U.S.-Saudi Consortium Plans $5 Billion Gulf Refinery Outside Hormuz
Key Takeaways
- •MERA Oil is a U.S.-Saudi consortium planning a $5 billion refinery project with capacity to process 200,000 barrels of crude oil per day.
- •The partners are evaluating three possible sites in Gulf Cooperation Council countries, and the planned location would be outside the Strait of Hormuz.
- •The proposed complex would also include a deepwater port, storage capacity, and export facilities.
- •Reuters said the project could later be expanded to include sustainable aviation fuel processing and carbon management facilities.
- •The announcement comes after the shutdown of Saudi Aramco’s Jazan refinery removed 400,000 barrels per day from global refining capacity following a Houthi strike.
A consortium of U.S. and Saudi companies is planning to build a new $5 billion refinery in the Persian Gulf, according to Reuters. The project is designed to have capacity to process 200,000 barrels of crude oil per day.
The group, known as MERA Oil, includes Texas-based MWG Group, the Patel Family Office, and PWS, a company associated with Saudi AHQ Group. The partners are currently evaluating potential sites and have narrowed the choice to three locations in Gulf Cooperation Council states. The GCC consists of six Gulf countries.
In addition to the refinery itself, the planned complex would include a deepwater port, storage capacity, and export facilities, Reuters reported. The consortium said the location will be outside the Strait of Hormuz, a major shipping chokepoint for global oil flows.
Reuters also reported that the project could eventually be expanded to include sustainable aviation fuel processing capacity and carbon management facilities, reflecting how new refining projects are increasingly being designed with broader fuel and emissions infrastructure in mind.
The proposal comes after Saudi Aramco was forced to shut down its Jazan refinery earlier this week, removing 400,000 barrels per day from global refining capacity after a strike by Yemen’s Houthis. The attack took place on Saturday, and video verified by Reuters showed a large plume of smoke rising from the facility. Houthi military spokesman Yahya Saree said the group also struck Aramco facilities in Yanbu. Saudi Aramco has not commented on the extent of the damage or on a restart schedule. Media reports have said repairs at Jazan may take until mid-August.
The shutdown is expected to add to an already tight supply situation in refined fuels. Analysts have warned for months that fuel markets were under strain, and crack spreads have recently reached record levels as demand outpaces supply amid fighting in the Persian Gulf, the Red Sea, and Russia.
On the supply side, Russia has begun restarting refineries damaged by Ukrainian drone strikes. However, its ban on diesel exports remains in place.
By Irina Slav for Oilprice.com