Global energy markets are closely watching events in Saudi Arabia to see how well the kingdom can boost its oil production following last weekend's strikes by Iran and its allies. Regardless of how quickly production comes back online, the Saudi energy sector remains vulnerable to attack — meaning the risk of further production outages remains ever-present.
Saudi Arabia has finally started to allow media to visit the Abqaiq and Khurais processing complexes that were attacked earlier this week, taking 5.7 million barrels per day (bpd) of production offline. This has allowed more photos of damage and more details about the current status of the facilities to emerge. Earlier in the week, Saudi Arabia painted a rosy picture of how quickly it could get its oil production capacity back online, saying it could restore 11 million bpd of processing capacity by the end of September and 12 million bpd by the end of November. Saudi Arabia was almost certainly going to be overly optimistic in its timetable for bringing full production capacity back online at the two damaged facilities, as it wants to ease market concerns that it won't be able to meet export obligations.
After all, Saudi Arabia is already reportedly reducing domestic refinery throughput and looking to import refined products to meet export obligations. But any delays to getting production — not necessarily processing capacity — back online by the end of September are in fact likely to be in the order of weeks, not months.
Abqaiq Processing Complex
Summary: Prior to the attack, the Abqaiq processing complex had capacity in excess of what it needed to handle the fields that it processes oil and gas from, so Saudi Arabia does not need Abqaiq fully up and running to meet its production capacity targets. Nonetheless, it suffered extensive damage, and it's not clear how long it will take to repair and/or rebuilding the facility's damaged spheroids, which are used to depressurize oil to help remove water and dissolved gasses. Damage at the spheroids appears to be the main obstacle to raising production levels at Abqaiq.
- Prior to the attack, Abqaiq's production was 4.5 million bpd, while its nameplate processing capacity was 7 million bpd. The fields that feed into Abqaiq have a collective capacity of a little more than 5 million bpd.
- Saudi officials have said that they brought the facility back online, hitting 2 million bpd of production within 48 hours. Production is now reportedly at 2.5 million bpd.
- Five of the complex's 18 crude stabilization towers were hit, and Saudi officials have said they must rebuild at least one — if not more. If five of the 18 stabilization towers are inoperable, the throughput capacity of the processing units could only remain above 5 million bpd if all other 13 are operational.
- Abqaiq has 11 spheroids that received 11 total hits, with some suffering more strikes than others. In order to process 5 million bpd, at least seven or eight spheroids must be functional, assuming no redundancy. With Abqaiq producing 2.5 million bpd at present, that would suggest that at least four are currently operational.
Khurais Central Processing Facility
Summary: Four cruise missiles struck the Khurais central processing facility, according to Saudi officials, and it appears that the Saudi Arabian Oil Co. (Saudi Aramco) feels it can rebuild the damaged infrastructure instead of tearing it down and replacing any major components. This suggests that Saudi Arabia's assessment that it can bring production back online relatively quickly may be achievable, but it's still entirely possible that its capacity only ramps up slowly in October.
- Prior to the attack, Khurais' production was 1.2 million bpd, while its production capacity was 1.45 million bpd.
- Three of its five stabilization towers suffered extensive damage.
- Saudi officials expect to restore full capacity by the end of September.
- Current production levels remain unclear, but Saudi officials said they restored 30 percent of production (360,000 bpd) within 24 hours of the attack.
Saudi plans to restore production capacity to 12 million bpd only by the end of November imply that Saudi Aramco officials expect it will take three months to add a final 1 million bpd of lost production capacity at Abqaiq; that Abqaiq will only be able to process about 4 million bpd by the end of September; and that repairing and rebuilding the rest of the spheroids will take longer. And this, in turn, implies that they expect to fully repair two or three more spheroids to meet their targets. This means the status of rebuilding the spheroids appears to be the most important thing to determine whether Saudi Arabia can reach its ambitious targets of attaining a production capacity of 11 million bpd by the start of October and 12 million bpd by the beginning of December.
Even if Saudi Arabia misses those goals, it may be able to bump production back to pre-attack levels of 9.8 million bpd. Prior to the attack, it appears that between 1 million and 1.45 million bpd of Saudi Arabia's spare capacity was held at fields that do not use the targeted infrastructure. This would imply that even Saudi production capacity is currently close to 8 million bpd and that it would only need to bring about 2 million bpd of additional capacity online at Khurais and Abqaiq to meet pre-attack production levels. If Saudi Aramco can bring Khurais fully back online as planned, that would require repairing one to two more spheroids at Abqaiq.