The Oil and Gas Sector in the Kingdom of Saudi - US

The Oil and Gas Sector
in the Kingdom of Saudi Arabia
U.S.-SAUDI ARABIAN BUSINESS COUNCIL
Strengthening
Bilateral Business
Relations through
U.S.-Saudi Arabian Business Council
Trade and Investment
LETTER FROM THE PRESIDENT
Dear Reader,
The U.S.-Saudi Arabian Business Council (USSABC) is pleased to offer you this summary of our recently
released Oil and Gas Sector in the Kingdom of Saudi Arabia report. Based on extensive research
gathered from Saudi Government documents, media agencies, and studies by non-governmental
organizations, this report presents a concise yet thorough overview of Saudi Arabia’s oil and gas industry,
including billions of dollars worth of investment opportunities.
The report provides an analysis of the most recent statistics and ongoing trends in the industry. It
describes the sector’s regulatory structure and major developments. More importantly, these topics are
discussed within the framework of private and foreign investment opportunities. A current list of key
contacts for government ministries and leading Saudi companies in the industry is also included.
The 2009 Oil and Gas Sector report is a great resource for companies interested in learning more about
Saudi Arabia’s growing hydrocarbon industry. Combined with the Council’s other business development
services, the report provides companies with a valuable “first step” toward breaking into the Saudi market,
which boasts a combined $1.4 trillion worth of investment opportunities through 2020.
To obtain a complete copy of the report, please see the back cover for additional information.
Sincerely,
Edward Burton
President and Managing Director
U.S.-Saudi Arabian Business Council
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U.S. - Saudi Arabian Business Council
Strengthening Bilateral Business Relations through Trade and Investment
TABLE OF CONTENTS
Executive Summary
SWOT Analysis – Oil & Gas
Industry Structure
Oil Reserves
Oil Production & Consumption
Oil Exports
Development Plans
Khursaniyah Field Development
Manifa Field Development
Khurais Increment Program
Shaybah Increment Program
Wafra Increment Program
Other Field Developments
Refining Industry
Refining Production
Ras Tanura Refinery
SAMREF
Rabigh Refinery
SASREF
Yanbu
Riyadh Refinery
International Refineries
Refining Exports
Development Plans
Rabigh Refining and Petrochemical Company (Petro-Rabigh)
Ras Tanura Refining and Petrochemical Project
Yanbu Refinery Upgrade
SAMREF Refinery Upgrade
SATORP
Saudi Aramco/ConocoPhilips Refinery
Jizan Refinery
Refining Facilities Worldwide
Natural Gas Overview
Natural Gas Reserves
Natural Gas Production & Consumption
Natural Gas Development Plans
Hawiyah Gas Development Project
Haradh Gas Development Project
Karan Development Program
Khursaniyah Gas Program
Khurais Gas Development Program
Yanbu Gas Plant Development
Storage Facilities
Transportation and Distribution
Terminals
Investment Opportunities
Key Contacts
Saudi Arabian Government
Saudi Aramco
USSABC Saudi Members in the Oil & Gas Sector
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U.S. - Saudi Arabian Business Council
Strengthening Bilateral Business Relations through Trade and Investment
SAUDI ARABIAN ENERGY FACTS
Minister of Petroleum and Mineral Resources: H.E. Eng. Ali bin Ibrahim Al-Naimi
Government Organizations: The Ministry of Petroleum and Mineral Resources and the Supreme Council
for Petroleum and Mineral Affairs sets policies and governs the Saudi oil industry, including crude
production, refining, and marketing undertaken by Saudi Aramco.
