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Page added on January 9, 2018

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Shadows picked up by satellites suggest Saudi Arabia underreported its oil stores last year

Production
  • Saudi Arabia reported falling oil reserves last year and agreed as part of OPEC to extend production cuts into 2018.

LONDON — Satellite imagery of two of Saudi Arabia’s largest oil refineries suggests the kingdom may have underreported its oil stores in the first half of 2017.

Satellite images gathered by the tech startup Bird.i suggest the level of crude oil held in two major Saudi refineries, Ras Tanura and Yanbu, increased last year from January to June. The kingdom’s official figures show supplies as having declined amid a commitment to reduce supply in the face of low prices.

Bird.i collects and analyzes satellite, drone, and airborne images from numerous sources, some of which are captured in monochrome and some in full color. The technology allows the fullness of oil tanks to be estimated according to the shadows cast by tanks’ floating roofs: More shadow suggests the roof and oil stores are low. Factors such as the time the photos were taken, the position of the sun, and the satellite’s position are also considered.

Images taken of the Ras Tanura refinery, which with a capacity of 550,000 barrels a day is Saudi Arabia’s largest, suggest stocks were relatively low in January compared with in May, when the shadows cast were much shorter — indicating a higher supply.

RasTanuraRefinery_20170130 073917_WORLDVIEW02_TLLat26P653037Lng50P143758_BRLat26P635511Lng50P166550_Z16_1030010063B0AE00OTHERe28fa15d 5f5a 4304 89db c799740150d7_CCOVER 0_SUNAZI 156P000_SUNELE 42P500_ONAD 28P200_BANDS 1_GSD 0P5870_FCPS The Ras Tanura refinery in January 2017. Copyright © Birdi Ltd. – Image © 2017 DigitalGlobe, Inc.

RasTanuraRefinery_20170508 103500_WORLDVIEW01_TLLat26P653037Lng50P143758_BRLat26P635511Lng50P166550_Z16_102001005F3A7800OTHERcb9e6bd8 6e86 4937 b97a 00548a40f7d5_CCOVER 7_SUNAZI 257P500_SUNELE 61P000_ONAD 29P300_BANDS 1_GSD 0P6290_FCPS 1 Ras Tanura refinery in May — where less shadow can be seen. Copyright © Birdi Ltd. – Image © 2017 DigitalGlobe, Inc.

Screen Shot 2017 12 20 at 10.32.10 Google Maps

Images of Yanbu terminal, a major refinery on the Red Sea with a capacity of 225,000 barrels a day, suggest stocks in November 2016 were relatively low compared with those in May of last year, when the tanks look to be “almost full,” according to Corentin Guillo, the founder and CEO of Bird.i.

A third — and the most recent — image of Yanbu, taken in December, shows more shadow, suggesting oil supplies fell again in the second half of the year.

YanbuRefinery_20161118 The Yanbu refinery in November 2016. Copyright © Birdi Ltd. – Image © 2017 DigitalGlobe, Inc.

YanbuRefinery_20170529 The Yanbu refinery in May — with less shadow visible. Copyright © Birdi Ltd. – Image © 2017 DigitalGlobe, Inc.

YanbuRefinery_20171210 The Yanbu refinery in December. Copyright © Birdi Ltd. – Image © 2017 DigitalGlobe, Inc.

Screen Shot 2017 12 20 at 10.39.10 Google Maps

Saudi Arabia is one of the world’s largest oil producers and a key member of the Organization of the Petroleum Exporting Countries. OPEC members agreed to cut oil production in November 2016 amid an oil glut and falling prices, and both OPEC and non-OPEC producers this past November agreed to extend the cuts through 2018.

Saudi Arabia also reported falling stores throughout 2017. In official data submitted to the Joint Organisations Data Initiative, the kingdom reported oil stocks had declined by 5.4 million barrels last year from January to June and were on a downward trajectory from March to September.

