Why did the Saudis bomb their own refineries and port?
While interested parties are looking for at least some significant Iranian footprint in the Houthi’s missile attack on the Saudi oil refinery, an event suddenly occurred that seriously upsets the current situation around the kingdom’s oil capabilities.
Saudi Aramco, the main producer and exporter of black gold in Saudi Arabia, has notified the business community of an impending unilateral change in the nature and composition of products shipped to Japan.
According to sources, the key Japanese partner - the company JXTG - from the beginning of October this year, instead of light oil brand Arab Light will receive a medium and heavy product, with a much lower proportion of light fractions. For the oil market of the Land of the Rising Sun, it’s all the same that instead of high-quality gasoline, fuel oil suddenly started to haul you. Also a petroleum product, but not the one you need.
There is no official explanation of the reasons. Unofficially, the supplier refers to the negative consequences of a Hussite missile attack on the largest refinery in the kingdom (and in the world) in Abkeik, which regularly supplied 5 million barrels per day of those 7 that the Saudis exported daily. Of the 10,5 million barrels that they pumped out of the fields every day in their own country.
However, if we consider what happened in combination with various other puzzles related to the Saudi oil production, there is a strong feeling that the popular conspiracy theory around the “Arab Light” brand is not so much taken from the ceiling. The largest Gavar field on the peninsula and, correspondingly, in KSA, which for decades provided more than 60% of the country's oil production, if it did not dry out completely, it was very fatally close to that.
This is the conclusion that is drawn from the general picture around the attempts of the monarchy to bring its main source of monetary wealth to IPO.
According to the official version, the Saudi Arabian Oil Company, better known as the Arabian-American Oil Company or ARAMCO, is a real fabulous diamond. In 2006, Financial Times experts named it the largest in the world in terms of business value, at that time valued at 781 billion dollars.
According to its own PR service, according to the results of the 2018 year, with total revenue of 355,9 billion, Saudi Aramco received 111 billion dollars of profit, bypassing all other world competitors by a large margin. The officially declared available oil reserves of ARAMCO in the fields in the kingdom are at the level of 255 (according to other sources of 260) billion barrels.
Leading business publications, having barely heard about the plans of the Saudi monarchy to bring the company to an initial public offering, in March 2016 of the year unanimously predicted its easy achievement of capitalization in 1,1, and even in 1,4 trillion dollars. Subject to the restoration of world prices to 75 dollars per barrel. But even in the worst case, the owner should have definitely received at least 880 billion.
True, then the case suddenly stalled. The report, compiled as a result of an external audit, by international experts involved in the preparation for the IPO, was decisively rejected by the company's management and immediately classified, and the IPO work was stopped. Evil tongues on the sidelines hinted at a revealed serious discrepancy between the actual situation and the beautiful glossy official image of success.
Sources in the KSA itself explained the outcome by the decisive discrepancy between the expert forecast of the total capitalization of the corporation in that very 1 trillion and the desire of Prince Mohammed bin Salman to get at least 2 trillion. While experts pointed to some other oddities, even in official numbers.
The fact is that until the 1988 of the year, the oil reserves found in the kingdom (primarily Western multinationals) and confirmed by experts were estimated at 169,9 billion barrels. More precisely, it was found to be much larger, almost to 200 billion, but the actually recoverable amount was only 169,9. Moreover, it was concentrated in six fields (out of about two dozen generally discovered), of which 60% of the reserves were in one - Gavar.
And then, without any additional exploration work or any significant breakthroughs in oil production technologies, at the end of the 1988 year, ARAMCO announced a sharp increase in its available reserves to 255 billion barrels. That is, 85 billion miraculously appeared out of nowhere. And what is most curious, continuing production and not finding new reserves, Saudi Arabia annually declared the size of the available volume unchanged. And the world market believed her.
For three decades, the Saudis annually produced 3,8 billion barrels of black gold, while being the main supplier of light oil on the planet. So much was extracted from them in 1980, as much in 1988 and in 2006, and even in 2016. In other words, over the past 3,5 decades, the kingdom was supposed to pump out approximately 133 billion barrels from 170 originally available.
And then, after oil prices fell by December 2015 to 45 dollars per barrel, the Saudis began to report growth in exports and production volumes, reaching 11,2 million barrels per day at the end of 2017 or 4,08 billion barrels for the whole year . Thus, even taking into account subsequent games to reduce extraction volumes under OPEC + agreements, by now, up to 142 billion barrels should be pumped from local pantries. Let me remind you, of the 169,9 billion that were exactly available as of the year 1988.
