PHOTOS: The Giant Saudi Oil Compound That's Just Miles From The Protests

A quick geography lesson before tomorrow Saudi Day Of Rage. Ra's Tannura is a major compound and port for the world's largest oil company, Saudi Aramco.
Just west of Al Khobar is one of Aramco's giant residential compounds.
This region, including nearby Bahrain, is home to a discontent Shiite majority. There have already been protests in Qatif.

The biggest refinery in the world

Millions of barrels of oil stored on Ras Tanura Sea Island

5 million barrels of oil are loaded onto ships every day at the peninsula

This is where they oversee everything

The largest compound, Dhahran has 11,300 residents and grassy sports facilities

Dharan's Core Area at twilight

Image: Courtesy of Saudi Aramco

R&D Headquarters

A look UNDERGROUND

Image: Courtesy of Saudi Aramco

The Exploration and Petroleum Engineering Center, or EXPEC

Image: Courtesy of Saudi Aramco

The world's largest seawater treatment plant

Countless of barrels of Arabian Extra Light crude oil flows through this pipeline, pictured during construction in 1997

Saudi Aramco geoscientists and petroleum engineers

The Shaybah facility at night

The Haradh Project

Image: Courtesy of Saudi Aramco

Another dramatic picture of Haradh

can't get enough oil?

Oil since 1861

Since the start of QE I (up until very recently), oil and stocks have been very closely correlated

Meanwhile, oil prices are severely lagging food prices

You can see easily how the Mideast crisis blew out the spread between WTI and Brent Crude

A massive divergence is brewing between the Baltic Dry Index and oil

Oil's burden of GDP is nearing old highs

To keep up with demand, a lot is resting on future oil fields.

Here's a look at non-OPEC production changes

The peak of discovery was in the 1960s

Google trends shows that the oil spike hasn't capture people's imagination like it did in the last time

The long term trend of stocks priced in oil is brutal

And even gold isn't keeping up with oil

And of course, personal income has badly lagged the cost of crude

Saudi Arabia increases oil production to cover Libya loss

The International Energy Agency confirmed on Friday that Saudi Arabia was stepping in to cover the fact that many platforms producing high-grade oil from Libya have been completely shut down because of the unrest.

A source told Reuters that the Saudi state oil company increased its production to more than 9m barrels per day – a rise of more than 700,000 barrels.

The worsening situation in Libya has seen about 1.2m barrels of production out of Libya's 1.6m barrels daily output lost.

European refineries have been particularly worried about a shortage of high-grade crude, of which Libya is a key supplier.

However, the news of Saudi Arabia's intervention calmed the spot price of oil, which had risen to a two-and-a-half year high above $119 at one point on Thursday.

On Friday, Brent crude dropped down to $111 per barrel. However, it still closed up 9pc for the week, reflecting continuing unrest in the wider oil producing region. Riots have spread from Tunisia to Algeria, Egypt, Bahrain and Yemen in recent weeks.
Analysts from ICAP Shipping said on Friday: "In terms of pure volumes there are ample supplies of crude that can be brought to the market if there is a major and prolonged disruption of exports [from Libya].
"However, with the lion's hare of Libyan crude comprised of light, sweet grades, it is also not entirely clear how global trade flows will be affected."
IEA figures show that Saudi Arabia has 3.5m barrels a day of spare capacity, while the United Arab Emirates could add 330,000 barrels, Qatar could put on 180,000, and Kuwait 230,000. While not all of this would be likely to come on stream at once, Middle East production is still 1.7m barrels per day lower than it was at the height oil price spike in mid-2008.

BARCLAYS CAPITAL WRONG ON SAUDI'S CAPACITY TO REPLACE LIBYA OIL EXPORTS

Some in the oil market think that Saudi Arabia can tap their reserves to replace lost Libyan oil produce. Barclays Capital argues this is not the case.

Latest estimates suggest around 1 mb/d of crude oil production is currently affected in Libya, with the rest of the 0.6 mb/d increasingly under threat too.

A plethora of foreign companies suspended their operations yesterday.
Repsol, one of the largest foreign operators in Libya, has suspended all its production and exploration activities in Libya, including output from the country’s El Sharara oil field (200 thousand b/d of key export-grade crude).
Another company with significant exposure to Libya, Eni (total production of oil liquids in Libya is around 550 thousand b/d), also suspended oil production from a number of sites as a precautionary measure following Statoil, BP, Shell and others who had already closed down their offices and removed expatriate staff.
Eni also announced the suspension of natural gas supplies through the Greenstream pipeline running across the Mediterranean from Libya to Italy.
Earlier in the week, al-Jazeera had reported that crude production at the Nafoora oil field (400 thousand b/d) had stopped because of a strike by workers, though this was denied later. Either way,

