Saudi Aramco Says Refining Shortage to Persist on Rising Costs

(Bloomberg) — Saudi Aramco, the world’s largest state oil company, said a shortage of refining capacity to process so-called heavy-sour crudes will persist because of rising construction costs.

Rising prices of steel and other construction materials have prompted companies and governments to delay or cancel projects, said Ibrahim Mishari, Saudi Aramco’s vice president of marketing and supply planning.


Costs to build new refining units have risen at least 70 percent in the past three years, London-based Merrill analysts Hootan Yazhari, Alastair Syme, Mark Iannotti and Philippe Ziegler said in an April 13 report. Heavy-sour oil contains more sulfur than sweet crudes and requires more processing than light grades to extract the same amount of gasoline.

“Many of these refineries may not materialize,” Aramco’s Mishari said at the Middle East Petroleum and Gas conference in Dubai. “The downstream bottleneck could remain.”

Bloomberg