Major Foreign Oil Company Involvement: AOC, BP, Chevron, ConocoPhillips, ExxonMobil, Occidental,
Repsol, Royal Dutch/Shell, Texaco, Total, Lukoil, Sinopec
Proven Oil Reserves (2008 est.): 264.2 billion barrels
Crude Oil Production average per day (2007): 8.82 million bpd
Oil Production Capacity (2008 est.): 10.5 - 11 million bpd (65 to 70 percent is light gravity)
Major Oil Fields: Ghawar (estimated reserves of 70 billion barrels), Safaniya (35 billion barrels), Khurais (27
billion barrels) Najd, Abqaiq, Berri, Manifa, Zuluf, Shaybah, Abu Saafa, Khursaniyah
Crude Oil Refining Capacity: 4.1 million bpd (2.1 million bpd domestic and 2 million bpd foreign)
Major Refineries in the Kingdom:
Refinery
Ras Tanura
Rabigh
Yanbu
Riyadh
Jeddah
Saudi Aramco Mobil Refinery Company
Ltd.(SAMREF)
Saudi Aramco Shell Refinery Company (SASREF)
Jubail refinery (operational in 2013)
Yanbu refinery (operational in 2013)
Owner
Saudi Aramco
Saudi Aramco
Saudi Aramco
Saudi Aramco
Saudi Aramco
Saudi Aramco/
ExxonMobil
Saudi Aramco/
Shell
Saudi Aramco/Total
Saudi Aramco/
ConocoPhillips
Capacity
550,000 bpd
400,000 bpd
235,000 bpd
120,000 bpd
85,000 bpd
400,000 bpd
305,000 bpd
400,000 bpd
400,000 bpd
Natural Gas Reserves (2008 est.): 257.8 trillion cubic feet (tcf)
Natural Gas production average per day (2007): 7.99 billion cubic feet
Natural Gas Liquids production average per day (2007): 1.1 million barrels
Major Pipelines (capacity): Petroline (5 million barrels per day), Iraq Pipeline across Saudi Arabia (1.65
million bpd, closed in 1990), Tapline (0.5 million bpd, closed in 1984), Abqaiq-Yanbu NGL line (0.29 million
bpd)
Major Oil Terminals: Ras Tanura (6 million bpd capacity), Yanbu (5 million bpd capacity), Ras al-Ju'aymah
(3 - 3.6 million bpd capacity); Jizan; Ras al-Khafji; Rabigh; Zuluf; Jubail.
Tankers (Saudi Aramco/Vela): 19 very large crude carriers (VLCCs), 4 ultra large crude carriers (ULCCs).
Daewoo Shipbuilding and Marine Engineering will deliver four VLCCs in 2009. The National Shipping
Company of Saudi Arabia (NSCSA) has 9 VLCCs, with a total 27 vessels, including 14 chemical tankers and
four container vessels.
________________________________________________________________________
U.S. - Saudi Arabian Business Council
Strengthening Bilateral Business Relations through Trade and Investment
OVERVIEW OF THE
OIL AND GAS SECTOR IN SAUDI ARABIA
For decades, Saudi Arabia’s economic development has been driven by the strong success its oil industry. Saudi
Arabia is the world’s largest producer and exporter of petroleum liquids and is currently the world’s second largest
crude oil producer behind Russia. Saudi Arabia’s economy remains heavily dependent on oil and petroleum-related
industries, including petrochemicals and petroleum refining. According to the International Monetary Fund, oil export
revenues account for around 90 percent of total Saudi export earnings and above 40 percent of the country's gross
domestic product (GDP). Meanwhile, Saudi Arabia is also the Middle East’s fastest growing consumer of energy, due
in part to its rapidly growing population and large-scale development projects. Domestic consumption has also been
stimulated by historically high oil prices and large government fuel subsidies.
Saudi Arabia's long-term goal is to further develop its lighter crude reserves
including the Shaybah Field, located in the Empty Quarter (Rub al-Khali) area
bordering the United Arab Emirates, the Abu Hadriya, Fadhili and Khursaniyah
(AFK) fields and the giant Khurais Field. In 2005, the Saudi Ministry of
Petroleum and Mineral Resources announced an ambitious goal of increasing
capacity to 12.5 million barrels per day (bpd) by the end of 2009. While
production levels dipped slightly in the late 2008, the government remains
confident that it will achieve its production target. The Saudi government has
even given mention to production targets following 2009, including an increase
to 15 million bpd after 2011.
