Contact us | +971 4 3635663
Sponsored by   Mudabala
 
 
BETA
Loading Loading ...
Sun, 08 Nov 2009 | 04:21 GMT
 

Aramco Confirms Having Brought 500,000-b/d Khursaniyah Field Onstream

Press Release
 
 
04 September 2008
The 500,000-b/d light crude Khursaniyah field has been confirmed by Saudi AramcoSaudi AramcoLoading... to be onstream, without further specification of whether its production supplied the bulk of July's production increase.

Global Insight Perspective
Significance
The Khursaniyah field represents the largest single increment in Saudi production capacity coming onstream in years and lifts the Kingdom's overall production capacity to around 11.8 million b/d.

Implications Having originally been delayed since December 2007 because of global material shortages suffered in the construction of its associated gas-processing plant, early testing of the field began some months ago. The perceived failure of Saudi Arabia to react to rapid crude price increases in the first and second quarters of this year, not increasing production until July, did, however, raise the suspicion that early Khursaniyah production was used when the increases finally came.

Outlook Having brought the field onstream, Saudi AramcoSaudi AramcoLoading...'s light crude production capacity has been significantly boosted and eventual future production cuts are more likely to affect its heavy oil production. If it should be revealed that Khursaniyah was used for the bulk of the recently added export volumes, Saudi Arabia's critics would continue to spread scepticism over whether its swing production capacity is real or not.

Taps are On
The Khursaniyah field "is operational and producing crude", a Saudi AramcoSaudi AramcoLoading... source confirmed to Reuters, adding that "its production rates are dependent on [the company's] monthly production targets for each facility". The 500,000-b/d light crude field is the single largest field to be brought onstream in the Kingdom for in many years, and will do a lot to alleviate fears of shortages of light oil similar to those prevailing in the world markets during much of the first half this year. Its oil is not only easier to refine into high-value products such as gasoline (petrol), but is also possible to run in most of the world's refineries--such as, for instance, many of China's ageing small plants--while the heavier crudes, of which the Kingdom also has large reserves, can only be run in a smaller number of relatively advanced facilities worldwide.

The Khursaniyah field development project has, however, suffered heavy delays and was initially scheduled to come onstream in December 2007. Problems with the construction of the associated gas treatment plant--in particular, shortages of material--were the main reason for the project slippage, demonstrating that Saudi AramcoSaudi AramcoLoading..., despite its outstanding track record, was not immune to the global shortages within the oil and gas construction industry and among its suppliers. Saudi Arabia's no-flare policy made it impossible to commence oil production despite the fact that oil production facilities were apparently in place on time, as that would have resulted in a need to burn off associated gas.

Crutch or Cushion?
According to the original schedule, the field was planned to reach full production in late January or early February, giving it a relatively short ramp-up period. While the delay was confirmed and the target date was moved first to mid-April and then to August, Saudi Arabia found itself under heavy international pressure to increase production in order to contain the spiralling crude price. Having officially maintained that its actual production capacity was 11.3 million b/d, while production was maintained at a level of 9.2 million b/d, the Kingdom's ability to deliver came further into question, especially from a growing doubt in the West over the veracity of the Gulf states' reserve statistics and the Saudi capability to sustainably increase production above its level of output at the time.

When Saudi Arabia finally agreed to unilaterally increase production to prevent the price of oil rising further, its pledge--in two tranches--of an additional total 500,000 b/d of light oil in July seemed to coincide with a possible early ramp-up of delayed Khursaniyah production, something upon which the Kingdom's critics rapidly seized. With some reports having said that early test production flowed from Khursaniyah as early as April, Saudi AramcoSaudi AramcoLoading... could well have been pushing for the last part of construction so as to bring production onstream in July. AramcoAramcoLoading...'s reason for not publicly proclaiming that Khursaniyah was onstream would have been, according to this theory, what its critics were claiming--that Saudi Arabia had been unable to react to the rising world market price earlier, because it was virtually producing at full capacity, with its "spare cushion" in effect non-existent. Claiming that the July increment came from other fields would, in this scenario, have allowed Saudi AramcoSaudi AramcoLoading... to keep up the appearance of still sitting on spare capacity, which is so important for its world market role as a swing producer, for its OPEC stature and--ultimately--for its international political standing. By not acting more transparently in this and other issues, Saudi AramcoSaudi AramcoLoading... has not been able to dispel this suspicion and yesterday's confirmation, saying only that the field is already producing, has not erased the question mark either.

