Alsir Sidahmed\r\n\r\n \r\n\r\nThe recent country report from the International Monetary Fund (IMF) was upbeat about the Kingdom\u2019s economy pointing out that the main risk facing this economy is the fluctuation of the global oil market and that diversification remains the main challenge facing the Kingdom\u2019s economic planners.\r\nIt reiterated its previous verdict that Saudi Arabia has one of the best performing economies among the G-20 and that is attributed mainly to the continuous high oil prices, high government spending, an active private sector all supported with carefully designed fiscal policies that kept inflation at bay.\r\nHowever, the drop in oil market to its lowest level in more than 14 months that prompted the Kingdom and other oil producers to trim their output is a clear demonstration of what the IMF warned of. The unique nature of oil is that it is still a commodity affected by supply and demand and in this particular case producers don\u2019t have control on the other end of the chain: consumption.\r\nOver the years, Riyadh has developed an oil strategy that took into consideration both its role as the world main residual supplier and at the same time work toward adding value to the crude it exports. That explains why the Kingdom worked on securing supplies through a comprehensive strategy of investing heavily to tap its oil reserves to enable it produce up to 12.5 million barrels per day (bpd) and maintain between 1-2 million bpd in spare capacity in case supplies were cut for one reason or another as has been demonstrated several times in the past. Along with providing secured supplies, the Kingdom developed two main outlets through the Gulf and the Red Sea export terminals in addition to the Sumed pipeline. However, the other side of the strategy includes refining both to meet the growing domestic consumption as well as tapping the demand in foreign markets. In addition to the domestic refineries in Jeddah, Riyadh and Ras Tanura, Yanbu and Rabigh ,Saudi Arabia opted to get into joint ventures where foreign markets conditions support such ventures that are utilizing currently some 2.4 million bpd in lucrative markets like the US, China, Japan, South Korea and so on.\r\nAs part of this strategy to refine as much as possible, or 6 million bpd, that is half of the Kingdom\u2019s crude to reduce the impact of the crude oil prices fluctuations on one hand and add value three new big joint venture refineries each with 400, 000 bpd capacity were built in Yanbu, Jubail and Jazan. The 1.2 million bpd, and a good part of it will be heavy crude, that these refineries will consume demonstrates clearly the dimensions of this strategy.\r\nFor one they are joint ventures with Sinopec of China, and ConocoPhillips though Jazan was left to be a 100 percent Saudi owned venture. The spread location between the Kingdom\u2019s east, west and south, which helps in the economic diversification and providing job opportunities. The most significant development is the creation of Aramco Trading firm two years ago to focus on the export of refined products, which allows the company to be a big player in the market at the time many refineries worldwide are suffering from being outdated and sometimes face difficulties in securing needed supplies. That is not the case with the Kingdom\u2019s new export refineries that were built with the state-of-the-art and up-to-date technology that takes into accounts the consumers needs. Moreover, the big Manifa oil field, which is expected to come on-stream later this year with 900, 000 bpd output completes the plan in terms of tapping a new source of crude, mainly heavy, process it at these refineries and spares some for export till the 400, 000 bpd Jazan refinery becomes operational in three years\u2019 time. In fact the value these refineries add covers their partners as well. Sincpec feels more confident to target new markets and consolidate its presence in Europe and Africa, thus expand beyond its traditional market in Asia. Its 400, 000 bpd joint venture with Aramco in Yanbu will enable it to start next year shipping its first clean diesel cargoes. That was made possible because the Chinese conglomerate will take 99, 000 bpd of diesel and 51, 000 bpd of gasoline, which exceeds the company\u2019s existing 75, 000 bpd it used to market.\r\nSuch refining strategies will help the Kingdom in rainy days.