At the current pace of work, the remainder in the bins under the Arabian sands will last a maximum of 7,5 of the year. Then everything. From the word at all. In theory, 1988 billion additionally found in 85 year should provide the kingdom with at least 22 year of prosperity. Or even 28 − 30 years, if you count with those seven and a half. And then the claims for 2 trillion of capitalization look reasonable.
For 111 billion profits over 28 years - this is somewhere in the region of three trillion dollars of stable permanent income. But only seven years of prosperity is just 832,5 billion. And it is very likely that the experts who conducted the audit came to such a figure. Plus - minus.
No wonder she didn't like it. Even taking into account the substantial Saudi investments in other countries that are still being maintained, it would be very, very unpleasant to be left without any income by the 2026-2027 years, and even after so many decades of living in maximum luxury when even the patrol police drive elite sports cars.
Based on the expenditures of the official budget of KSA in 294,8 billion dollars for 2019 year, we can reasonably assume that under the negative scenario, the kingdom (taking into account the capital of two sovereign funds) will remain somewhere on 4 year (taking into account other non-oil revenues - until 6,5 years) after the oil pumping stations in the country stop. It is approximately 14 years from now or 2033 year.
According to the optimistic version, even in falling production, the Saudis will be able to survive for 28 years normally, and then about 3 − 10 for 12 trillion of accumulated profit. Enough for the current generation of citizens of the country, their children and for a considerable period of time their grandchildren.
The difference, as you yourself understand, is significant. Therefore, it was very important for the government of the country to maintain public faith in the presence of those same 85 billion barrels of recoverable reserves and to manage to sell the company before the carriage turns into a pumpkin. And by all means to sell as expensive as possible. 2 trillion of capitalization is not becoming an empty whim of the Middle East absolute monarch, but a real means of preserving the country for a sufficiently long period. Allowing to hope to find during this time any strategic decision in terms of a new rich source of income.
It makes no difference who exactly planned and carried out the attack on the Abkeik plant. Yemenis, Iranians, Chinese or are tired of the heat due to global warming last on the Yeti planet. The main thing is that as a result of the strategic masking measures they gave a cardinal failure.
Japan purchased in Saudi Arabia from 0,82 to 1 million barrels of light oil per day. In other words, about a seventh (or 14,28%) of all Saudi exports. The refusal of supplies with a replacement for oil, which Riyadh can repurchase in Europe and other markets, convincingly proves that the kingdom definitely does not have this amount of Arab Light.
Although no other similar notifications have been received by other business partners of ARAMCO (at least there is currently no information on this), and Riyadh officially speaks of a complete restoration of production rates at the fields in Arabia themselves, there is reason to carefully think about where the Saudi oil?
Judge for yourself, at the entrance to the pool everything flows into the previous volumes (10,4 million barrels daily). The plant does not work. Although the fires have already been completely extinguished, restoration of production in full will take, as experts say, “from eight months”. Instead of full-time 5, it is capable of producing no more than 1,5 million barrels per day.
Before the incident, the kingdom exported (now it is already necessary to add “allegedly” with doubt) 7 million barrels, and the remaining 3 spent on domestic needs. If production has been restored to its previous level, and Riyadh will supply the product according to its actual state, then why is it so hysterically buying up all the free oil on the market? Where will he put the surplus, pump it back into the wells?
Or is the matter different? It is useful to read about what the attacked factory specialized in technologically. Translated into Russian - to clean the well fluid from water, sand and other impurities that pollute the original oil during its production. And, apparently, it is extremely polluting, which, albeit indirectly, however confirms the version of the significant, even critical, depletion of the reserves available in KSA. First of all, in its main deposit.
Thus, there are serious reasons to believe that the kingdom does not produce 10 million barrels per day, not pure oil, but the same general slurry, which in the zero years someone Khodorkovsky tried to call well liquid and exported without taxation. Consequently, in reality, Saudi Arabia has been producing significantly less oil for many years than it has officially stated.
In support of this, the information that the former vice-president of ARAMCO Saddad al-Husseini informed the United States that real KSA oil reserves may turn out to be public that happened as a result of the “leak of diplomatic telegrams” (associated with the name of Snowden) in 2011 40% lower than claimed. And this is just about the very same 85 billion barrels ...