To reach these ambitious production targets and to meet the growing demand
for energy around the world, the country will invest billions of dollars to boost
production capacity by developing new projects and upgrading existing ones.
While the global recession that began in 2008 has presented new economic
challenges, Saudi Arabia is pushing forward with many of its development
projects in the oil and gas sector, as it is a strategic component of not only the
Saudi economy but also the global economy. Saudi Aramco has extended
deadlines for EPC bids in a number of other projects, including the export
refineries at Jubail and Yanbu, in order to encourage more competitive bidding
that reflects declining construction costs. In March 2009, the Saudi Arabian Ministry of Petroleum and Mineral
Resources announced plans to spend approximately $60 billion on upstream and downstream operations through
2014. The budget includes allocations for 144 projects, including 17 mega-projects (those valued at more than $1
billion), 30 large projects, 17 medium-sized projects, and 80 small schemes.
Increased spending means more business opportunities for private firms. In 2002, the Supreme Economic Council
(SEC) approved a privatization strategy directed at advancing Saudi Arabia’s privatization drive and expanding the
role of the private sector and foreign investors in the Kingdom, including petroleum and energy support services.
Further, Saudi Aramco has announced that industry expansion and new production targets will be met largely through
increased private investment.
The U.S. continues to occupy the position of Saudi Arabia’s largest trading partner. Saudis maintain a preference for
American products and services. In fact, the U.S. Commercial Service estimates that U.S. companies possess a 50percent share of the market for engineered products. Within the oil and gas sector, there is a constant demand for
experienced companies and quality products in areas such as engineering, design, construction, and consulting.
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U.S. - Saudi Arabian Business Council
Strengthening Bilateral Business Relations through Trade and Investment
SELECT USSABC MEMBERS ENGAGED IN THE OIL & GAS SECTOR
Aal Taher Group
www.aaltaher.com
E.A. Juffali & Brothers
www.eajb.com
Abdulmohsen M. Aldrees & Sons. Co.
www.dreesgroup.com
El Seif Group
www.el-seif.com.sa
A.H. Al-Zamil Group of Companies
www.zamil.com
M.H. Sherbiny for Commerce
www.sherbinyforcommerce.com
Ahmad Hamad Algosaibi & Bros.
www.ahalgosaibi.com
Rezayat Co. Ltd.
www.rezayat-commercial.com
Al Dhahry Group
www.al-dhahry-group.com
Saudi Aramco
www.saudiaramco.com
Alkhorayef Commercial Company
www.alkhorayef.com
Tamimi Group of Companies
www.al-tamimi.com
Al-Qahtani & Sons Group of Companies
www.ahqsons.com
Yusuf Bin Ahmed Kanoo
www.kanoogroup.com
Dabbagh Group Holding Company
www.dabbagh-group.com
Xenel Industries Limited
www.xenel.com
U.S.-SAUDI ARABIAN BUSINESS COUNCIL PRODUCTS & SERVICES
Taking full advantage of the experience and expertise of Business Council staff in both the Washington, D.C.
metropolitan area and Riyadh, the USSABC offers a wide range of tailored products and services offers a full menu of
business development, networking, and communications and information services to Members and Non-Members.
