their concession is far away from Iran.
My objections, in this case, are based on two facts. First & foremost is the port restriction.

Current restrictions at Gwadar port is 12.5-meter draft which can handle up to 50K DWT bulk carries. For the record, the draft of VLCC, standard export vessel for crude, is 19 to 20 meters. Suez Canal is also 20.1-meter deep but due to its deep channel width, only vessels of max 77.5 mete Beam (width) and 160K DWT are allowed.

Smallest vessels commonly used for transporting crude (mostly in Europe) are called AFRAMAX, these have between 100 to 120 K Cargo capacity and about 14-meter draft. This is because standard crude cargo lots exported are of 500K to 600K bbl size. Thus port of Gwadar with 12.5 draft restriction would need to build 'Offshore' mooring platforms before it can receive or load large vessels. Currently, Gwadar is unsuitable for becoming a mega oil city.

The second objection is the already available surplus refining capacity of Saudi Arabia. For the benefit of the fellow members, here is the list of the refinery currently operating in Saudi Arabia.

Refineries wholly owned d by Saudi Aramco

- Jeddah oil refinery- 77 K bpd now converted to petroleum products storage.

- Yanbu oil refinery - 400 K bpd Completed in 2016 (some mention its capacity at 245K bbl per day)

- Ras Tanura Oil refinery is the oldest refineries built in 1947 at 50 k bpd. It was initially owned by Arabian American Oil Company (Aramco) - a JV between Standard Oil New Jersey–now Exxon, Standard Oil California and Texaco – now Chevron). In 1973 Saudi acquired 25% share and in 1980 nationalized the company and changed the name to Saudi Aramco). After 1980, Aramco was nationalised and became Saudi Aramco. The current capacity of Ras Tanura refinery is 550K bpd and is the largest refinery ofSaudi Arabia.

- Riyadh refinery- 120K bpd. Commissioned in1981.

- Jazan Oil refinery of 400 K bpd is scheduled to complete early 2109.

Joint venture refineries

- Petro Rabigh - 400 K bpd. Owned 37.5% by Saudi Aramco, 37.5% by Sumitomo Chemicals, and 25% by the Saudi public. Completed 2008. Phase II scheduled to complete this year.

- SASREF- Jubail. 305 K bpd built in 1985. Shareholders are Shell & Saudi Aramco.

- SATORP – Jubail 440K bpd. Completed in 2014. Jointly owned by TOTAL & Saudi Aramco.


- YASREF: Yanbu 400K bpd started full operation in 2016. Shareholders are Saudi Aramco & Sinopec.

SATORP & YASREF are wholly export refineries. ExxonMobil & Shell uplift 50% of the production form SAMREF & SAREF and sell to whomsoever they desire. Armco also exports part of Ras Tanura refinery output.


Saudi Arabia already has huge products surplus available for export.

Quote

Crude output remained under the nation’s assigned quota, but the Kingdom increased diesel and gasoline and other fuel shipments by 27 per cent to 1.912 million barrels per day in January,

Unquote

https://oilprice.com/Latest-Energy-...rabia-Boosts-Diesel-And-Gasoline-Exports.html


Therefore in my humble opinion, Gawdar Mega Oil City is nothing more than “Wishful” thinking. There is already a gas pipeline in existence from Turkmenistan to Western China. Kazakhstan has 30-billion bbl of oil reserves and transportation from Kazakhstan to China by pipeline will be far less expensive than hauling petroleum products from all the way to China by road.

China first showed interest Gwadar in 2002, it took 13 years (2015) for CPEC agreement to be signed. Let us wait and see how the Saudi interest bears fruit.
 
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Why would you build underwater pipeline from Iranian oil/gas fields to Pakistan which are probably three times more expensive compared to land pipe?

Does this make iota of sense?


MEVAOZH.png

Restive Baluchistan/Balochistan.

Just thinking aloud.

Cheers, Doc
 
Restive Baluchistan/Balochistan.

Just thinking aloud.

Cheers, Doc

Or, could it be that Indian proxies won't have to be pulled back from Baluchistan and India could continue to fund terrorism and send more Yadhavs because the pipeline will not go overland? Win-win for India.

We should charge them 100x the transit of overland route just for that possibility alone. They are focused to hurt us and taking advantage of our preference for peaceful resolution over their initiated terrorism whether its by RAW directly or via Afghans, Talibans and ISIS.
 