Outlook and Implications
Saudi AramcoSaudi AramcoLoading... could have done more to dispel the worst conspiracy theories about its actual sustainable output capacity. On the other hand, by commenting on them, some of the worst would also gain a certain credibility, which is one of the reasons the company lets these issues pass. Another reason is that a certain level of uncertainty ultimately works in Saudi Arabia's favour in its role as a kind of global oil market-maker.

Before the most questioning of theories are believed, however, one should bear in mind several other--and natural--constraints that have plagued Saudi Arabia particularly in recent months. With the long-held plan being that Khursaniyah would come onstream in December 2007, Saudi AramcoSaudi AramcoLoading... quite naturally saw an opportunity to execute some scheduled maintenance shut-ins elsewhere, which had proved impossible to do otherwise because of the tight market, particularly for light oil, over much of the past year. As Khursaniyah slipped behind schedule, however, the global shortages made the shifting of these now-scheduled maintenance projects impossible, with Saudi Arabia actually probably suffering a reduced light oil output capacity during the first half of the year, which it could not officially acknowledge without putting further upward pressure on the oil price.

Saudi Arabia's spare light oil production capacity is likely to have been limited, especially compared with how much more heavy oil production the Kingdom could switch on. However, the absolute tightness in the market might have been caused more by the temporary maintenance operations, which would have been covered had Khursaniyah not been delayed. Nevertheless, the Kingdom's place in the focus of world crude markets has made it necessary to tightly manage the information emanating from the country about its capacities. The final confirmation that Khursaniyah now is onstream, together with the general easing in what was until recently a very tight oil market, is now likely to further soothe fears of temporary shortages significantly. (By Global Insight)

- Ends -

For more information, please contact:
Samuel Ciszuk
Middle East energy
Tel: 44 20 7452 5076

© Press Release 2008

 
 
 
Community Comments (0) - Comment on this article
The opinions of the authors expressed herein do not necessarily state or reflect Zawya. Read our Comment Policy.
 
 
 
Loading ...
 
Report Abuse
Loading ...
 
 
Loading ...
Zawya Comment Policy:
 
  1. Zawya encourages you to add a comment to this discussion. You agree that when you add content to this discussion your comments will not:
    1.1   Contain any material which is libelous or defamatory of any person, is obscene, offensive, hateful or inflammatory or causes damage to the reputation of any person or organisation.
    1.2   Promote sexually explicit material, violence, discrimination based on race, sex, religion, nationality, disability, sexual orientation or age or any illegal activity.
    1.3   Be made in breach of any legal duty owed to a third party, such as a contractual duty or a duty of confidence.
    1.4   Be threatening, abuse or invade another's privacy, or cause annoyance, inconvenience or needless anxiety.
    1.5   Be used to impersonate any person, to misrepresent your identity or affiliation with any person, or be likely to deceive any person.
    1.6   Give the impression that they represent Zawya.
    1.7   Advocate, promote or assist any unlawful act such as (by way of example only) copyright infringement or computer misuse.
  2. The content posted on www.zawya.com is created by members of the public. The views expressed are theirs and unless specifically stated are not those of Zawya. Zawya reserves the right to review all comments prior to posting and edit or delete any contribution, but Zawya is not responsible for and can not be held liable for any content posted by members of the public on www.zawya.com.
  3. Zawya is not responsible for the availability or content of any third party sites that are accessible through www.zawya.com. Any links to third party websites from www.zawya.com do not amount to any endorsement of that site by Zawya and any use of that site by you is at your own risk.
  4. By submitting your comment, you hereby give Zawya the right, but not the obligation, to post, air, edit, exhibit, telecast, webcast, re-use, publish, reproduce, use, license, print, distribute or otherwise use your comments worldwide, in perpetuity.
 