Some in the oil market believe Saudi Arabia would tap into their reserves to pick up the slack.
Barclays argue this is not the case:
"Firstly, the grades and quality of crude available from Saudi Arabia is likely to be different from Libya," says Suki Copper at Barclays Capital.
For instance, the volume-weighted average of Libyan grades would have an API of around 37-38, while the current shut in Saudi production is biased towards medium crude.
Cooper goes on to say:
"Moreover, Libyan crude is sweeter, with CPC Blend and Azeri Lights likely to feel the shortages. Effectively, West African crude should receive a higher bid from the Med, with the ultimate effect likely to be seen via a widening in the Brent-Dubai spread, as prompt supplies of Brent-related crudes remains the issue
"Moreover, the time taken to bring those Saudi barrels to the market is likely to be significantly longer compared to the ongoing Libyan production. Thus, the concept of a barrel for barrel replacement is not a correct one.
"Ultimately, the overall significance of the situation in Libya is more than just about lost barrels. It continues to inject a huge amount of uncertainty in the oil market especially for the medium term, as destabilisation in the Arab world, home to the world’s largest oil and gas reserves and production, is of extreme significance."

Oil prices soar to two-year high on worries over crisis in Libya

Oil prices soared to the highest level in more than two years as Libyan leader Moammar Gadhafi urged his supporters to attack protesters who are violently challenging his 42-year rule.

Only a small part of Libya's oil production appeared to be affected, though analysts fear that similar revolts will spread to OPEC heavyweights like Iran.

1. 1. Benchmark West Texas Intermediate for April delivery jumped $5.71, or 6.4 percent, to settle at $95.42 per barrel on the New York Mercantile Exchange. Oil hasn't been that high since it settled at $97.92 on Oct. 1, 2008.

Libya holds the most oil reserves in Africa and is the world's 15th-largest crude exporter at 1.2 million barrels per day, according to the Energy Information Administration. As the Libyan government cracked down on protesters, Western oil companies including Eni and Repsol-YPF temporarily suspended oil production in the country. BP has started evacuating workers.

Any production losses in Libya could be quickly absorbed by other countries like Saudi Arabia. The official Saudi Press Agency quoted Saudi Arabia's oil minister Ali Naimi as saying that Saudi's production capacity of 12.5 million barrels per day can help "compensate for any shortage in international supplies." Saudi Arabia currently produces around 8 million barrels per day.

The International Energy Agency said in a statement on its website that it is ready "to make oil available to the market in the event of a major supply disruption." The Wall Street Journal reports that the IEA plans to meet this week to discuss the possible release of strategic stockpiles, if necessary.

The main concern stalking markets is that revolts in the Middle East and North Africa will spread to other members of the Organization of Petroleum Exporting Countries, particularly Iran, the group's second-largest producer.

Energy consultant Jim Ritterbusch said a "fear premium" has added about $10 per barrel to the price of oil. That means prices could tumble once the region settles down. "But that doesn't look like it's going to happen anytime soon, he said."

Eni, Libya's biggest oil producer, idled operations that produce one-quarter of the country's output at 244,000 barrels of oil and gas per day. Spain's Repsol-YPF, which also suspended production Tuesday, produces about 34,777 barrels a day. Austrian oil company OMV, which produces about 33,000 barrels a day said it will reduce production because of the unrest.

BP evacuated 70 people from Libya, including 40 workers and their families. BP isn't producing oil in Libya, but it has been working on an exploration project. BP has 140 employees at its Libyan operation.

Other oil companies, including Royal Dutch Shell PLC, Marathon Oil Co. and Germany's Wintershall, also started pulling out employees. Meanwhile, key Libyan officials resigned and air force pilots defected amid a bloody crackdown on the protests.

At least 300 people have been killed in the uprising, according to New York-based Human Rights Watch. As units of Gadhafi's army defected, protesters said they were watching several oil fields and pipelines, hoping to protect them against damage or vandalism.

At least three ports that handle oil shipments have been closed, according to one resident, Ahmed al-Zawi.

In Iran, government opposition groups this week held their largest protests in more than a year, resulting in two deaths, though the demonstrations have failed to gain the momentum seen in North Africa.

Two Iranian naval vessels entered the Suez Canal on Tuesday en route to a training mission in Syria, officials said, the first time that Tehran has sent military ships through the strategic waterway since the 1979 Islamic Revolution.

Brent crude, which is delivered around the world and is seen as a better reflection of global demand than WTI, added 4 cents to settle at $105.78 per barrel on the ICE Futures exchange. Brent is considered to be more susceptible to disruptions in Middle East oil supplies, while large U.S. stockpiles of crude have helped keep WTI prices lower.