For some reason, my countrymen are in the habit of getting carried away over the slightest piece of good news.
Immature nation I am afraid. Maturity is not about knowing everything. But about being aware of limits of your knowledge and restricting your absolute comments to what you know. I knew as regards anything oil industry related your the man. And your posts clearly makes 100% sense. The bottom line in your post is "oil megacity" is a pipedream.

Ps.. And thanks for that reply.

Restive Baluchistan/Balochistan.
No. Talking of 'pipedreams' this oil pipeline under the sea is another mmm "pipedream" to no where. Makes no economic sense whatsoever.
 
Hon Indus Pakistan,

I am honoured by your post. Right or wrong my analysis follows.

For some reason, my countrymen are in the habit of getting carried away over the slightest piece of good news. Recently everyone was euphoric with the news that Exxon was on the verge of discovering oil deposits larger than Kuwaiti reserves near the Iran border. In fact, Exxon has not even started drilling and their concession is far away from Iran.
My objections, in this case, are based on two facts. First & foremost is the port restriction.

Current restrictions at Gwadar port is 12.5-meter draft which can handle up to 50K DWT bulk carries. For the record, the draft of VLCC, standard export vessel for crude, is 19 to 20 meters. Suez Canal is also 20.1-meter deep but due to its deep channel width, only vessels of max 77.5 mete Beam (width) and 160K DWT are allowed.

Smallest vessels commonly used for transporting crude (mostly in Europe) are called AFRAMAX, these have between 100 to 120 K Cargo capacity and about 14-meter draft. This is because standard crude cargo lots exported are of 500K to 600K bbl size. Thus port of Gwadar with 12.5 draft restriction would need to build 'Offshore' mooring platforms before it can receive or load large vessels. Currently, Gwadar is unsuitable for becoming a mega oil city.

The second objection is the already available surplus refining capacity of Saudi Arabia. For the benefit of the fellow members, here is the list of the refinery currently operating in Saudi Arabia.

Refineries wholly owned d by Saudi Aramco

- Jeddah oil refinery- 77 K bpd now converted to petroleum products storage.

- Yanbu oil refinery - 400 K bpd Completed in 2016 (some mention its capacity at 245K bbl per day)

- Ras Tanura Oil refinery is the oldest refineries built in 1947 at 50 k bpd. It was initially owned by Arabian American Oil Company (Aramco) - a JV between Standard Oil New Jersey–now Exxon, Standard Oil California and Texaco – now Chevron). In 1973 Saudi acquired 25% share and in 1980 nationalized the company and changed the name to Saudi Aramco). After 1980, Aramco was nationalised and became Saudi Aramco. The current capacity of Ras Tanura refinery is 550K bpd and is the largest refinery ofSaudi Arabia.

- Riyadh refinery- 120K bpd. Commissioned in1981.

- Jazan Oil refinery of 400 K bpd is scheduled to complete early 2109.

Joint venture refineries

- Petro Rabigh - 400 K bpd. Owned 37.5% by Saudi Aramco, 37.5% by Sumitomo Chemicals, and 25% by the Saudi public. Completed 2008. Phase II scheduled to complete this year.

- SASREF- Jubail. 305 K bpd built in 1985. Shareholders are Shell & Saudi Aramco.

- SATORP – Jubail 440K bpd. Completed in 2014. Jointly owned by TOTAL & Saudi Aramco.


- YASREF: Yanbu 400K bpd started full operation in 2016. Shareholders are Saudi Aramco & Sinopec.

SATORP & YASREF are wholly export refineries. ExxonMobil & Shell uplift 50% of the production form SAMREF & SAREF and sell to whomsoever they desire. Armco also exports part of Ras Tanura refinery output.


Saudi Arabia already has huge products surplus available for export.

Quote

Crude output remained under the nation’s assigned quota, but the Kingdom increased diesel and gasoline and other fuel shipments by 27 per cent to 1.912 million barrels per day in January,

Unquote

https://oilprice.com/Latest-Energy-...rabia-Boosts-Diesel-And-Gasoline-Exports.html


Therefore in my humble opinion, Gawdar Mega Oil City is nothing more than “Wishful” thinking. There is already a gas pipeline in existence from Turkmenistan to Western China. Kazakhstan has 30-bbl bbl of oil reserves and transportation from Kazakhstan to China by pipeline will be far less expensive than hauling petroleum products from all the way to China by road.