Products and services include:
Business Development Services
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Market Insight & Analysis
Competition Analysis
Market Entry Strategy
Partner Identification & Introduction
Company Profiles & Contact Information
In-Country Partnership Screening & Analysis
In-Country Appointments & Logistical Support
Trade Show Support Services
Trade Missions to and from Saudi Arabia
Advisory Services
Networking Services
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Annual Business Conference/Plenary Meeting
Business Round Tables/Issue Luncheons
Business Dialogue Sessions
Pre-dinner or reception meeting with
dignitaries
Communications & Information Services
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Newsletter
A Business Guide to Saudi Arabia
Industry Sector Reports
Sponsorship Opportunities
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U.S. - Saudi Arabian Business Council
Strengthening Bilateral Business Relations through Trade and Investment
U.S.-SAUDI ARABIAN BUSINESS COUNCIL MEMBERSHIP BENEFITS
$5,000 Platinum Member
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Priority notice of special events
Priority Table Seating for CEO/Chairman at selected events
CEO receives direct access to dignitaries at events
Pre-dinner or reception meeting with dignitaries
Special invitations to round table executive discussions
Unlimited Saudi visa sponsorships
Limit of ten copies of Business Guide, limit of ten sector reports per year; additional copies at a discount
Ten free hours for research requests; additional hours at a discount
Ten free hours for identifying partners or distributors; additional hours at a discount
Corporate logo displayed on the Council’s website with link to company site
$2,500 Gold Member
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Priority notice of special events
Special invitations to round table executive discussions
Limit of five Saudi visa sponsorships per year
Limit of five copies of Business Guide, limit of five sector reports per year; additional copies at a discount
Five free hours for research requests; additional hours at a discount
Five free hours for identifying partners or distributors; additional hours at a discount
$1,000 Silver Member
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Invitations to special events
Limit of three Saudi visa sponsorships per year
Limit of three copies of Business Guide, limit of three sector reports per year; additional copies at a discount
Three free hours for research requests; additional hours at a discount per year
Three free hours for identifying partners or distributors; additional hours at a discount
ABOUT THE U.S.-SAUDI ARABIAN BUSINESS COUNCIL
The U.S.-Saudi Arabian Business Council (USSABC) was established in December 1993 to improve the mutual
knowledge and understanding between the private sectors of the United States and Saudi Arabia, and to promote
and facilitate increased trade and investment between the two countries. Our mission is to foster, develop, and
expand the strategic business alliance between the U.S. and Saudi Arabia by promoting trade and investment
between the two countries and contributing to the accurate depiction of the business environment within the Kingdom
of Saudi Arabia. The USSABC also seeks to create awareness of the opportunities for small and medium sized
businesses in both countries.
The USSABC has built a membership base of leading companies in the U.S. and Saudi Arabia, enjoys strong
government support from both countries, and interacts regularly with officials to promote issues of mutual interest to
U.S. and Saudi firms. The Business Council serves as the central source of information and assistance for
companies that want to pursue specific business activities in the Kingdom of Saudi Arabia. Furthermore, the
USSABC organizes conferences and seminars in both countries to promote dialogue between the two private
sectors, as well as trade and investment missions that provide networking opportunities for U.S. and Saudi
companies.
The USSABC provides a wide variety of business development services to Council members and non-members
alike. These services include market entry strategy, partner identification and introduction, in-country appointments
and logistical support, and the organization of trade missions to and from Saudi Arabia. The USSABC also provides
up-to-date information on market opportunities in Saudi Arabia through a number of publications, including A
Business Guide to Saudi Arabia, a bi-monthly newsletter, the U.S.-Saudi Business Brief, and special reports on Saudi
Arabian industry sectors. For more information on Council membership or services, please visit www.us-sabc.org.
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U.S. - Saudi Arabian Business Council
Strengthening Bilateral Business Relations through Trade and Investment
United States Office
8081 Wolftrap Road
Suite 300
Vienna, VA 22182
Telephone: 703-962-9300
Fax: 703-204-0332
Email: [email protected]
Saudi Arabia Office
54 Al Ahsa Street, Al-Malaz
P.O. Box 27582
Riyadh 11427
Telephone: 966-1-474-2555 / 474-3555
Fax: 966-1-476-7167 / 476-2697
Email: [email protected]
Website
www.us-sabc.org