Looking ahead, there are also knock-on effects from high oil prices. A jump in energy costs could hurt consumer spending and stymie a fragile recovery in developed countries.

The crisis in the Middle East and North Africa — which has brought down governments in Tunisia and Egypt and sparked protests in Yemen, Bahrain, Iran, Morocco and Jordan — will put added pressure on weaker economies, especially those in Europe, according to Capital Economics.

In the U.S., a run-up in fuel costs could force businesses and consumers to spend less on other things, slowing both the economy and the pace of hiring.

The U.S. economy picked up momentum at the end of 2010 and is probably growing at about a 3.2 percent annual rate or more in the first three months of the year. A $10 increase in the price of oil shaves off roughly 0.4 percentage point from economic growth, according to economist Brian Bethune at IHS Global Insight. The economy could be pushed into a recession if oil prices were to skyrocket to $150 or $160 a barrel, Bethune and other economists say.

In other Nymex trading in March contracts, heating oil rose 7.75 cents to settle at $2.8035 a gallon and gasoline gained 5.63 cents to settle at $2.7464 a gallon. Natural gas futures lost about a penny to settle at $3.867 per 1,000 cubic feet.

Kenya's Shilling Weakens to More-Than Eight-Month Low as Oil Prices Surge

Kenya’s shilling depreciated to the weakest level in more than eight months against the dollar as oil rallied to a 30-month high and businesses sought to buy dollars to meet month-end obligations.

The currency of East Africa’s biggest economy slumped as much as 1 percent to 82.59 per dollar, the weakest intraday level since June 7, and traded 0.2 percent lower or 82 at 12:37 p.m. in Nairobi.

Brent oil futures rose as much as 7.7 percent to $119.79 a barrel on the London-based ICE Futures Europe exchange, the highest since Aug. 21, 2008, as Libya’s violent uprising reduced supplies from Africa’s third-biggest producer. Loyalists of Libyan leader Muammar Qaddafi sought to crush dissent in the capital of Tripoli as his opponents tightened control of eastern cities and President Barack Obama condemned the regime’s attacks.

“The shilling has weakened due to high demand for dollars by businesses to settle their month-end invoices and with the political crisis in the Arab world, the surge in oil prices will pile more pressure on the local unit in the coming days,” Steve Lagat, a dealer at Nairobi-based CFC Stanbic Bank Ltd., said in a phone interview today. The shilling may “breach the psychological 83 shillings to the dollar level as global oil prices surge,” Lagat said.

Energy prices set for roller-coaster ride as Russia weighs in

While he fell short of bluntly saying, "I told you so," Alexei Miller, arguably Russia's most powerful energy executive, warned the West that it may not be able to count on Mideast and North African energy supplies as it once did.

Coming from Miller, the chief of Russian energy giant Gazprom, it was a not-too-subtle nudge that global importers of energy, especially Europe, should invest more in Russian oil and gas capacity.

"The question about the reliability of gas deliveries from North Africa to Europe should be more critically examined than it is currently." said Miller in comments to NTV, a Gazprom-owned Russian broadcaster.

Gazprom told CNN its executives were not available to further clarify his comments. However, Gazprom has been one of many Russian energy companies trying to attract more foreign investment to further exploit its vast and proven oil and gas reserves.

"Perhaps Russia is trying to issue some friendly advice (to the West) that maybe it's time to diversify our sources of energy. It is good for Russia for it's certainly in a position to do more." said Liam Halligan, chief economist of Prosperity Capital in London.

The assumption that we can assume stability in, say, Saudi Arabia ... is now going to be doubted by the markets.

According to U.S. government statistics, Russia is the world's largest oil producer and second-largest exporter after Saudi Arabia.

But the timely, if opportunistic, warning darkened an already jittery mood among energy analysts as some now discussed the possibility of an oil "superspike" that could fuel a commodities crisis in the months to come.

How high could oil go? While industry insiders agree a spike of $200 a barrel is unlikely, many are now unwilling to rule out that kind of a price range. Oil cartel OPEC has tried to calm concerns, saying spare capacity exists to soften the blow and moderate price spikes. But some now doubt the organization has a handle on spare capacity.

"There is growing concern in the market that there isn't the spare capacity in Saudi Arabia that the markets have been told there is," said Charles Robertson, chief economist at Renaissance Capital.

"The second problem is that the markets can't be as relaxed about the Middle East and North African now as they were even a week or two ago," he said.

"What matters about Libya is that you've seen a regime which has been stable for the better part of 30 years and is in danger of being overthrown. The assumption that we can assume stability in, say Saudi Arabia, or other countries around the Gulf, that assumption is now going to be doubted by the markets," Robertson said.