Saudi Aramco plans to carry out scheduled maintenance at its 300,000 barrel per day Sasref refinery at Jubail, a joint venture with Royal Dutch Shell, in October for more than a month, potentially impacting Saudi Arabia’s oil production during the period, industry sources told Energy Intelligence.
The Sasref refinery processes Arab Light crude and is scheduled for a complete shutdown for maintenance in October for 35 days, industry sources say.
In December, Energy Intelligence reported that Aramco would be starting maintenance at its 400,000 bpd Yanbu export refinery from March for 55 days. The maintenance work at Yanbu is part of the reason why the kingdom’s overall production is expected to drop to 9.8 mbpd next month—below its 10.3 mbpd target.
Trading sources say the kingdom will have a shortage of refined products for its domestic market in March due to the Yanbu shutdown and has been placing import orders.
Overall, Energy Intelligence understands that Aramco’s 2019 business plan is based on an oil price of around $50 per barrel and calls for average production of around 10.8 mbpd for the year, which indicates that the kingdom might raise its output in the second half of the year.
Benchmark Brent oil prices have recovered from under $50/bbl in late December to around $67/bbl recently, largely on the back of the Opec-led supply cuts.
Saudi analysts have suggested that the kingdom needs a minimum oil price of around $75/bbl with exports at around 7.5 mbpd as a break-even point for the federal budget. With US sanctions pressing both Iran and Venezuela, some traders believe that the kingdom might need to increase its output by the second half of the year to compensate for the losses in these Opec countries.
Saudi Energy Minister Khalid Al Falih says recently that the oil market might reach balance in April, when ministers from an Opec/non-Opec producer alliance are due to meet to determine the fate of a 1.2 mbpd production cut deal that expires on June 30.
It’s still not entirely clear what the group will decide on for the second half of the year.