Screen Shot 2017 12 20 at 08.32.36 Jodi

“The direction of the oil price is particularly difficult to predict given the combination of global demand, technological change and politics which feed into its valuation,” said Laith Khalaf, a senior analyst at Hargreaves Lansdown.

“It would be pretty destabilising for the oil price, and for OPEC, if Saudi Arabia was shown to be saying one thing and doing another,” he said.

But Khalaf cautioned that aboveground storage tanks were not the full picture. Satellite images are “far from conclusive evidence,” he said, since reserves are also held overseas and in underground tanks.

Saudi Arabia’s economy is heavily dependent on oil, a problem — in the face of a finite supply and low oil prices — the kingdom is trying to solve. Its Vision 2030 project seeks to diversify the economy and boost the state’s coffers.

As part of this project, the kingdom plans to float the state oil giant Saudi Aramco, which uses both the Ras Tanura and Yanbu refineries.

“In order to comply with the normal listing rules, Saudi Aramco would have to reveal precise information about its current reserves and how they have been calculated,” said Mihir Kapadia, the CEO of Sun Global Investments.

“However, it is not yet clear whether the share sale would include ownership of the ground reserves, and therefore we may be uncertain about the level of transparency from the company,” he said.

“The [official government] figure of 266 billion barrels [in reserves] matters because it estimates the proven value of the commodity, especially as it could appreciate after peak oil,” Kapadia said.

“One of the key aspects for the [Aramco’s] valuation would be the reserve total,” he said.

Saudi Arabia’s oil ministry did not immediately respond to a request for comment.

Business Insider



17 Comments on "Shadows picked up by satellites suggest Saudi Arabia underreported its oil stores last year"

  1. MASTERMIND on Tue, 9th Jan 2018 7:01 pm 

    “The [official government] figure of 266 billion barrels [in reserves] matters because it estimates the proven value of the commodity, especially as it could appreciate after peak oil,” Kapadia said.

  2. MASTERMIND on Tue, 9th Jan 2018 7:02 pm 

    Saudi Arabian oil reserves are overstated by 40% – Wikileaks
    https://www.theguardian.com/business/2011/feb/08/saudi-oil-reserves-overstated-wikileaks

    The collapse of Saudi Arabia is inevitable
    http://www.middleeasteye.net/columns/collapse-saudi-arabia-inevitable-1895380679

  3. Ghung on Tue, 9th Jan 2018 7:14 pm 

    Pumping it up and selling it aren’t the same thing. It would be stupid to not stockpile whatever surplus production they are positioned to put in storage. I’m sure it’ll come in handy someday.

  4. Boat on Tue, 9th Jan 2018 7:20 pm 

    MM,

    Read that same thing about Saudi oil 20 years ago. Lol Venezuela is running out of oil while they drown in it. A better story.

  5. MASTERMIND on Tue, 9th Jan 2018 7:32 pm 

    Saudi Arabia’s Energy Minister Warns of World Oil Shortages Ahead
    https://www.wsj.com/articles/saudi-minister-sees-end-of-oil-price-slump-1476870790

    Saudi Aramco CEO sees oil supply shortage coming as investments, discoveries drop
    https://www.reuters.com/article/us-aramco-oil/aramco-ceo-sees-oil-supply-shortage-as-investments-discoveries-drop-idUSKBN19V0KR

    WORLD ECONOMIES IN TROUBLE: Middle East Oil Exports Lower Than 40 Years Ago
    https://srsroccoreport.com/world-economies-in-trouble-middle-east-oil-exports-lower-than-40-years-ago/

  6. MASTERMIND on Tue, 9th Jan 2018 7:33 pm 

    Boat

    You read a wikileaks cable 20 years ago? That’s odd I didn’t think they were around back then?

  7. Boat on Tue, 9th Jan 2018 7:43 pm 

    MM,

    Consumption is a direct result of sex. If you Google a little you would know how the Middle East population has exploded. Put on a rubber, give up on Sharia Law and go renewables and many problems go away.