China first showed interest Gwadar in 2002, it took 13 years (2015) for CPEC agreement to be signed. Let wait and see how the Saudi interest bears fruit.


 
Or, could it be that Indian proxies won't have to be pulled back from Baluchistan and India could continue to fund terrorism and send more Yadhavs because the pipeline will not go overland? Win-win for India.

We should charge them 100x the transit of overland route just for that possibility alone. They are focused to hurt us and taking advantage of our preference for peaceful resolution over their initiated terrorism whether its by RAW directly or via Afghans, Talibans and ISIS.

Are you saying there are Indian proxies operating in Iran's Baluchistan region?

You don't realize that both regions have been warring for Independence since before "India" was created right?

Cheers, Doc
 
Saudi team arrives in Pakistan, may sign four MoUs

Khaleeq KianiUpdated October 01, 2018
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Prime Minister Imran Khan meets Crown Prince Mohammed bin Salman on his visit to Saudi Arabia earlier this month. — Photo/File

ISLAMABAD: Pakistan and Saudi Arabia are expected to sign four memoranda of understanding (MoUs) for oil and mineral sector investment and trade cooperation that would ultimately extend the Chinese Belt and Road Initiative (BRI) from Gwadar to Africa through Oman and Riyadh.

The MoUs are planned to be signed on the conclusion of a four-day visit of Saudi delegation that arrived here on Sunday, sources said. The move will enable Islamabad to secure supply of petroleum products and crude oil on deferred payments and Riyadh will be looking into setting up of an oil refinery at Gwadar, invest in a copper and gold project in Balochistan’s Reko Diq and LNG-based power projects in Punjab.

Led by the Minister for Energy, Industry and Mineral Resources, the visiting delegation would also have members from the Saudi national oil firm, Aramco, the sources said. Besides authorities of various ministries, state-run Pakistan State Oil (PSO) would be the only Pakistani firm to be part of a direct dialogue, the sources added.

Islamabad to get oil supply on deferred payments and Riyadh may set up an oil refinery, invest in mineral and energy projects

They said Riyadh had been looking for diversifying its trade routes, including for oil supplies because of its tension with Qatar and Iran.

ARTICLE CONTINUES AFTER AD
It is considering two options — about 40km bridge or tunnel — to link Gwadar with Muscat and Oman at the mouth of Strait of Hormuz on one side and connect its industrial city of Jazan with Eritrea’s Massawa region through a 440km tunnel across the Red Sea. The land route between Muscat and Jazan port is around 2200km.

The sources said the meetings would be held on Monday between the officials of Saudi and Pakistani companies under the aegis of the ministries of energy & mineral resources and industries & production for a 110,000 barrel per day (BPD) refinery at Gwadar and investment in copper mines of Reko Diq and phosphate supply.

The sources said the two sides would also discuss the supply of refined products and crude oil imports on deferred payments followed by another session for proposed privatisation of two LNG-based power plants set up by federal funding in Punjab the same day (Monday).

They said the teams would then travel to Gwadar port and Reko Diq on Tuesday for field visits. The two sides would hold final discussions on Wednesday on proposed MoUs on the Gwadar refinery, Reko Diq, two power plants and oil supplies — both refined and crude.

The sources said Pakistan had requested Saudi Arabia for a long-term arrangement for oil supplies on delayed payments – one of the most crucial avenues for balance of payments support.

Pakistan is importing about 110,000 barrels per day (BPD) crude oil from Saudi Arabia, out of its total import of about 350,000 BPD.

Riyadh provided deferred payment facility for oil supplies initially for two years soon after Pakistan went nuclear in 1998 and then kept extending the facility for another three years.

The Gwadar refinery proposed to be set up by Saudi Arabia could be used for supply of refined products to Pakistani market or for export.

All the projects would take time to materialise, said a finance ministry official but hinted that investments flowing into Pakistan could support declining foreign exchange reserves.

The discussions are taking place at a time when a staff mission of the IMF is simultaneously holding Article IV consultations with the authorities that could become the basis for a future IMF programme if the government agreed. The support from Saudi Arabia would be one of the key factors to determine if Pakistan should go for the IMF programme.

Pakistan’s oil import bill amounted to $14.5 billion during the financial year ending on June 30, 2018, and could go up to $18bn this year with higher prices and increased consumption.

Published in Dawn, October 1st, 2018
 
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