 
 
 
 
 
 
Post Your Tender Notices for FREE
(No Sign-in Required)
 
 
Oil and Gas Tenders Due Date
Off Plot Construction Contract for Amal Steam Surface Facilities 07Feb10
SUPPLY OF VIGIL ANTI-SLIP STAIR NOSING FOR STAIRCASES 16Nov09
TURNAROUND MAINT WORKS AT FAHAHIL PLANTS WITHIN DUKHN FIELDS 22Nov09
Pre-qualification for EMC Contract 31Dec09
Foodstuff Supply - KUWAIT PETROLEUM CORPORATION 08Nov09
IMPLEMENTATION OF MISC. PLANT CHANGE REQUESTS(PCRS) at HALUL 15Nov09
Maintenance of Photocopiers and Accessories - KUWAIT PETROLEUM CORPORATION 06Dec09
First Project EF/1713 : Construction of Oil and Gas Pipelines at Mina Al Ahmadi To Subiya and Doha Power Stations Second Project EF/1760 : Construction of Pumping Station and Oil and Gas Pipelines at Mina Al Ahmadi To Al Zoor and Shuaiba Power Stations 07Feb10
Engineering, Supply and Construction Works for 4th Petroleum Liquid Gas at Mina Ahmadi Refinery 13Dec09
Shah Gas Field - Main Process Package 31Dec09
Supply of Pipe Casings “5” and Digging Pipes 3-1/2, 3-1/2 – “5” Casing 22Nov09
Prequalification for Off-Plot Delivery Contract (ODC) 31Dec09
PROVISION OF FUEL & MAINT OF FUEL OUTLETS (Tentative Bid Due Date and award date) 28Jan10
Construction of Water Treatment Facilities - Phase 3 (On-Shore) 14Dec09
CALL-OFF CONT FOR MACH., BAL. & METAL SPRAY AT QP VARI. LOCS 22Nov09
Oracle Program Licensing - KUWAIT PETROLEUM CORPORATION 01Dec09
Mabruk Oil Operations (MOO) invites interested local and international companies (or their representatives) specialized in providing Drilling Fluids Services to submit to MOO their completed Pre-qualification documents, for evaluation and preparation of a bidders list, as MOO intends shortly to issue a Call for Tender for Drilling Fluids Services for its Offshore Al-Jurf Oil Field. 31Dec09
Installation, Operation & Maintenance of Integrated Security System for all company facilities consisting of Two Parts, Part A: Installation and Part B: Provision of Support, Operation & Maintenance 27Nov09
PRICE AGREEMENT FOR ELECTRICAL CABLES. 20Dec09
PROVISION OF HARBOUR TUGS, PILOT BOATS AND MOORING GANGS 15Nov09
 »  More Tenders
 
 
 
Community Buzz

Stories

Companies

Most viewed companies by Community in the last 24 hrs
Company Name Country Industry
Consolidated Contractors Company Overseas Construction and Design
Saudi Binladin Group Saudi Arabia Construction and Design
Saudi Electricity Company Saudi Arabia Electric Utilities
Saudi Telecom Saudi Arabia Telecommunications Services
Sharjah Electricity and Water Authority UAE Electric Utilities
Hyundai Engineering and Construction Company - Saudi Arabia Saudi Arabia Construction and Design
Al Azizia Panda United Company Saudi Arabia General Retailers
Qatari Diar Real Estate Investment Company Qatar Landlords and Developers
Emirates Telecommunications Corporation UAE Telecommunications Services
Almarai Company Saudi Arabia Food
 

Projects

Most viewed projects by Community in the last 24 hrs
Project Name Country Sector
Takreer - Ruwais Refinery Expansion UAE Oil and Gas
Al Futtaim Carillion - Marina Hotel (Yas Island) UAE Real Estate
Emirates Aluminium (EMAL) - Smelter Complex - Phase 1 UAE Industry
Abu Dhabi DOT - Abu Dhabi Metro UAE Infrastructure
ENEC - Nuclear Power Plant UAE Power and Water
SATORP - Jubail Refinery and Petrochemical Complex Saudi Arabia Oil and Gas
Dubai RTA - Dubai Metro UAE Infrastructure
Al Safwa - Jeddah Cement Plant Saudi Arabia Industry
Qatar Bahrain Causeway Foundation - Qatar Bahrain Causeway Bahrain Infrastructure
Qatar Bahrain Causeway Foundation - Qatar Bahrain Causeway Qatar Infrastructure
 

Blogs

 
 
 
Items Related to Story

Projects Monitor

 
Name Country Sector
Aramco - Khursaniyah Field Development Saudi Arabia Oil and Gas
 
 

 
 
 
 
 

Site is optimised for viewing at 1024 x 768 with Internet Explorer v6 and Firefox v3.0 and above.
Copyright © 2009 ABQ Zawya Ltd. All rights reserved. Please read our Membership Agreement