Minister comfortable with current prices as Oman favors new kind of deal

Saudi Energy Minister Khalid Al-Falih talks to journalists during the 7th Meeting of the Joint Ministerial Monitoring Committee in Muscat on Sunday. He called for extending cooperation between OPEC and non-OPEC oil producers beyond 2018. (AFP)
Updated 21 January 2018
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Minister comfortable with current prices as Oman favors new kind of deal

MUSCAT: Saudi Arabia’s energy minister urged global oil-producing nations on Sunday to extend their cooperation beyond 2018, but said this might mean a new form of deal rather than continuing the same supply cuts that have boosted prices in recent months.
It was the first time that Saudi Arabia had publicly raised the possibility of a new form of coordination among oil producers after 2018. Their agreement on supply cuts, originally launched last January, is due to expire in December this year.
Khalid Al-Falih, speaking to reporters ahead of a meeting later in the day of the joint ministerial committee which oversees implementation of the cuts, said extending cooperation would convince the world that coordination among producers was “here to stay.”
“We shouldn’t limit our efforts to 2018 — we need to be talking about a longer framework of cooperation,” Al-Falih said. “I am talking about extending the framework that we started, which is the declaration of cooperation, beyond 2018.
“This doesn’t necessarily mean sticking barrel by barrel to the same limits or cuts, or production targets country by country that we signed up to in 2016, but assuring stakeholders, investors, consumers and the global community that this is something that is here to stay. And we are going to work together.”
Al-Falih said the global economy had strengthened while supply cuts — in which Saudi Arabia has shouldered by far the largest burden — had shrunk oil inventories around the world. As a result, the oil market will return to balance in 2018, he said.
But he said producers still had a lot of hard work ahead to restore the market to health, and it was unlikely to reach balance by the middle of this year.
Al-Falih and energy ministers from the UAE and Oman noted that the rise of the Brent oil price to three-year highs around $70 a barrel in recent weeks could cause an increase in supply of shale oil from the US.
But both Al-Falih and UAE minister Suhail Al-Mazroui said they did not think the rise in prices would hurt global demand for oil.
Kuwait’s oil minister Bakheet Al-Rashidi said any discussion among producers on the future of the agreement on supply cuts would probably happen at a meeting in June. OPEC and other producers led by Russia are next scheduled to meet to discuss oil policy in June.
Oman’s oil minister Mohammed bin Hamad Al-Rumhi said producers would discuss in November whether to renew their supply agreement or enter a new type of agreement. Oman is in favor of a new type of deal, he said without elaborating.


Saudi Aramco to invest in refinery-petrochemical project in east China

Updated 18 October 2018
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Saudi Aramco to invest in refinery-petrochemical project in east China

  • This is the third such project in China that Saudi Aramco has set its sight on
  • Last month, Saudi Aramco signed a long-term deal with the Zhejiang project’s operator Zhejiang Rongsheng to supply crude oil

ZHOUSHAN, China/SINGAPORE: State oil giant Saudi Aramco signed an agreement on Thursday to invest in a refinery-petrochemical project in eastern China, part of its strategy to expand in downstream operations globally.
The memorandum of understanding between the company and Zhejiang province included plans to invest in a new refinery and co-operate in crude oil supply, storage and trading, according to details released by the Zhoushan government after a signing ceremony in the city south of Shanghai.
Zhejiang Petrochemical, 51 percent owned by textile giant Zhejiang Rongsheng Holding Group, is building a 400,000-barrels-per-day refinery and associated petrochemical facilities that was expected to start operations by the end of this year.
This is the third such project in China that Saudi Aramco has set its sight on as it seeks to lock in long-term outlets for its crude oil and produce fuel and petrochemicals to meet rising demand in Asia and cushion the risk of a slowdown in oil consumption.
Last month, Saudi Aramco signed a long-term deal with the Zhejiang project’s operator Zhejiang Rongsheng to supply crude oil.
The oil giant had not yet finalized the size of its stake in the project and still needed to complete due diligence, Aramco’s Senior Vice President of Downstream, Abdulaziz Al-Judaimi, said on the sidelines of the event.
Saudi Aramco expects to supply 170,000 barrels per day of Saudi crude to the refinery in Zhoushan when it starts operations, he said.
The first crude carrier supplying the refinery should arrive in December or January, depending on when the project starts, he added.
Aramco also owns part of the Fujian refinery-petrochemical plant with Sinopec and Exxon Mobil Corp, and has plans to build a 300,000-bpd refinery with China’s Norinco. It is also in talks with PetroChina to invest in a refinery in Yunnan.