Saudi crude consumption to reach 3 million b/d in Q3: analyst

Jul 09, 2015

Saudi Arabia’s refinery intake increased by 235,000 b/d or 12% year on year in the second quarter, and total consumption is expected to reach 3 million b/d in Q3, analysts at Jadwa Investment said late Tuesday.

The report did not give an estimated total for Q2.

The bank said in a research note that refinery intake increased as the new 400,000 b/d Yasref refinery ramped up to full capacity.

The refinery, a joint venture between Saudi Aramco and Sinopec, will contribute to total Saudi crude consumption reaching 3 million b/d in Q3, as demand peaks due to the summer months, it said.
Quarterly growth in Q3 over the last three years has averaged 250,000 b/d, a trend Jadwa expects to continue.

It forecasts 2015 Saudi crude consumption will average 2.7 million b/d.

“Although we expect increases in gas output from the Hasbah and Arabiyah fields to replace some domestic crude consumption, there is a risk that delays in bringing these projects online will lead to upside risk in our full year crude consumption forecast,” the research note said.

The offshore Arabiyah and Hasbah fields are two non-associated gas fields being developed as part of Saudi Aramco’s Wasit gas development program and are expected to supply 1.7 Bcf/day of gas by the end of the year.

The Jadwa report also highlighted Saudi Arabia’s higher crude production levels in Q2, which increased by 6% year on year to 10.3 million b/d.

“Maintaining market share is even more of a priority now for Saudi Arabia than when prices began to fall in the second half 2014,” the report said. “Global oil markets are more competitive and the Kingdom faces competition from both within OPEC and outside it.”

It sees limited year-on-year change in Saudi crude exports, however, which are expected to remain around 7 million b/d in 2015.

Coupled with rising domestic consumption, Saudi production is forecast at an average of 9.8 million b/d in 2015.

Jadwa notes an upside risk, however, due to more intensive competition for market share.

Dubai (Platts)–8Jul2015/917 am EDT/1317 GMT