In what oil experts see as the beginning of a significant new trend in the world petroleum market, British Petroleum has contracted with Saudi Arabia to process Saudi oil at BP's European refineries for the Saudi-owned Petromin Oil Co.
The agreement gives Saudi Arabia, the non-communist world's largest oil producer, long-sought access to the "downstream" refining and marketing end of the oil business in Europe, opening up the potential for larger profits than those possible by merely selling crude oil for further exploitation by the oil companies.
It also gives British Petroleum access for the first time to Saudi oil, which has previously been sold only to American oil companies, or to state-owned oil companies in Europe and Japan in a growing number of nation-to-nation transactions.
Mobil is now negotiating a similar deal with Saudi Arabia and Petromin.
Oil experts here said today they expect this trend to grow. More and larger deals of this kind could further limit the amount of oil going to American oil companies. They also could give oil producing nations, as virtual partners in the refining and marketing process, more leverage over oil companies and another way to influence oil prices or carry out political decisions for oil distribution.
BP, Mobil and Shell all have been scrambling to find new supplies of oil they lost when the turmoil in Iran cut production and interrupted supply agreements there, and after other Organization of Petroleum Exporting Countries began taking oil away from the multi-nationals to sell directly to state-owned oil companies in nation-to-nation transactions.
The multinationals have feared their supplies of crude could grow even smaller if a number of oil-producing countries also make proposed cutbacks in total cude oil production to hold down world supply and keep up prices. BP gets much of its oil from Kuwait, which is considering cutting its production by up to 30 percent for economic reasons, and from Britain's North Sea fields, where the British government may limit future production to extend the life of its reserves.
To sign new agreements under which Iran will supply them will a combined total of about 220,000 barrels of crude a day at an average price of around $30, BP and Shell had to agree to negotiate side deals to refine and help market an additional 40,000 to 50,000 barrels a day for the income and to "identify known trends" national Iranian Oil Company.