Saudi Aramco CEO Says 'We Are Ready' for IPO in Second Half of 2018
https://www.bloomberg.com/news/articles/2018-01-24/aramco-trading-starts-swapping-saudi-crude-oil-for-refined-fuels
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Unit of Saudi Aramco previously traded mostly oil products
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Mediterranean offers ‘opportunities for trading’: Al-Buainain
Saudi Aramco’s
trading unit started swapping the kingdom’s crude oil for products
refined in other countries, allowing the company to tap new markets,
according to its chief executive officer.
The
company has supplied crude to refiners in the Mediterranean region and
gotten fuel in return, Ibrahim Al-Buainain, chief executive officer of
Saudi Aramco Products Trading Co., said Wednesday by phone. The refined
products have been sold in Europe, North Africa and the west coast of
Saudi Arabia, and the aim is to do more of the processing deals,
Al-Buainain said.
“In
the Mediterranean there is plenty of spare refining capacity,”
Al-Buainain said. “That’s creating opportunities for trading.”
Al-Buainain said the company was trading small amounts of Saudi crude in
the processing deals and that the swaps allowed it to reach new
customers.
Saudi Arabia is the world’s biggest crude exporter and the
kingdom is preparing to sell shares in state energy producer Saudi
Arabian Oil Co., also known as Aramco, in what could be the world’s
biggest initial public offering. The strategy of dealing in Saudi crude
is a change for Aramco Trading which previously bought and sold mostly
fuels like gasoline, diesel or fuel oil. Last year the unit started
trading crude produced by other countries.
Expanding Sales
State
oil companies like Saudi Aramco are expanding their crude sales and
refining capacity to better compete in a market flush with supply. Crude
from U.S. shale oil fields and from Russian deposits is increasingly
vying for buyers in Asia, the biggest market for Middle Eastern
producers.
“They have to adapt to the market and look to take
advantage of opportunities to improve profitability,’’ said Bassam
Fattouh, director of the Oxford Institute for Energy Studies.
Aramco
has stakes in 5.4 million barrels a day of refining capacity in Saudi
Arabia to South Korea and the U.S. The company aims to double that
capacity within a decade even as it battles other crude producers for
market share. The trading unit may also supply crude to Aramco’s 600,000
barrel-a-day Motiva Enterprises LLC refinery in Port Arthur, Texas, the
biggest refinery in the U.S., according to Al-Buainain.
“Saudi
Aramco is developing the trading business to take advantage of the
expansion in their refining business,’’ Oxford’s Fattouh said.
Trading Opportunities
Aramco is increasingly joining integrated oil companies like
BP Plc and Royal Dutch Shell Plc that aim to take advantage of their
pipelines, storage units, refineries and oil production fields to take
advantage of trading opportunities and boost profit. It’s a shift for
state oil producers which traditionally pumped crude and shipped it to
buyers under long-term contracts.
The wholly owned trading unit of
Saudi Aramco has done at least two processing deals with Saudi crude
and it’s also traded crude and condensate produced in other countries,
Al-Buainain said.
Aramco Trading handles about 1.5 million barrels
a day of refined fuels, and wants to increase that to more than 2
million barrels, Al-Buainain said
in May. It also plans to buy crude from other producers to supply some
of Saudi Aramco’s joint-venture refineries globally, he said Wednesday.
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