Saudi drone attacks came as Aramco was preparing for IPO
At 3.31 a.m. and 3.42 a.m. on September 14, loud explosions shook Saudi Arabias Khurais oilfield and the Abqaiq petroleum processing facility, both owned by the state-owned Saudi Aramco oil company, often described as the Kingdoms crown jewel.
The explosions set off fires that took several hours to douse. The strikes, said to have involved at least 20 drones and several cruise missiles, forced Saudi Arabia to shut down half of its oil production capacity, or 5.7 million barrels per day of crude - 5 per cent of the world's global daily oil production.
The Iran-backed Houthi rebels, who have been fighting a Saudi-led military coalition in Yemen for the past four years, claimed responsibility for the attack.
Abqaiq is the world's largest oil processing facility, where about two-thirds of the total Saudi supply is refined and cleaned of impurities such as sulphur and sand. It has a crude oil processing capacity of more than 7 million barrels a day, according to the US Energy Information Administration.
The plant handles crude pumped from the Ghawar super giant field. Abqaiq is also linked to the Shaybah oil field through a 395-mile pipeline.
Aramco, which pumped about 9.8 million barrels a day in August, will be able to keep up supplies for several weeks by drawing on its global storage network. The Saudis hold millions of barrels in tanks in the kingdom itself, besides in three locations around the world: Rotterdam in the Netherlands, Okinawa in Japan, and Sidi Kerir on the Mediterranean coast of Egypt
The attacks came as Aramco was preparing for an initial public offering (IPO).
Khurais is the location of Saudi Arabia's second-biggest oil field, with a production capacity of 1.45 million barrels a day. The Khurais field produces Arab Light.
The attacks also came days after Saudi Arabia's King Salman replaced the nation's energy minister with one of his own sons, naming Prince Abdulaziz bin Salman to one of the most important positions in the country.
The new energy minister is an older half brother to 34-year-old Crown Prince Mohammed bin Salman and replaces Khalid al-Falih, who'd been in the role since 2016.
Abdulaziz is an experienced oil industry figure in Saudi Arabia. He has been minister of state for energy affairs since 2017. The two brothers are not known to be close.
Damage to the top OPEC producer's oil installations ignited fears of supply disruption around the world and sent crude prices soaring. The price of a barrel of Brent crude surged by 20 per cent early on Monday to nearly $72 (pounds 58, up from $60 per barrel).
The prices then dropped back to about $66 per barrel after US President Donald Trump pledged to release some of America's oil reserves, to make up the shortfall from Saudi Arabia.
Saudi Arabia plans to list as much as 5 per cent of Aramco by 2020 or 2021, which would make it the world's biggest IPO ever.
To prepare for an initial public offering, Aramco replaced Khalid al-Falih as board chairman earlier this month with finance-minded Yasir al-Rumayyan, distancing the company from the energy ministry. Al-Rumayyan is a close adviser to the crown prince and heads the Public Investment Fund, the country's sovereign wealth fund.
The September 14 attacks were the biggest on Saudi oil infrastructure since Saddam Hussein's invasion of Kuwait in 1990, when the Iraqi military fired Scud missiles into the Kingdom.
Saudi Arabia possesses around 18 per cent of the world's proven petroleum reserves and ranks as the largest exporter of petroleum. The oil and gas sector accounts for about 50 per cent of gross domestic product, and about 70 per cent of export earnings. Apart from petroleum, the Kingdom's other natural resources include natural gas, iron ore, gold, and copper.
Saudi Arabia is a founder member of the OPEC.
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