Then the known facts begin to take shape in the "oil painting" without distortions and interference. In reality, oil in the country is left from the strength of years at 5 − 7. While the corporation still maintains a reputation as the largest and most profitable oil asset in the world, it must be sold as quickly as possible. And extremely expensive. This requires an IPO. But to pass the input control before listing fails. Auditors find something. All or not all, no matter what. The main thing is enough not to jump above the capitalization of 800 billion, which is unacceptably small, given all the circumstances.
Then Riyadh resorts to plan “B”. The initial IPO project is postponed. The so-called two-stage version comes into play. At the first stage, the initial public offering is carried out only in Saudi Arabia. The richest people in the country should buy at least 1 billion from 3 to 60% of ARAMCO’s shares, thereby showing their agreement with the estimated total capitalization of 2 trillion.
And in order for them to think better, negotiations are sometimes conducted in a very tough form. Based on this result, at the second stage it is supposed to go to one of the leading international sites with more accommodating auditors to place on them another 1-2% of the company's shares at the maximum rate.
As a result, the assessment of the total capitalization of the Saudi Arabian Oil Company should reach the specified target amount or come close to it. That will allow you to gradually sell then the rest quietly, perhaps not even on the open market, in small lots that do not allow the buyer to somehow significantly sell the price relative to the officially announced on the basis of a public stock quote. And profit. Let not two generations with a tail, but at least one and a half for sure.
And with the early exhaustion of reserves and the inevitable bankruptcy, let the new owners then deal with it themselves. Given the absoluteness of the structure of monarchical power, I would not be surprised that the responsibility for the result will be blamed on the new owners. According to the principle - when the company was sold to you, it had oil above the roof, it brought fantastic profits, and what did you bring it, Herods, to bankruptcy in a few years!
Perpetrators are required to bear serious responsibility and pay decent compensation. And you know how it happens in life sometimes. I accidentally entered the wrong consulate and disappeared ... And after all, everything would have been almost on the ointment, if not for this missile strike.
I specially repeat that all of the above really really gives away the conspiracy theory, but somehow all the well-known facts somehow fit too smoothly into this picture - someone began to play against the Saudi house. Perhaps this is the very opposition that is not averse to ascending the throne itself, or perhaps the Americans, who thus bring down the price of the main oil pearl of the kingdom.
Saudi Aramco, the main producer and exporter of black gold in Saudi Arabia, has notified the business community of an impending unilateral change in the nature and composition of products shipped to Japan.
According to sources, the key Japanese partner - the company JXTG - from the beginning of October this year, instead of light oil brand Arab Light will receive a medium and heavy product, with a much lower proportion of light fractions. For the oil market of the Land of the Rising Sun, it’s all the same that instead of high-quality gasoline, fuel oil suddenly started to haul you. Also a petroleum product, but not the one you need.
There is no official explanation of the reasons. Unofficially, the supplier refers to the negative consequences of a Hussite missile attack on the largest refinery in the kingdom (and in the world) in Abkeik, which regularly supplied 5 million barrels per day of those 7 that the Saudis exported daily. Of the 10,5 million barrels that they pumped out of the fields every day in their own country.
However, if we consider what happened in combination with various other puzzles related to the Saudi oil production, there is a strong feeling that the popular conspiracy theory around the “Arab Light” brand is not so much taken from the ceiling. The largest Gavar field on the peninsula and, correspondingly, in KSA, which for decades provided more than 60% of the country's oil production, if it did not dry out completely, it was very fatally close to that.
This is the conclusion that is drawn from the general picture around the attempts of the monarchy to bring its main source of monetary wealth to IPO.
According to the official version, the Saudi Arabian Oil Company, better known as the Arabian-American Oil Company or ARAMCO, is a real fabulous diamond. In 2006, Financial Times experts named it the largest in the world in terms of business value, at that time valued at 781 billion dollars.
According to its own PR service, according to the results of the 2018 year, with total revenue of 355,9 billion, Saudi Aramco received 111 billion dollars of profit, bypassing all other world competitors by a large margin. The officially declared available oil reserves of ARAMCO in the fields in the kingdom are at the level of 255 (according to other sources of 260) billion barrels.
Leading business publications, having barely heard about the plans of the Saudi monarchy to bring the company to an initial public offering, in March 2016 of the year unanimously predicted its easy achievement of capitalization in 1,1, and even in 1,4 trillion dollars. Subject to the restoration of world prices to 75 dollars per barrel. But even in the worst case, the owner should have definitely received at least 880 billion.
