Kuwait's New Oil And Gas Strategy Copies Saudi Arabia's: Produce And Refine -- July 31, 2015

Read this story in light of recent reports that Saudi Arabia has taken a strategic turn from producing and exporting oil, to producing and refining oil. Now it's Kuwait:

Kuwait National Petroleum Co. has let a series of contracts to groups of oil and gas service providers to build the planned 615,000-b/d Al-Zour refinery complex in southern Kuwait as part of the company’s Clean Fuels Project.

KNPC officially awarded four contract packages worth an estimated $11.5 billion for the grassroots refinery on July 28, with a fifth contract package due to be awarded in the coming weeks, the state-run company confirmed in a series of posts to its social media accounts.

KNPC let a $4.1 billion lump-sum turnkey contract to a consortium of Spain’s Tecnicas Reunidas SA, China’s Sinopec Engineering (Group) Co. Ltd., and Hanwha Engineering & Construction Corp. of South Korea to provide engineering, procurement, construction, and commissioning for main processing units at the plan.

Note the contractors: Spain, China, and South Korea.

I guess America's job is to provide security while Kuwait gets the necessary engineering from Europe and Asia. Incredible.

*************************
 Are Refineries Worth It?

MPC just raised its dividend from 25 cents to 32 cents.

PSX: Phillips 66 beats by $0.02; increases quarterly dividend 12% to $0.56/share.

*******************************

A Note For The Archives

A few weeks ago when we were out in California, I was talking to my brother-in-law about the Bakken. Unbeknownst to me, our 12-year-old granddaughter was taking notes on our conversation, but in a "graphic" way.

She was using the back of a Yahtzee score sheet. Today, when opening up one of the books I had started reading out in California, the drawing fell out. I annotated it to highlight some of the things she noted from our little discussion.

Ten European Refineries Will Go Idle

Bloomberg is reporting:

Oil refiners in Europe will shut 10 percent of their plants this decade as fuel demand falls to a 19-year low.

Of the region’s 104 facilities, 10 will shut permanently by 2020 from France to Italy to the Czech Republic, a Bloomberg survey of six European refinery executives showed. Oil consumption is headed for a fifth year of declines to the lowest level since 1994, the International Energy Agency estimates. Two-thirds of European refineries lost money in 2011, ....

A 50 percent jump in three years in U.S. diesel exports coupled with waning demand for imports of European fuels, as well as two recessions in five years in the euro region, have curbed profit from oil products at companies from Italy’s Eni SpA to Royal Dutch Shell Plc.Refining margins dropped to $7 this month, from a peak of about $20 a barrel in 2008, according to data compiled by Bloomberg.

The losses are being compounded by the configuration of Europe’s refineries. Most of the plants, more than 50 percent of which were constructed in the wake of World War II, are geared toward gasoline production, though diesel now accounts for 75 percent of the region’s motor fuel needs. 

Times are a'changing. Did you notice that comment about US diesel exports?

Bottom line: seems like a huge headline, but shutting down 10 old refineries out of a total of 104 facilities between now and 2020 seems hardly noteworthy. Losing money, however, is something else.

Major UK Refinery Likely To Shut Down -- Not Making Money

Link here.

Data points:

• supplies 20 percent of London's fuel requirements
• employs 800 folks
• authorities: it won't be missed -- except by 800 families