Page 5 - Downstream Monitor - MEA Week 37

DMEA Commentary DMEA
The National industrialization Co. (Tasnee) said from September 14 its feedstock supplies had been reduced by an average of 41%, while Saharan international Petrochemical Co. (Sip- chem) said its supplies had been cut by around 40% and Advanced Petrochemical had seen its supplies halved.
it is not just Jubail-based operations that are affected, though, with Red Sea coast-based Yanbu National Petrochemical Co. (Yansab) say- ing that its feedstock supplies would be reduced by around 30%.
Considering the major impact of the attacks, it is little surprise that security at Jubail, Ras Tanura, Yanbu and Jazan has been tightened this week, with Argus reporting that a “shoot on sight” policy had been adopted for drones.
This begs the question: why wasn’t such a pol- icy in place previously?
Riyadh has invested handsomely in defence and the devastation caused by these attacks reflects poorly on the systems in use.
asian strain
The Saudi downstream squeeze is bad news for Asian and Turkish consumers, which receive the bulk of Saudi output; however, it may actually support Aramco’s efforts to build out its overseas downstream capabilities.
Aramco aims to raise global refining capacity to 8-10mn bpd by 2030, with expansion focused on major Asian consumers of the kingdom’s crude. Downstream investment projects in China, india, indonesia, Malaysia and Pakistan are at various stages of execution, while invest- ments in South Korea and the uS have long been established.
Most of Aramco’s current 4.9mn bpd capac- ity is produced through JVs, with around 2-3mn bpd of the total is seen being converted to petro- chemicals, to add to the 17mn tpy of petrochem- icals already manufactured.
The narrative will now be that by developing downstream facilities alongside Aramco, sup- plies of its crude can be guaranteed with more certainty than refined products, thereby increas- ing security.
Markets around Asia have tightened for monoethylene glycol (MEG), polymers, liq- uefied petroleum gas (LPG) and gasoline, and alternative sources for imports will be sought while Saudi capabilities remain diminished.
Meanwhile, Reuters quoted a Chinese official as saying that Aramco had informed PetroChina that some light crude loadings for october would be delayed by around 10 days as a result of the outage, while some light September ship- ments would be replaced with heavy crude.™
Week 37 19•September•2019 w w w . N E W S B A S E . c o m P5