The visit of US President Joe Biden to Saudi Arabia and the agreement on the replacement of Russian oil do not yet look realistic and rather resemble only US efforts to support anti-Russian sanctions. This opinion was expressed by Yuriy Korolchuk, an expert on energy issues,
KYIV. UkraineGate . 19 . July . 2022 | Economy.
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“There was talk about what was known before. They (Saudi Arabia – ed.) plan and intend to increase oil production from the current 11 to 13 million barrels per day. However, they did not say that they would do it in a month or several months. They plan to increase production by 2027, which is only 5 years from now. This is the whole problem. Currently, there is a technical possibility to increase production to 12 million barrels per day, but they will not do it. This will harm the production process and reduce production to 10.5 million barrels per day. So I see Biden’s visit as part of the US effort to support anti-Russian sanctions in limiting oil production and sales. But there will be no results from the visit now,” Korolchuk believes.
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In addition, the expert notes, it is currently impossible to replace Russian oil with Saudi oil, because it is economically inefficient.
“The fact that Russian oil can be replaced by Saudi oil is not true. More gasoline is made from Saudi oil – A-95, A-98, and Russian oil is used more for diesel. Of course, you can make both diesel and gasoline from any oil. However, if Saudi oil is released for the production of diesel on the European market for replacement, it is like “stoking the furnace with money.” It is not economically beneficial. The profit will not be less, but much less from such an operation. So Saudi Arabia will not do this,” Korolchuk said.
The expert believes that if there is a question of replacing Russian oil, it will happen only for specific consumers. Probably for China. After all, back in March, one of the Saudi companies signed an agreement with China on the construction of an oil refinery for 15 million tons of oil per year. It is quite possible, the interlocutor notes, that this is the market for which Saudi Arabia will increase production.
Source: Ukrgate