True, then the case suddenly stalled. The report, compiled as a result of an external audit, by international experts involved in the preparation for the IPO, was decisively rejected by the company's management and immediately classified, and the IPO work was stopped. Evil tongues on the sidelines hinted at a revealed serious discrepancy between the actual situation and the beautiful glossy official image of success.
Sources in the KSA itself explained the outcome by the decisive discrepancy between the expert forecast of the total capitalization of the corporation in that very 1 trillion and the desire of Prince Mohammed bin Salman to get at least 2 trillion. While experts pointed to some other oddities, even in official numbers.
The fact is that until the 1988 of the year, the oil reserves found in the kingdom (primarily Western multinationals) and confirmed by experts were estimated at 169,9 billion barrels. More precisely, it was found to be much larger, almost to 200 billion, but the actually recoverable amount was only 169,9. Moreover, it was concentrated in six fields (out of about two dozen generally discovered), of which 60% of the reserves were in one - Gavar.
And then, without any additional exploration work or any significant breakthroughs in oil production technologies, at the end of the 1988 year, ARAMCO announced a sharp increase in its available reserves to 255 billion barrels. That is, 85 billion miraculously appeared out of nowhere. And what is most curious, continuing production and not finding new reserves, Saudi Arabia annually declared the size of the available volume unchanged. And the world market believed her.
For three decades, the Saudis annually produced 3,8 billion barrels of black gold, while being the main supplier of light oil on the planet. So much was extracted from them in 1980, as much in 1988 and in 2006, and even in 2016. In other words, over the past 3,5 decades, the kingdom was supposed to pump out approximately 133 billion barrels from 170 originally available.
And then, after oil prices fell by December 2015 to 45 dollars per barrel, the Saudis began to report growth in exports and production volumes, reaching 11,2 million barrels per day at the end of 2017 or 4,08 billion barrels for the whole year . Thus, even taking into account subsequent games to reduce extraction volumes under OPEC + agreements, by now, up to 142 billion barrels should be pumped from local pantries. Let me remind you, of the 169,9 billion that were exactly available as of the year 1988.
At the current pace of work, the remainder in the bins under the Arabian sands will last a maximum of 7,5 of the year. Then everything. From the word at all. In theory, 1988 billion additionally found in 85 year should provide the kingdom with at least 22 year of prosperity. Or even 28 − 30 years, if you count with those seven and a half. And then the claims for 2 trillion of capitalization look reasonable.
For 111 billion profits over 28 years - this is somewhere in the region of three trillion dollars of stable permanent income. But only seven years of prosperity is just 832,5 billion. And it is very likely that the experts who conducted the audit came to such a figure. Plus - minus.
No wonder she didn't like it. Even taking into account the substantial Saudi investments in other countries that are still being maintained, it would be very, very unpleasant to be left without any income by the 2026-2027 years, and even after so many decades of living in maximum luxury when even the patrol police drive elite sports cars.
Based on the expenditures of the official budget of KSA in 294,8 billion dollars for 2019 year, we can reasonably assume that under the negative scenario, the kingdom (taking into account the capital of two sovereign funds) will remain somewhere on 4 year (taking into account other non-oil revenues - until 6,5 years) after the oil pumping stations in the country stop. It is approximately 14 years from now or 2033 year.
According to the optimistic version, even in falling production, the Saudis will be able to survive for 28 years normally, and then about 3 − 10 for 12 trillion of accumulated profit. Enough for the current generation of citizens of the country, their children and for a considerable period of time their grandchildren.
The difference, as you yourself understand, is significant. Therefore, it was very important for the government of the country to maintain public faith in the presence of those same 85 billion barrels of recoverable reserves and to manage to sell the company before the carriage turns into a pumpkin. And by all means to sell as expensive as possible. 2 trillion of capitalization is not becoming an empty whim of the Middle East absolute monarch, but a real means of preserving the country for a sufficiently long period. Allowing to hope to find during this time any strategic decision in terms of a new rich source of income.
It makes no difference who exactly planned and carried out the attack on the Abkeik plant. Yemenis, Iranians, Chinese or are tired of the heat due to global warming last on the Yeti planet. The main thing is that as a result of the strategic masking measures they gave a cardinal failure.
