Kuwaiti oil experts to Al Jazeera Net: repairing the damage of Aramco attacks cost billions and takes months

Nadia Al Dabbas - Kuwait

The earthquake caused by the attack on Saudi Aramco's drones by drones appears to be reactive on more than one level.

In addition to the political effects of the attack, which has not yet been established by the identity of the entity or state that carried out it, it had economic consequences that began shortly after its announcement.

Kuwaiti oil experts unanimously agreed that the local and international oil markets were affected by the loss of about 5.7 million barrels of oil per day, which was quickly demonstrated by the record high oil prices during the trading that followed the incident targeting the facilities of the Saudi company.

Professor of Petroleum Engineering at Kuwait University Dr. Talal Al-Bathali stressed that the geopolitical factor has returned strongly to control oil prices, as oil prices - for the first time in nearly a quarter of a century - react upwards by about 20% in one day with an event related to oil supplies, contracting compared to what happened During the second Gulf War, which did not have the same effect.

Al-Bathali described what happened as "catastrophic" in light of talk that the repair of damaged facilities will take weeks, and stressed that it would become a "big trouble" if this shortage of supply, where no country can compensate.

The US strategic stockpile is about 680 million barrels, which means it will not be enough to compensate for the missing for more than six months, according to the same spokesman.

Al Bathali stressed that Saudi Arabia, which produces an estimated 10 million barrels of oil per day, is the only country able to meet the global needs, and any imbalance will negatively affect the region in particular and the world in general, as the wheel of the global economy will be affected.

Rising prices
Although al-Bathali said he feared oil prices would reach $ 80- $ 90 a barrel, he was optimistic after statements by Saudi officials that supply was being stopped as a precaution, but stressed that it would take time to overcome the damage.

Dr. Abdul Sami Behbehani, the oil expert and director of the ASCA Petroleum Consulting Company, agrees with Talal Al-Bathali that the jump in oil prices is linked to the geopolitical side, in the sense of fear of unrest in an area that contains about 65% of the world oil reserves and 30% of production. More than 70% of natural gas, according to estimates by specialized reports.

Asia's hardest hit
Behbehani said Asia would be hardest hit by Saudi supply shortfalls, including China, which alone imports about 15 million barrels of Gulf oil a day, followed by economic cooperation countries in Europe.

As for the United States, it is in its interest to keep oil prices at the level of $ 70 a barrel, taking into account that US President Donald Trump - coming to a presidential election soon - confirmed in his account "Twitter" his country's readiness to make up for the shortage of global supplies of US reserves, This means that oil prices will fall again this weekend, he said.

Behbehani said that from his knowledge of the production capacity of oil in Saudi Arabia, the strikes did not target oil stores, otherwise we have seen fires continue so far, pointing out that the target areas where more than 100 crude oil storage, each estimated capacity of two million barrels per day. He believed that what was targeted were gas storage and refinery.

Regarding the cost of repairing the damage caused by targeting a refinery that can refine five million barrels of oil per day, Behbehani said that the cost of establishing an oil refinery of this size could reach $ 200 billion, at a time when the smallest refinery costs one million barrels of oil per day between ten billion and twenty billion. Dollars, which means that repairing the damage will cost Saudi Arabia billions.

The same spokesman expressed surprise at the targeting of facilities the size of Aramco's factories, which are highly regulated and secure.

US shale oil
Oil strategy expert Abdulhamid Al-Awadhi described the targeted refinery as the largest and only about this size in the world, with a production capacity of about seven million barrels per day, in addition to five billion cubic feet of gas, which justifies the sudden absence of half of Saudi production, which he said. It will have a big impact on oil prices.

Al-Awadi believes that the beneficiaries of this event are oil traders in the first place, followed by producers of US shale oil, which is increasing production year after year, pointing out that the President's pledge to fill the shortage aimed at maintaining oil prices.

According to Al-Awadhi, Saudi Arabia's exit from the crisis depends on data issued to estimate the extent of damage in the facilities, which is likely to take months.

He pointed out that the reform process whenever delayed, oil prices will be eligible to rise.

Agreement by virtue of the dead
Al-Awadhi shows that the agreement to reduce production between OPEC countries and independent producers became ruled dead, and the countries under the agreement to work to make up for the shortfall, and here most observers rely on Russia to increase production if there is a real desire to maintain fair prices for oil Between 65 and 70 dollars a barrel.

One solution is to resume production from the divided zone between Kuwait and Saudi Arabia.

Al-Awadhi blamed the Middle East and the policies of the US president, especially in the Gulf region, where he created political tensions that began with the unilateral abolition of the nuclear agreement with Iran. Other countries have not spared Clebia, Venezuela and Nigeria from their policies, all of which cast a shadow on the world oil markets.