Saudi Arabia finds no takers for additional oil

Gulf News ^ | 28/09/2005 | sta

[Perdogg]

There are "no takers" for Saudi Arabia's offer to pump more oil for a global market pressured by soaring prices and refining constraints, the kingdom's oil minister Ali Al Naimi said yesterday.

There was "plenty" of oil available globally to meet future demand, and the world's biggest crude exporter was working to soon boost its proved reserves by 200 billion barrels from 264 billion now, he said.

Naimi also told a World Petroleum Congress in Johannesburg the kingdom would stick to plans to gradually boost its total oil output capacity to about 15 million barrels per day (bpd) from about 11 million at present, keeping ample spare available.

But he emphasised that Saudi Arabia had not found customers for its existing excess capacity the lion's share of Opec's offer last month to pump up to two million bpd more oil, filling any supply shortages caused by hurricanes in the US.

"There are no takers," Naimi told delegates after a speech in which he reassured markets on the ability of global suppliers to meet rising demand for oil over the next 3-4 years.

Naimi said the main reason behind soaring crude prices which hit record peaks above $70 per barrel last month was that refining upgrading capacity had not kept pace with growth in demand for high-quality environmentally friendly fuels. "Give us the customers and we will pump more oil," he told reporters in reply to a question.

Oil prices dipped after the minister's comments.

Al Naimi declined to say whether the kingdom would in October pump more or less oil than the estimated 9.6 million bpd it is producing in September. But a senior Saudi source said the kingdom may actually pump less oil in October due to hurricane damage to US refineries, although any downturn would be temporary.

[mtbopfuyn]

I've said it before and I'll say it again, there isn't a shortage.

[Paladin2]

I'd bet that if the oil were offered at $30/bbl FOB SA, it would be gone.

I'd guess there is something wrong with the offering price. (which is supposed to be the whole idea behind this offer isn't it? Well? SA is being such a good ally again.)

[jwpjr]

re: there isn't a shortage

Your right! And wrong! There's a shortage alright, but it's in refinery capacity, not crude oil. Crude oil is totally worthless, in fact a major liability, without the facilities to convert it to something useful. The same can be said for tankers that transport it.

[FreedomPoster]

The shortage seems to be of U.S. refining capacity.

[fight_truth_decay]

Mr Naimi said talk of oil scarcity reminded him of the 1970s, when people also thought the end of the age of oil was at hand. "But in the intervening years, when we were supposedly facing a precipitous decline, world oil reserves more than doubled," he said.

CUT

Exxon's Mr Tillerson told the convention in South Africa that his company estimated that global energy demand would increase by 50 per cent over the next 25 years. Mr Tillerson said that by some estimates there was as much as 7 trillion barrels of oil yet to be discovered. On a more conservative basis, the world still had more than 3 trillion barrels from conventional fields, oil sands deposits and other sources. "That is more than twice all the oil recovered up to now in all of human history," Mr Tillerson said.

http://news.independent.co.uk/business/news/article315546.ece

[ovrtaxt]

The oil market desperately needs a shot of free market conditions. OPEC must be broken up.

All it takes is one maverick country, and the dominos start to fall.

[fight_truth_decay]

"Mr Naimi also said that there were "no takers" for more oil right now, as a result of constrained refining capacity. Roughly a quarter of US refining capacity is still shut after Hurricanes Katrina and Rita struck the country's southern coast, but global refining capacity - to turn crude oil into petrol and other products - was struggling to keep up with demand even before that."

http://news.independent.co.uk/business/news/article315546.ece

[SauronOfMordor]

You're right. The Saudi's probably offered it at a premium above market prices, and there (obviously) were no takers. Offer it at $50, and there would be lots of takers

[mewzilla]

Why not buy it and stick in the SPR?

[fight_truth_decay]

Not worth anything anyway in its' present state:

“Basically, crude oil is no use to anybody. You can’t put it in a car,” said Tony Machacek of Bache Financial brokerage.

http://www.businessday.co.za/articles/topstories.aspx?ID=BD4A96367

[md2576]

"There are no takers," Naimi told delegates after a speech in which he reassured markets on the ability of global suppliers to meet rising demand for oil over the next 3-4 years.

Naimi said the main reason behind soaring crude prices which hit record peaks above $70 per barrel last month was that refining upgrading capacity had not kept pace with growth in demand for high-quality environmentally friendly fuels."

If there is no shortage and only refinery shortages then why is the price of a barrel so high? The price of a barrel is before refining, correct? So if there is plenty of oil then why has the cost of a barrel went up? I can see how a shortage of refineries would cause the price at the pump to go up but not price per barrel.

[G-Man 1]

Diden't Saudi Arabia say a few months ago that their wells were losing pressure because the oil in the ground was running low ?

[hubbubhubbub]

Why not buy it and stick in the SPR?

Because this article is total BS

[mewzilla]

Well, we've tapped the SPR, so if we can get a good deal, why not fill it up?

[hubbubhubbub]

I dont disagree with you, I'm just saying the article is a complete falsehood. Look at the source. SA has been lying about their reserves and their ability to supply for quite some time now. Why do you think we're in Iraq?

ANSWER: Because SA isn't as important anymore.

[jec41]

There is indeed a shortage for sweet or light crude used for gasoline. What the Saudis offered is sour oil or heavy that cannot be run through our refineries. It is much cheaper than light crude and much harder to distill for gas. It also has a much lower content of gas than sweet oil. Great if you need more plastic.

[Jet Jaguar]

we need a few more refineries.

[jec41]

Why not buy it and stick in the SPR?

Because this article is total BS

Also beause it is heavy oil and cannot be refined for gas in our refineries. They will sell it for $30 barrel and they still will not get any takers.

[Eagles Talon IV]

Here is the oddity. If in fact there is no shortage of crude, and i believe there is not. If in fact the refineries can buy all the crude they want and simply do not want any more because they cannot refine it then WHY is the price at $65.00 bbl?

The producers don't have a lot to say about the price they get for their crude since that is determined by the market. A producer can take his crude off the market and of course that will cause a price increase due to a lessoning of supply but the producer who causes this increase cannot benefit by it. As far as I'm concerned this is a manufactured oil bubble kept inflated by media hype and fear induced semi hysteria in the NYMEX trading pits. I also believe that within the next several weeks we will see oil collapse to under $50.00 bbl and many of the more inexperienced traders will get badly hammered.