Although the Middle East and North Africa produce one-quarter of the world's oil, they currently refine only 6% of it (see Table 11). Nevertheless, many countries have major petroleum refining and petrochemical industries and have ambitious plans to encourage downstream activities as a means of broadening their industrial bases.
Petroleum refining is by no means new to the region. The first refineries began operations in 1913 at Abadan in Iran and Suez in Egypt shortly after the discovery of oil. However, before World War II Abadan accounted for most of the region's capacity and mainly produced fuel oil for the Royal Navy. After the war, as crude oil production increased and economies expanded, additional refineries were built in Egypt, Iran, Iraq and Saudi Arabia, primarily to refine crude for the growing local market. Even countries with little or no oil of their own, like Syria, Jordan and Lebanon, developed small refining industries. Elsewhere, notably Kuwait, Bahrain and Saudi Arabia, refineries were built with the export market in mind. Since the early 1970s local refining has been boosted by heavy demands for feedstock in the growing petrochemical industry (Map 37). The Gulf states have embarked on ambitious projects to capture some of the forecast increases in the demand for petrochemicals, which have since proved far too high.
Since 1976, the region's refining capacity has increased by over 40% and several additional major projects are scheduled for completion before 1990. In Algeria the Skikda refinery, with a capacity of 300,000 b/d, came on stream in 1983. Libya's 250,000 b/d refinery at Ras Lanuf began operations in 1984. Egypt more than doubled its capacity. Two new facilities opened in Abu Dhabi. Iraq commissioned a refinery at Baiji in 1983 and was due to complete another one in 1985. In Kuwait, the Mina Abdullah refinery is being modernised and output increased. Saudi Arabia, which is already the largest refiner in the region with a capacity early in 1984 of 840,000 b/d, opened or planned to open three more large refineries in 1984-5 at Yanbu, Jubail, and Rabigh with a capacity of over 550,000 b/d. Its huge Ras Tannurah refinery is also being modernised.
All this expansion is causing apprehension in Western Europe and the Far East because it will aggravate the existing surplus capacity of refineries and petrochemical plants. Thus in 1984 only about 75 % of the world's refining capacity was utilised. Refineries in the Middle East and North Africa were similarly underutilised and a few
|Source: The Middle East and North Africa, 1984-85|
( Europa Publications, London, 1984), and Oil and Gas
Journal, 31 December 1984.
projected refinery expansion and construction schemes have been cancelled.
Refineries, like pipelines, are vulnerable in times of political conflict. Egypt's Suez refineries, for example, were badly damaged in the 1967 Arab--Israeli war. Lebanon's Sidon and Tripoli refineries suffered during that country's civil war and as a result of the feud between Syria and Iraq. Refineries in both Iran and Iraq have sustained heavy damage in the Gulf war. The 610,000 b/d Abadan refinery was virtually destroyed and has been out of operation since 1980. When the war is over, Iran may build a new refinery in a less vulnerable part of Khuzestan rather than rebuild Abadan. Iraq's losses have not been so great, but its 140,000 b/d facility at Basra was badly damaged early in the war and has not been repaired.
Almost all the region's 60 or so oil refineries are located on the coast. Refineries at inland locations tend to be small, and provide largely for a local market. Other refineries are in coastal locations because of their export orientation. Relatively little of the total throughput of refined products is consumed in the area, although local demand for petroleum products is rising. Middle East refineries have an advantage over their competitors in being up to date, and capable of producing high-value light products such as gasoline. About 10% of oil exported from the Middle East and North Africa is now in the form of refined products, whose transportation tends to be more costly than that of crude oil because of the need to use smaller, more specialised ships.
Exxon Background Series, Middle East Oil and Gas ( Exxon Corporation, New York, 1985).
International Petroleum Encyclopedia ( Pennwell Publishing Company, Tulsa, Oklahoma, 1982).
Oil and Gas Journal and Petroleum Economist (various issues).