Saudi Arabia plans to slightly raise LPG exports in 2016 versus last year's volume of just below 7 million mt, on rising crude production from the Shaybah field upgrade, sources familiar with the matter said this week.
The bulk of the increase is in term contracts with major Asian buyers such as India and North Asia, they said, underscoring the oil kingdom's aim to secure market share amid rising supply in neighboring Middle Eastern producers and North America.
Sources had said term exports allocated for last year were around 6.6 million mt, down from 6.8 million mt for 2014.
But Saudi Arabia occasionally also sold spot cargoes, estimated at less than 10 cargoes last year, and such offers are expected to continue in 2016 to meet buyers' requirements and as growing domestic petrochemical demand fluctuates depending on plant operations, they added.
"The main thing is how the local petrochemical makers perform -- depending on whether they face technical problems, as well as production at the Shaybah field," one source said.
Another source said feedstock demand from the petrochemical sector is estimated at between 18 million mt and 20 million mt, up from 15 million-16 million mt consumed in 2011, following a 37% year-on-year increase in 2010.
Saudi Arabia's annual LPG output was estimated at 26 million mt, but this is expected to rise with higher crude production from the Shaybah oil field.
Shaybah, in the Empty Quarter bordering the UAE, is being upgraded to boost its output capacity by 250,000 b/d for the second time, with the field scheduled to reach 1 million b/d of Arabian Light crude production capacity by April this year. Sources said the capacity is already being gradually increased.
But upgrading of the giant Khurais oil field in eastern Saudi Arabia -- which has a 1.2 million b/d capacity and originally expected to be raised by 300,000 b/d around early 2018 and then delayed to 2019 -- could be at risk as the kingdom plans to cut non-essential spending in the face of low oil prices, analysts had said.
Saudi Aramco had said last year it aimed to sustain a maximum oil production capacity of 12 million b/d while developing 5 Bcf/d of new non-associated gas processing capacity by 2019.
The kingdom, OPEC's biggest producer, told the group it produced 10.088 million b/d in December, down from 10.145 million b/d in November.