Japan purchased in Saudi Arabia from 0,82 to 1 million barrels of light oil per day. In other words, about a seventh (or 14,28%) of all Saudi exports. The refusal of supplies with a replacement for oil, which Riyadh can repurchase in Europe and other markets, convincingly proves that the kingdom definitely does not have this amount of Arab Light.
Although no other similar notifications have been received by other business partners of ARAMCO (at least there is currently no information on this), and Riyadh officially speaks of a complete restoration of production rates at the fields in Arabia themselves, there is reason to carefully think about where the Saudi oil?
Judge for yourself, at the entrance to the pool everything flows into the previous volumes (10,4 million barrels daily). The plant does not work. Although the fires have already been completely extinguished, restoration of production in full will take, as experts say, “from eight months”. Instead of full-time 5, it is capable of producing no more than 1,5 million barrels per day.
Before the incident, the kingdom exported (now it is already necessary to add “allegedly” with doubt) 7 million barrels, and the remaining 3 spent on domestic needs. If production has been restored to its previous level, and Riyadh will supply the product according to its actual state, then why is it so hysterically buying up all the free oil on the market? Where will he put the surplus, pump it back into the wells?
Or is the matter different? It is useful to read about what the attacked factory specialized in technologically. Translated into Russian - to clean the well fluid from water, sand and other impurities that pollute the original oil during its production. And, apparently, it is extremely polluting, which, albeit indirectly, however confirms the version of the significant, even critical, depletion of the reserves available in KSA. First of all, in its main deposit.
Thus, there are serious reasons to believe that the kingdom does not produce 10 million barrels per day, not pure oil, but the same general slurry, which in the zero years someone Khodorkovsky tried to call well liquid and exported without taxation. Consequently, in reality, Saudi Arabia has been producing significantly less oil for many years than it has officially stated.
In support of this, the information that the former vice-president of ARAMCO Saddad al-Husseini informed the United States that real KSA oil reserves may turn out to be public that happened as a result of the “leak of diplomatic telegrams” (associated with the name of Snowden) in 2011 40% lower than claimed. And this is just about the very same 85 billion barrels ...
Then the known facts begin to take shape in the "oil painting" without distortions and interference. In reality, oil in the country is left from the strength of years at 5 − 7. While the corporation still maintains a reputation as the largest and most profitable oil asset in the world, it must be sold as quickly as possible. And extremely expensive. This requires an IPO. But to pass the input control before listing fails. Auditors find something. All or not all, no matter what. The main thing is enough not to jump above the capitalization of 800 billion, which is unacceptably small, given all the circumstances.
Then Riyadh resorts to plan “B”. The initial IPO project is postponed. The so-called two-stage version comes into play. At the first stage, the initial public offering is carried out only in Saudi Arabia. The richest people in the country should buy at least 1 billion from 3 to 60% of ARAMCO’s shares, thereby showing their agreement with the estimated total capitalization of 2 trillion.
And in order for them to think better, negotiations are sometimes conducted in a very tough form. Based on this result, at the second stage it is supposed to go to one of the leading international sites with more accommodating auditors to place on them another 1-2% of the company's shares at the maximum rate.
As a result, the assessment of the total capitalization of the Saudi Arabian Oil Company should reach the specified target amount or come close to it. That will allow you to gradually sell then the rest quietly, perhaps not even on the open market, in small lots that do not allow the buyer to somehow significantly sell the price relative to the officially announced on the basis of a public stock quote. And profit. Let not two generations with a tail, but at least one and a half for sure.
And with the early exhaustion of reserves and the inevitable bankruptcy, let the new owners then deal with it themselves. Given the absoluteness of the structure of monarchical power, I would not be surprised that the responsibility for the result will be blamed on the new owners. According to the principle - when the company was sold to you, it had oil above the roof, it brought fantastic profits, and what did you bring it, Herods, to bankruptcy in a few years!
Perpetrators are required to bear serious responsibility and pay decent compensation. And you know how it happens in life sometimes. I accidentally entered the wrong consulate and disappeared ... And after all, everything would have been almost on the ointment, if not for this missile strike.
I specially repeat that all of the above really really gives away the conspiracy theory, but somehow all the well-known facts somehow fit too smoothly into this picture - someone began to play against the Saudi house. Perhaps this is the very opposition that is not averse to ascending the throne itself, or perhaps the Americans, who thus bring down the price of the main oil pearl of the kingdom.
Information