- The Washington Times - Sunday, May 28, 2006

DUBAI, United Arab Emirates (AP) — Oil companies and other investors are spending a collective $100 billion on new oil refineries that could alleviate a bottleneck in refining capacity and eventually translate into a small cut in the price of gasoline, a top project financier said here yesterday.

Will Rathvon, global head of project finance for Standard Chartered Bank, said that more than 30 new or expanded refineries will come on stream in the next decade, adding at least 6.5 million barrels a day of badly needed capacity to global fuel markets.

“Right now refining is maxed out,” Mr. Rathvon said on the sidelines of a Middle East energy conference. “At this point, the shutdown of a single refinery — even for maintenance — can trigger an increase in gasoline prices.”

Refineries in fuel-thirsty Asia are operating at a frantic 95 percent capacity, Mr. Rathvon said. In North America and Europe, refineries also are running at more than 90 percent capacity, he said.

“Running that tight has put prices up,” Mr. Rathvon told the Associated Press.

Oil officials such as Saudi Oil Minister Ali al-Naimi have blamed a lack of refining capacity for stubbornly high fuel prices.

New refining capacity of at least 6.5 million barrels per day over the next decade could shave $2 or $3 from the price of a barrel of crude oil. Americans might see a 5 cent to 10 cent reduction in the price of a gallon of gasoline, Mr. Rathvon said.

But most new refineries are being built outside the United States — mainly because of opposition to refinery construction by local communities near proposed sites. That means Americans may pay as much as $1 per barrel more to import a larger proportion of their fuel as finished gasoline and diesel fuel in coming years, Mr. Rathvon said.

About 60 percent of new refinery construction is in Asia and the Middle East. Three major refinery deals have been announced in Saudi Arabia this month alone.

They include a $4.3 billion refinery complex in Rabigh on Saudi Arabia’s Red Sea coast being developed by Japan’s Sumitomo Chemical Co. and Saudi Arabian Oil Co.

Also in May, Saudi Aramco and ConocoPhillips signed a $6 billion agreement to build a 400,000-barrel-a-day oil refinery in the country’s Red Sea city of Yanbu. State-owned Saudi Aramco and French oil company Total SA agreed to build a 400,000-barrel-a-day refinery in the eastern Saudi city of Jubail on the Persian Gulf.

India’s Reliance Petroleum Ltd. will spend $6 billion to finance a refinery at Jamnagar to produce jet fuel, gas and diesel.

A $5 billion, 320,000-barrel-a-day refinery expansion is planned for China’s Fujian province, with investments from Saudi Aramco and Exxon Mobil Corp.

Saudi Aramco is one of the biggest investors in the global refining push. The state-run firm has said that it plans to spend $50 billion in the next five years on refineries in the country, as well as in China, Indonesia, South Korea and the United States.

Copyright © 2018 The Washington Times, LLC. Click here for reprint permission.

The Washington Times Comment Policy

The Washington Times welcomes your comments on Spot.im, our third-party provider. Please read our Comment Policy before commenting.


Click to Read More and View Comments

Click to Hide