  8. Anonymous on Tue, 9th Jan 2018 7:43 pm 

    1. article does not proceed to the so what. For instance if this were true would it mean SA is cutting more than what it says? That they are producing more (but not selling it) than they say?

    2. Reminds me of the tank farm conspiracy excuses from peak oilers like Simmons. (Not saying this dude is a peaker.)

  9. Boat on Tue, 9th Jan 2018 7:45 pm 

    MM,

    I will stick with the big picture. You go find shyt posts to fit your nonsense.

  10. Makati1 on Wed, 10th Jan 2018 12:23 am 

    “Shadows picked up by satellites suggest Saudi Arabia under reported its oil stores last year”

    Now who could have guessed that the most honest, fair, freedom loving country in the world would lie? LMAO

  11. deadly on Wed, 10th Jan 2018 6:25 am 

    You know how the Saudis lie all of the time.

    Madkat, those crocodile tears you shed for America are all in vain.

    There is an excuse for ignorance, but not for stupidity.

  12. Dredd on Wed, 10th Jan 2018 8:42 am 

    Is it collusion or conspiracy (Dept. of Justice Conspiracy Theories – 3) ?

    Those photos from satellites are blowing the whistle.

    Good.

  13. bobinget on Wed, 10th Jan 2018 9:43 am 

    Total products supplied over the last four-week period averaged 20.6 million barrels per day, up by 5.6% from the same period last year. Over the last four weeks, motor gasoline product supplied averaged about 9.1 million barrels per day, up by 2.5% from the same period last year. Distillate fuel product supplied averaged about 3.9 million barrels per day over the last four weeks, up by 6.8% from the same period last year. Jet fuel product supplied is up 13.4% compared to the same four-week period last year.

  14. Outcast_Searcher on Wed, 10th Jan 2018 10:05 am 

    Yeah, let’s focus on unproven conspiracy theories like this, involving at most, 5% or so of the daily global oil consumption.

    And let’s pretend that this will have a major impact on the price of crude IF proven true.

    Because this matters so much in the face of global oil demand increasing every year the global economy isn’t in shambles. (NOT)

    As if scale didn’t matter. LOL

  15. MASTERMIND on Wed, 10th Jan 2018 10:07 am 

    We are going to have a massive world oil shortage this year! Sheep may go insane!

  16. deadly on Wed, 10th Jan 2018 12:19 pm 

    MASTERNOMIND is really Chicken Little.

    If I had oil and plenty of room to stockpile it all, ample storage, I would. Especially if the price is lower than expected. You build storage for that very reason.

    “Ya, we got oil but you’ll have to wait until we get it pumped from the ground to the tanker. it might take a while.”

    That’s not how it’s done.

    With storage, when the price is right, you always have some to sell. You can parcel it out, still have plenty, then when the price tops out at 150 USD, you can sell it all.

    When the cost to produce the oil is four dollars per barrel, you can use plenty of it for domestic use at no cost. What sells for fuel oil and gasoline is all profit. Easy to refine to jet fuel and fuel a 787.

    “Yeah, we have ten million barrels of oil for sale, it’ll sell at any price all the way up to what will be the top bid.”

    You know it will sell, it’s oil. The most demanded commodity on the planet. A tremendous resource. Fungible and tradable, it is going to be used by a consumer. The demand is always there.

    If had had ten bins each holding 10,000 bushels, I would fill everyone with wheat, then when the price is right, you sell.

    You know it will sell, it’s wheat.

    Analogous to the oil business world.

    Supply and Demand

    People must eat and one way to do that is to use oil until the cows come home.

    That is the way it is in the real world.

  17. Outcast_Searcher on Wed, 10th Jan 2018 12:38 pm 

    Deadly, if you’re certain crude is headed to around $150, then why not just buy long term oil futures, or long term futures options?

    Then you don’t have storage expenses, or the need to mess around with physical crude, insuring the storage facilities (or paying for the storage), etc.

    Or is this just an idle “I would” but no conviction?

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