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Author Topic: Question about North Sea oil  (Read 1985 times)
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ozzy76
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« on: June 20, 2013, 07:36:27 pm »

 Greetings.
  I wanted to ask a question about British North Sea oil.
From time to time I see a VLCC for Fawley on this site.

And my question is sort of related to that.

But before I ask my question, I would like to give a few stats,
Which I hope will explain the reason for my question.
Since 2006 Britain has more oil than what is produced in the North sea.
BUT these imports are about 60 % of Britains' needs..Despite the fact that the British North sea produces enough oil for about 94% of britains' needs..
So, the question is
Why the huge gap??
Why is Britain importing 60 % and not 5-6 % of it's oil.
Why aren't refineries in Britain processing this oil??
 Is it because of  Enviromental reasons?
Or is there some Economic gain in selling this oil, i.e does it make the balance of payements look good and make Sterling a stronger currency?? Is it to do with having good foreign reserves of Currency???  Is the imported oil cheaper than the Brent crude??? Which I understand to be a nice blend of oil?

I was struggling to understand, as we are hearing bad economic tidings across the whole of Europe. It just doesn't make sense that oil refineries are not built to handle this oil..
It would create thousands of well paid jobs..Or would it lead to higher petrol prices and a recession??
And lastly where does Britain export this oil to?? And where does the refined oil come from.
And why are refineries in Europe, closing Down.
Phew , that's a lot of questions..But it was just something I thought of.
I know people follow ship traffic on here..So somebody should know of the economics behind it all. Grin
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Allan RO
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« Reply #1 on: June 20, 2013, 08:32:26 pm »

Hi Ozzy

Very complicated set of questions.  Only a small percentage of Middle Eastern oil arrives at Fawley in VLCCs, may be 4 or 5 a year, then they are only part loads of around 80 - 100,000t.   Most of the crude processed there comes either from North Sea fields or from oil fields in Russia.  It may be a question of economics to a small extent, but don't forget the price for crude oil is generally set by OPEC, although there are variations in price because of supply and demand often manipulated by speculators who hold large quantities of crude in tankers waiting for the price to edge up a few cents/barrel - on a 300,000t load of oil thats a lot of profit to be made.  And the price also varies depending on the type of crude, heavy crude is cheaper than say a light North Sea oil

Crude oils from different sources have different hydrocarbon make-up, some have more heavy ends which end up as a higher production of residues like bitumen,good if you have a large local roadbuilding programme, others are much lighter and yield a higher percentage of more useful,and hence more valuable products and yield less residue after cracking and distillation.  Others have a higher sulphur content which no-one really wants, as it can poison the catalyst in the cracker. - try www.oilprices.org for more information.

So it is likely that in the main, the refineries will source the type of crude oil that suits the capabilities of their crackers and other processing plant, and produce the products they want either for the local market or for export.

Hope this helps

Allan
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ozzy76
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« Reply #2 on: June 21, 2013, 08:57:57 pm »

Yes Thank you Allan for your Reply.
I completely forgot about the effect of Opec.
And that is also interesting about how the Refineries are set up for a particular blend of Crude Oil.
I guess the cost of these must be massive and the price of oil, controlled by Opec..Means it's hard to plan for the future.
I.e..Something that might be profitable to do today..May not be tomorrow.
 Thank you for you reply and the link
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