As Saudi Arabia Diversifies, A Texas Oil Refinery May Be In Its Future : Parallels Analysts say Saudi Arabia's national oil company may be trying to buy a refinery in the U.S. It's part of an effort to build an economy that goes beyond oil exports.
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As Saudi Arabia Diversifies, A Texas Oil Refinery May Be In Its Future

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As Saudi Arabia Diversifies, A Texas Oil Refinery May Be In Its Future

As Saudi Arabia Diversifies, A Texas Oil Refinery May Be In Its Future

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ROBERT SIEGEL, HOST:

Saudi Arabia is such an influential player in the oil industry that any action it takes can sway global markets. So it's not surprising that there's a lot of speculation among experts about whether it's massive nationalized oil company, Saudi Aramco, is trying to buy a refinery here in the U.S. As NPR's Jackie Northam reports, theories abound.

JACKIE NORTHAM, BYLINE: The oil refinery sits along the Gulf Coast of Mexico near the Port of Houston. It's currently owned by a Dutch company - LyondellBasell. Now it's up for sale, and analysts believe Saudi Arabia is eyeing the medium-sized refinery. That's creating a lot of chatter among global oil analysts, foreign policy experts and Saudi watchers all trying to decipher why the kingdom is interested.

JEAN-FRANCOIS SEZNEC: I think in the long run they'd like to be ready for a post-oil era.

NORTHAM: That's Jean-Francois Seznec, a senior fellow and energy specialist at the Atlantic Council. He says via Skype Saudi leaders have long recognized the country needs to wean itself off just exporting oil, especially now with chronically low crude oil prices and concerns over climate change.

SEZNEC: They need to diversify the economy now. They cannot just wait. They need to have many, many different products, and they want this within the next 10, 15 years.

NORTHAM: Seznec says the refinery will likely produce thousands of products such as petrochemicals, plastics along with gasoline and diesel. He says a sale would not undermine U.S. control of its refining capacity. It's not an especially large refinery and is one of a couple dozen in Texas alone.

But buying refineries would allow Saudi Arabia to branch out and do more than just pump crude oil. Seznec says other major oil exporters such as Russia or Venezuela don't think in the same strategic way.

SEZNEC: It shows how much the American corporations have influenced the thinking of the Saudis because this is exactly the kind of thinking a company like ExxonMobil or Chevron or people like that would use. And Saudi Aramco is using the same kind of thinking in its management.

NORTHAM: Jim Krane, an energy specialist at the Baker Institute at Houston's Rice University, says the state-owned Saudi Aramco is buying refineries elsewhere as a way to ensure it has customers for its crude oil.

JIM KRANE: Saudi Aramco has been buying refineries mainly in Asia, you know, countries where they see demand growing - so China, India, Vietnam, South Korea, Indonesia. They also own a refinery in Japan. And so you know, that's a big growth market.

NORTHAM: But it's a different story here in the U.S. Imports of heavy Saudi crude have dropped over the past few years thanks in large part to the shale drilling boom here. And other producers, particularly Canadian ones, have been muscling in on the market. Amy Myers Jaffe, an energy specialist with the University of California, Davis, says via Skype this has left Saudi Arabia feeling it's losing its influence in the U.S.

AMY MYERS JAFFE: Saudi Arabia has always been concerned that if they don't sell a certain amount of oil to the United States that we won't care enough about their national security.

NORTHAM: Rice University's Krane says one of the ways to ensure Saudi Arabia maintains its influence is making sure the U.S. buys its crude oil.

KRANE: So one of the ways they can do that is by owning refining capacity in the U.S. and making sure that those refineries buy Saudi crude rather than Canadian crude or, you know, crude from Mexico or Venezuela.

NORTHAM: And much of that will depend on whether Saudi Arabia does buy the LyondellBasell refinery. LyondellBasell declined to comment. The Saudi embassy in Washington did not respond to questions about a possible sale. Jackie Northam, NPR News.

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