Oil Manufacturing and Refining Industry in Saudi Arabia
The Oil Manufacturing and Refining Industry in the Kingdom of Saudi Arabia is one of the manufacturing industries that processes petroleum-derived oils and vegetable oils, preparing them for use according to their intended purpose. The contribution of manufacturing industries to the gross domestic product (GDP) at constant prices rose from 5.2 percent in 1970 to 7.9 percent in 2022.
Contribution of the oil manufacturing and refining industry to the GDP
The contribution of the oil refining industry is linked to the growth of the petrochemical industry in Saudi Arabia. The average contribution of the oil refining industry stood at 3.5 percent during the period from 1970 to 2019. Growth rates of the manufacturing sector varied throughout this period, with negative growth recorded during periods of declining oil prices, particularly between 1991 and 2019, due to the oil refining industry's sensitivity to oil prices.
The manufacturing sector in Saudi Arabia has received continuous support since the discovery of oil. The Saudi Industrial Development Fund played a role in establishing several industrial cities that support the growth of various industries, strengthen the industrial sector, and promote economic diversification. This contributed to the growth of oil refining industries, which came to represent around 29.1 percent of total manufacturing industries.
Development of the oil refining industry in Saudi Arabia
The development and growth of the industrial sector, the diversification of its products, and the expansion of its markets locally and globally have led to positive changes in the macroeconomy. The GDP of manufacturing industries at current prices reached SAR313.553 billion in 2019 and SAR610.052 billion in 2022.
In line with this growth, the oil refining industry also developed, achieving successive growth levels. Its GDP at constant prices (2010=100) was approximately SAR74.173 billion in 2014, rising to about SAR83.547 billion in 2015, then to SAR94.610 billion in 2016, and to SAR96.533 billion in 2017. In 2020, the GDP of the oil refining industry declined to about SAR78.780 billion, before gradually increasing again to reach approximately SAR99.514 billion in 2022.
The oil refining industry maintained its contribution to the GDP and developed over the years. The relative change in GDP at constant prices reached 13.3 percent in 2015, around 15.6 percent in 2016, and 2.03 percent in 2017 in the oil refining industry. In 2022, the change rate was approximately 8.3 percent.
Edible oils in Saudi Arabia
Edible oils in Saudi Arabia include cooking oils such as cottonseed oil, soybean oil, corn germ oil, peanut oil, sesame oil, sunflower oil, and others. They also include industrial-grade oils, which can be used in certain industries and may also be suitable for consumption depending on their level of refinement. These include linseed oil and rapeseed oil.
Industrial oils differ from edible oils in that they are used exclusively for industrial purposes, either due to their unacceptable taste or because they are unfit for human consumption. These include rice bran oil and rice polish oil (which is a byproduct composed of rice germ mixed with the inner husk of rice, produced as a secondary product during rice whitening).
Edible oils also include cooking or frying oils, which consist of oils that do not form stable mayonnaise emulsions at temperatures between 4.4 degrees Celsius and 7.3 degrees Celsius. These may be oils or semi-solid to solid fats, such as non-hydrogenated or hydrogenated fats specifically prepared for frying purposes, as well as refined oils like palm oil, corn oil, sunflower oil, cottonseed oil, and others.
Lubricating oils in Saudi Arabia
The oil industry in Saudi Arabia has developed significantly, making the country one of the leading nations in processing lubricating oils. It is also among the major producers and consumers of vehicle lubricants globally. A portion of its production is exported to Asian and African countries, while large quantities are also used domestically for various purposes.
The use of lubricating oils is not limited to car engines and transportation vehicles, which account for only about 30 percent of lubricating oil consumption. The largest global consumer of this commodity is heavy industrial machinery and large-scale equipment used to operate factories.
Engine and machinery oil products in Saudi Arabia
Oil products in Saudi Arabia are diverse, encompassing a wide range of types depending on their various uses across engines and machinery. Lubricant manufacturing companies produce around five hundred products in different packages and specifications for multiple purposes. Key types of oils in Saudi Arabia include: gasoline engine oils, diesel engine oils, gas engine oils, two-stroke engine oils, industrial greases, hydraulic oils, compressor oils, oils used in metallurgical industries, and others.
Saudi Aramco oils
Since 2017, Saudi Aramco one of the world's largest crude oil and gas companies has been working to enter the global base oil market as part of its efforts to maximize the value of petroleum products. This initiative aligns with the company's strategy to achieve integration in its refining and marketing sector, with an existing presence in the base oil market through its independently operating joint ventures in base oil production and marketing.
The company is also developing its own strategy for base oils, leveraging its extensive experience in the oil industry, the high reputation of its products, and its distinguished global standing in meeting customer needs. This is further supported by decades of expertise from Saudi Aramco’s affiliated companies in the base oil industry.
Export of used oils from Saudi Arabia
As part of regulating oil trade operations and protecting the national economy, Saudi Arabia prohibits the export of used oils, which are sometimes exploited as a means for diesel smuggling. In 2014, approval was granted to halt the export of used oils and crude oil residues.