US again the top supplier of oil to UK
Shale growth threatens other oil producers
AFTER 57 years, USA is once again the top oil supplier with 265,000 barrels per day, thanks to shale oil which has found one of the biggest outlets outside its homeland, replacing Norway, Nigeria, Algeria and Russia.
The growth of shale is in the early stages but could soon threaten other oil producers elsewhere. USA is topping in the world and could be hitting close to 12 million barrels by the end of this year, pushing ahead of Russia and Saudi Arabia.
Arabian Gulf producers should not be concerned with the UK market, as they have their natural nearby homes for its oil. Almost 60 percent of their production including petroleum products head east towards Asia. This is the reason why national oil companies are investing heavily in joint venture refineries in the east such as Pakistan, China, Korea, Japan, and others, with lesser demands for oil.
This is why the two major oil companies ExxonMobil and Valero, which have their own refineries in UK, pushed to use their own system to run their shale rather than selling it outside their system at lower oil prices.
Their investments are paying off as US shale oil can hardly be used locally, as their production is reaching five million barrels, and there is no more room for consuming the huge volume that is arriving and without any infrastructure to cater for the new volume of domestic oils. Therefore, the refining investments are paying off, with a stable home for their own crude oils.
Kuwait for example took similar steps in 1983 when it invested in downstream by buying Gulf oil outlets in Europe and expanded to reach today’s level in terms of investing with others in Vietnam refinery. Saudi Aramco and Abu Dhabi are taking similar actions to ensure sound and secure home for their crude oils.
Home finding and investing in other consuming countries is aimed at sheltering and protecting its market for security reasons. Going downstream will open business opportunities for other smaller businesses.
The example of UK is the hard lesson to be learned for the traditional crude oil producers. Shale oil is serious business.