Petromin to invest in KAEC’s Industrial Valley

Samir Nawar, CEO of Petromin, left, with Rayan Qutub, CEO of the Industrial Valley during the signing of the agreement.
Updated 11 January 2017
0

Petromin to invest in KAEC’s Industrial Valley

JEDDAH: King Abdullah Economic City (KAEC) has succeeded in adding Petromin to the growing list of investors in the Industrial Valley.
Under the deal, Petromin will lease 193,917 sq. meters of land to build a logistics service center for Nissan vehicles.
“King Abdullah Economic City’s efforts are focused on boosting the competitiveness of the Industrial Valley as a regional manufacturing and logistics hub,” said Fahd Al-Rasheed, group CEO and managing director of KAEC.
“The unrivaled quality of our infrastructure will attract national and global manufacturing and logistics giants, which will give us further impetus to press on with achieving the strategic vision the government has set forth for this modern city.”
Petromin is one of the Kingdom’s leading producers of automotive lubricants and automotive service providers. The company is active in five major sectors: Mass production and retail sales of automotive and industrial lubricants; Petromin Express, the company’s quick automotive service arm; automotive maintenance and repair; retail sales of automotive fuels through the company’s gas stations; and automotive retail — the company is the official Nissan Motors dealer in Saudi Arabia.
Samir Nawar, chief executive officer of Petromin, underlined the importance of the two sides working together as a team.
“This is why we have long-term investment in King Abdullah Economic City at the very top of our priorities,” he said. “There are so many favorable aspects that make the KAEC the perfect place for us to expand our investments, including the city’s strategic location, the commencement of operations at the King Abdullah Port and the sheer ease of doing business thanks to the record time in obtaining the necessary permits and licensing from the Economic Cities Authority.”
Rayan Qutub, CEO of the Industrial Valley, said that the deal reflects the growing demand for space in the Industrial Valley.
“The automotive sector, which includes vehicle dealers, distributors, spare parts suppliers, commercial vehicle assembly corporations and lubricants manufacturers, is a runaway success in the Industrial Valley,” he said. “It is a natural outcome that the Industrial Valley is developing as the primary base of operations for this sector, thanks to its strategic location on the coast of the Red Sea, its logistical access, the upcoming re-export zone, and the opening of the roll-on/roll-off pier at King Abdullah Port.”
The Industrial Valley, he said, has become the number one choice for corporations that seek to start or expand their business in the region.
“So far, we have been able to attract 120 of the biggest corporations of which 25 have already begun production and 35 others are in the process of building their facilities.”


Asia’s refining profits slump as Mideast exports surge

Updated 23 February 2019
0

Asia’s refining profits slump as Mideast exports surge

  • Since 2006, the Asia-Pacific has been the world’s biggest oil-consuming region, led by industrial users South Korea and Japan along with rising powerhouses China and India
  • However, overbuilding of refineries and sluggish demand growth have caused a jump in fuel exports from these demand hubs

SINGAPORE: Asia’s biggest oil consumers are flooding the region with fuel as refining output is exceeding consumption amid a slowdown in demand growth, pressuring industry profits.
Since 2006, the Asia-Pacific has been the world’s biggest oil-consuming region, led by industrial users South Korea and Japan along with rising powerhouses China and India.
Yet overbuilding of refineries and sluggish demand growth have caused a jump in fuel exports from these demand hubs.
Compounding the supply overhang, fuel exports from the Middle East, which BP data shows added more than 1 million barrels per day (bpd) of refining capacity from 2013 to 2017, have doubled since 2014 to around 55 million tons, according to Refinitiv.
Car sales in China, the world’s second-biggest oil user, fell for the first time on record last year, and early 2019 sales also remain weak, suggesting a slowdown in gasoline demand.
For diesel, China National Petroleum Corp. in January said that it expected demand to fall by 1.1 percent in 2019. That would be China’s first annual demand decline for a major fuel since its industrial ascent started in 1990.
The surge in fuel exports combined with a 25 percent jump in crude oil prices so far this year has collapsed Singapore refinery margins, the Asian benchmark, from more than $11 per barrel in mid-2017 to just over $2.
Combine the slumping margins with labor costs and taxes and many Asian refineries now struggle to make money.
The squeezed margins have pummelled the stocks of most major Asian petroleum companies, such as Japan’s refiners JXTG Holdings Inc. or Idemitsu Kosan, South Korea’s top oil processor SK Innovation, Asia’s top oil refiner China Petroleum & Chemical Corp. and Indian Oil Corp., with some companies dropping by about 40 percent over the past year. Jeff Brown, president of energy consultancy FGE, said the surge in exports and resulting oversupply were a “big problem” for the industry.
“The pressure on refinery margins is a case of death by a thousand cuts ... Refinery upgrades throughout the region are bumping up against softening demand growth,” he said.
The profit slump follows a surge in fuel exports from China, India, Japan, South Korea and Taiwan. Refinitiv shipping data shows fuel exports from those countries have risen threefold since 2014, to a record of around 15 million tons in January.
The biggest jump in exports has come from China, where refiners are selling off record amounts of excess fuel into Asia.
“There is a risk for Asian market turmoil if (China’s fuel) export capacity remains at the current level or grows further,” said Noriaki Sakai, chief executive officer at Idemitsu Kosan during a news conference last week.
But Japanese and South Korean fuel exports have also risen as demand at home falls amid mature industry and a shrinking population. Japan’s 2019 oil demand will drop by 0.1 percent from 2018, while South Korea’s will remain flat, according to forecasts from Energy Aspects.
In Japan, oil imports have been falling steadily for years, yet its refiners produce more fuel than its industry can absorb. The situation is similar in South Korea, the world’s fifth-biggest refiner by capacity, according to data from BP.
Cho Sang-bum, an official at the Korea Petroleum Association, which represents South Korean refiners, said the surging exports had “triggered a gasoline glut.”
That glut caused negative gasoline margins in January.