Saudi Aramco to ramp up Jizan fuel output, sources say

Saudi Aramco's Jizan refinery is set to increase output of ultra-low sulfur diesel (ULSD) and reduce exports of vacuum gasoil (VGO) as it ramps up production in the second quarter, industry sources said.

The refinery could produce up to 250,000 barrels per day (bpd) of ULSD, or 10-ppm gasoil, when it hits full capacity.

This could boost Aramco's fuel exports to Europe, the sources said.

European countries have been looking to replace supply from Russia after the European Union imposed an embargo on Russian oil product imports from February 5.

Both Saudi Aramco and Kuwait Petroleum Corp are ramping up output from new refineries this year, which will help meet supply shortfalls in Europe and cool prices of refined products.

"Increasing availability of Middle Eastern gasoil will also weigh on arbitrage opportunities to ship Asian gasoil to West of Suez," FGE analysts said in a note.

"We expect the share of Middle Eastern volumes in Europe's diesel import mix to increase relative to Asia in the coming months."

Saudi Aramco declined to comment.

Located in Saudi Arabia's southwest Red Sea coast, the $21 billion Jizan refinery and petrochemicals complex capable of processing 400,000 barrels per day of crude started up in end December 2021 to early 2022 after a delay from 2018, a source close to the matter said.

The boost in refining capacity will also help Saudi Arabia to lock in more long-term agreements to sell refined products to customers while using naphtha as feedstock for petrochemicals, the sources said. The refinery's hydrocracker unit and integrated gasification combined-cycle (IGCC) plant have just been started up, they added.

A hydrocracker processes residual fuel and VGO to produce diesel and kerosene.

This could end Jizan's residual fuel exports, with about 90,000 bpd of high-sulfur fuel oil and vacuum residues estimated to be fed into the power plant, said FGE.

The refinery offered one VGO cargo of 80,000 tons (500,000 barrels) for April 15-17 loading, industry sources said, though exports are likely to fall in subsequent months.

 

Reuters