ROCKMAN wrote:I read this article back then and didn’t really think much about it one way or the other. Now that I’ve focused on the big move China is making into refining, especially in JV’s with exporters like Saudi Arabia, one passage does jump out at me more now: “Accordingly, much of the conference focus was on how the GCC countries might use their current and near-term largesse to build sustainable economic and government futures.” IOW instead of exporting oil and letting foreign refiners and marketers have that portion of the profit why not expand in that direction themselves. And while the Saudis may not have the expertise or work force China certainly does. And by controlling more of the refining end of the system China will have more control over the distribution of those products. A distribution that may have a huge impact on the economies of all oil importing countries not too far down the road.
ROCKMAN wrote:It seems the depletion aspect is being amplified by tw other dynamics. The old ELM: export land model. It takes into account not just the depletion of an oil exporter but their internal consumption. Saudi Arabia is a good example l: the growing population is consuming more oil all time leaving less to export.
Now it looks like China's big moves into refining, along direct ownership of on ground oil reserves will be taking even more oil out of the market place. In X years depletion may reduce global production by Y%. But ELM and Chinese refinery JV'S may take an additional Z% of oil off the market. I can't guess the magnitude but it could rival the depletion rate.
ROCKMAN wrote:China’s refinery expansion via major JV’s with oil exporters is even more extensive than previously noted. This in addition to in ground oil reserves they acquired over the years. An article on the Reuter’s website detailed that one of China’s largest oil refiners, Sinopec, will pay nearly 1.5 billion dollars for overseas gas and oil producing assets. And as seen below China isn’t the only country making such moves.
In the words of the president of Saudi’s Aramco:
“The world has watched in awe as China has emerged as a global industrial giant and taken its rightful place in the international business arena. China's opening of its petrochemicals business ventures to foreign participation is yet another instance of the nation's economic rise and integration into the global economy, and Saudi Aramco is honored to participate with Sinopec.
Saudi Aramco's participation in these projects is another step forward in our Kingdom's growing economic relationship with China. Saudi Aramco opened a new Aramco Overseas Company office in Shanghai to focus on strategic sourcing of commodities and services from China. I am proud to say that Saudi Arabia is China's biggest trade partner in the West Asia and North Africa regions. At the same time, we place great value on our leading role in providing China, the world's second-largest consumer, with the energy to power its tremendous economic, industrial and social growth.”
And China isn't just pushing into third world countries: PetroChina and INEOS completed transactions to form joint ventures related to the refining operations in Scotland and France. The Chinese have completed the deal to form refining Joint Ventures between PetroChina International and INEOS Investments. Li Keqiang, the Chinese Vice Premier, and Nick Clegg, the British Deputy Prime Minister, witnessed the signing of the framework agreement to form the Joint Ventures. “The Joint Ventures with INEOS are consistent with PetroChina’s strategy to build its broader business platform in Europe as a leading international energy company,” said Si Bingjun, General Manager of PetroChina International London.
And some of that oil the cornucopians were expecting out of newly developing fields won’t make it to the open market. China is financing the construction of Kyrgyzstan’s first major oil refinery. The refinery is expected to produce 600,000 tons of fuel annually, enough to end Kyrgyzstan’s dependency on Russian imports. Slated to receive crude piped from Chinese-run fields in Kazakhstan.
And China is cutting crude oil deals with Russia: China and Russia agreed to invest around $5 billion in a joint oil refinery in the Chinese port city of Tianjin. China National Petroleum Corp. and Russia's OAO Rosneft agreed to build a 260,000 barrels-a-day refinery. Last year, China secured 300,000 barrels a day in Russian crude supplies for the next 20 years in exchange for a $25 billion loan.
And moves by countries other than China:
Kuwait and a Japanese partner will build a $9 billion refinery in Vietnam that will have an ultimate capacity of 400,000 bopd supplied by Kuwait. More future oil that won’t be available on the open market.
And another 600,000 bopd that will also disappear from the future market as one of Indonesia's main oil suppliers, Azerbaijan, is planning a $4.8 billion oil refinery in Batam, a free-trade zone that is 20 kilometers off Singapore's south coast.
And this transformation has been studied in detail. From:
coast.ttp://www.atkearney.com/paper/-/asset_p ... ame-/10192
“Over the next 10 years, operators at one in every three refineries in North America and Western Europe will need to reconsider their operating models and how they are integrated across the value chain. Otherwise, they will struggle to keep up with changing global markets and compete with improving global standards in refining. By 2021, refineries will need to restructure, strategically reposition their assets, or leave the market. More than half the refineries in Asia, the Middle East, and Eastern Europe have been constructed or significantly upgraded during the past decade. Elsewhere, the industry has seen major shutdowns, especially in Western Europe and on the east coast of North America. These trends have accelerated during the past 10 years.
These stark prospects are among the findings of a recent study of the global refining market. In North America and Western Europe, the current trend of refinery closings is expected to continue, with one in five refining assets being squeezed out of the market over the next five years. Meanwhile, the boom in demand in Asia and the Middle East will lead to substantial changes in capacity and partnership structures.
The supply side is responding differently to these trends in different parts of the world. China and the Middle East—notably Saudi Aramco—are building more refineries and planning to integrate more closely with upstream activities. Brazil, meanwhile, is aiming to become an exporter of refined products and is leading capacity expansion in South America.
Middle East - most new investment is going downstream. The continuing trend is toward mega-refining and petrochemical integration, while forming joint ventures for local exports and target-market assets are increasingly becoming part of corporate strategies. Another trend is emerging as talks between Middle East refiners and Chinese downstream integrated players are underway to secure supply for Asia Pacific and outlets for the Middle East—these are the archetypal "win-win" situations”
And in other quarters: State-owned Hindustan Petroleum Corp Ltd (HPCL) has approved the incorporation of a joint venture company to set up an oil refinery and petrochemical complex in Rajasthan. The refinery will run on crude oil from neighboring oilfields of Cairn India. Half of the crude oil requirement at the proposed refinery will come from the Barmer oilfields of Cairn and the rest will be imported. The refinery will process crude oil produced in Rajasthan as well as Arab mix crude. Cairn India currently produces about 175,000 barrels per day oil and has potential to go up to 300,000 bpd. More oil pulled from the open market.
And what about those liquids from the big foreign NG fields that will be produced with all that LNG? State-owned Qatar Petroleum signed a joint venture agreement with France's Total and Japan's Idemitsu for a new condensate refinery to be built in Qatar. Under the agreement Qatar will hold 84% of the refinery. It will produce petroleum products including naphtha, kerosene, diesel oil and LPG by refining condensate produced at Qatar's North Field, which is one of the largest natural gas fields in the world. It will be equipped with a diesel hydrotreater to increase the added value of diesel oil products. The new refinery will have daily production capacity of 60,000 b/d of naphtha, 43,000 b/d of jet fuel, 24,000 b/d of gas oil and 9,000 b/d of liquid petroleum gas (LPG). The new refinery will have a capacity of about 300,000 b/d, making it one of the largest single-site facilities of its kind in the world.
BTW: were you keeping count of such JV’s being put together by US companies and the US govt's national oil company?
M_B_S wrote:http://oilprice.com/Energy/Crude-Oil/Arab-Countries-Openly-Discuss-Peak-Oil-for-the-First-Time.html
...The fact that a major Middle East oil exporter would hold such a conference on what has long been a verboten subject was quite remarkable and a dramatic change from decades of PO denial.
The two and a half day meeting was well attended by people from the GCC as well as other regional countries....
The going-in assumption was that “peak oil” will occur in the near future.
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Now we know that they know we know it: PEAK OIL!
M_B_S
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