SAN FRANCISCO (MarketWatch) -- Dense, dirty and less profitable, a type of crude oil long marginalized by the global petroleum industry is attracting a wave of new refining investment as the world's supplies of premium crude look set to decline.
Saudi Arabia, through its state-owned oil company Saudi Aramco, is planning to expand its refinery capacity by nearly 80% in five years, in part by signing deals with foreign oil majors including ConocoPhillips, Total SA, ExxonMobil Corp. and China's Sinopec. Much of that new capacity will be aimed at turning the kingdom's reserves of heavy crude oil, which is less desirable and is sold at discount to premium light crude, into gasoline and other petroleum products for shipment to Europe and Asia.
Indeed we are building more refineries that will refine Saudi crude; much of this will be heavy sour crude," said Sheema Al-Nafisee, a spokesman at Saudi Aramco, the world's largest oil producer. "We can say that we will continue to satisfy both domestic and world demand."
The kingdom's plans to increase its refining capacity won't necessarily alleviate high oil and gasoline prices. It will take years before new refineries start operating. World oil demand growth, including rising consumption in Saudi Arabia itself, could easily outstrip additional capacity, analysts say. "The refineries
won't be ready in five years, and we are expecting delays on all fronts," said A.F. Alhajji, an energy economist at Ohio Northern University and a long-time observer of Saudi Arabia. Demand is too lofty to be accommodated by the planned increase in capacity, he said.
EDIT
http://www.marketwatch.com/news/story/saudi-arabia-plans-royal-treatment/story.aspx?guid=%7B5608C8C0-4CCF-467C-AEE1-4D15A93E5F03%7D&dist=msr_26