Refining Community Logo

RE: Asian Refiners say "No Thanks" Saudi Crude

Home Forums Refining Community Refinery News Asian Refiners say "No Thanks" Saudi Crude RE: Asian Refiners say "No Thanks" Saudi Crude

#6785

Charles Randall
Participant

Here is update article on Saudi Oil & response from it’s largest group consumers in Asia. Think it highlights the problem going on with crude supply today = dwindling conventional Light crudes but available heavy & non-conventional crudes. It is function of lack of complexity in refining capacity on all “new consumers” in developing countries that have driven prices higher (along with all speculators of course).  Asia is taking more than 50% Saudi crude these days and Western consumers have slumped as West Africa has become the transition point for crude supplies moving west. Despite politician claims – most US import supply today comes from Canada, Mexico, Venezuela & North Sea – with Mid East down less 15% source (also why they don’t care what price goes to in US anymore because the additional supplies from more expensive wells or enhanced oil recovery (EOR) only impacts US minority placement of their market today.
 
Also indicates that most of privitatized or independent Asian refineries have been out this type market for long time since they do not receive government subsidized funding (like China’s Sinopec, PetroChina and others – despite claims “one off” & meeting WTO requirements) so they can hold domestic fuel prices to less than $1/gallon and not wreck farming industries at home. Several countries like Malaysia & Taiwan have removed fuel price caps (unlike China) to increase on products and still are unable purchase crude at these price levels
 
In fact this Subsidy is also highlighted in another update article = “China turns Gasoline (&Diesel) Importer” @ (http://beta.ph.news.yahoo.com/rtrs/20080616/tbs-china-energy-output-21231dd.html). Hiding behind excuse of Quake damage supply disruption inland refinery, & meeting demands for Olympic games….. the China Government owned refiners like Sinopec & PetroChina have stopped refining crude for incremental demands & are just buying products (because there is higher level of government subsidy available for the fuel imports).
 
Which is absurd since China has capacity & not only that but the other independent refineries which do not receive the government subsidy for crude or fuel imports have been reduced to historic low utilization rates that track amount of domestic crude available for them process.
 
These cases highlight how much the government is restraining privitatization of the refining sector, is subsidizing the transportation cost on all of its production & export products which becomes an unfair advantage in trade sector US (wouldn’t our farmers & trucking companies love to have Uncle Sam control their prices at under $1.00/gallon!!). Think how explosive US growth would be industry sector if that was allowed & as incentive they were freed from Environmental investments as are these developing countries!
 
It is time to put stop to these type unfair trade practices that encourage un-economical price increases, unwarrented job shifts from practices that are in violation of WTO trade status and damage US business. China shouldn’t be allowed to buy crude that isnt economic, import fuel that has to be subsidized for industries to afford or shift independent companies back into bankruptcy mergers with controlled government agencies (ie CNPC petrochemical bottom shopping failed independent refiners for feedstock supply).
 
Regards

Refining Community