Saudi Aramco signs preliminary gas deal with Shell

Saudi Aramco has signed a preliminary deal to pursue international gas opportunities with Royal Dutch Shell. (Reuters)
Updated 08 March 2018
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Saudi Aramco signs preliminary gas deal with Shell

LONDON/DUBAI: State oil giant Saudi Aramco signed a preliminary deal to pursue international gas opportunities with Royal Dutch Shell on Thursday as part of top crude exporter Saudi Arabia’s diversification drive before the listing of Aramco.
The memorandum of understanding (MoU) signed in London between the two companies was during the official visit of Saudi Crown Prince Mohammed bin Salman to Britain, and would include gas upstream and liquefaction projects.
“It is a discussion that began some time ago and now we have signed a memorandum to work on gas projects from upstream to downstream across the world and in Saudi Arabia. Concrete projects would be announced in due course,” Shell Chief Executive Ben van Beurden told Reuters after the signing ceremony.
Last year, industry sources told Reuters Saudi Arabia and international oil companies had discussed gas venture opportunities inside the Kingdom and abroad.
Aramco is gearing up for a share listing later this year, aiming to get a valuation of up to $2 trillion in what could be the world’s biggest initial public offering (IPO).
The Kingdom has a long-term goal of increasing the use of gas for domestic power generation, thus reducing oil burning at home and freeing up more crude for export.
Expanding its gas portfolio inside the Kingdom as well as abroad could help increase Aramco’s valuation as it generates more revenue from exports than selling oil at lower domestic prices — Saudi Arabia is the world’s fifth-biggest oil consumer despite being only the 20th-biggest economy.
Saudi Energy Minister Khalid Al-Falih, who is also Aramco’s chairman, had said Aramco was interested in investing in international upstream ventures, particularly gas, and could invest in importing gas into the kingdom.
Diversifying gas assets abroad would help Aramco achieve a better valuation and is attractive for investors, industry sources has said. Riyadh also plans to raise domestic gas prices, a move seen as an incentive for foreign companies.
Aramco controls gas reserves in excess of 8 trillion cubic meters, according to BP’s annual energy review. The Saudi company has said it wants to explore for gas in the shallow waters of the Red Sea as well as onshore shale gas.


Eni issues fraud complaint over suspect Iraqi shipment

Updated 18 July 2019
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Eni issues fraud complaint over suspect Iraqi shipment

  • Italian oil multinational asks if rejected tanker cargo contained Iranian crude targeted by US sanctions

LONDON: Eni has filed a fraud complaint against its former head of oil trading over a suspect Iraqi crude oil shipment, amid concerns inside the Italian oil major that the failed delivery may have included Iranian crude targeted by US sanctions.

In the filing to the Milan prosecutor’s office, Eni accused its former head of trading and operations, Alessandro Des Dorides, of misleading all parties to the deal and hiding the role of a small Italian oil trading firm, Napag.

Two other senior employees were either demoted or suspended as a result of the failed shipment, sources said.

Eni said it had suspended dealings with Napag in February over a separate investigation by Milan prosecutors into suspected obstruction of justice by members of Eni’s former legal team.

Eni said that it fired Des Dorides at the end of May, after he had been in his job about six months, for what it said was an unrelated petrochemical deal with Napag in 2018.

Napag did not respond to an emailed request for comment or answer phone calls.

Des Dorides did not respond to several requests for comment from Reuters via email or LinkedIn. Reuters could not locate legal representation for him.

Eni also declined to comment. Eni said it “does not comment on ongoing investigations and internal due processes.”

The crude arrived aboard the White Moon tanker at the end of May for offloading at the Milazzo refinery in Sicily, which is part-owned by Eni. The Italian oil major, which produces oil in Iraq and is a regular buyer of Iraqi crude, was solely responsible for the cargo.

However, Eni said it rejected the delivery because it did not match the Iraqi Basra Light crude it expected from its counterparty, the Dubai-based trading arm of Nigerian firm Oando.

After sitting offshore for three weeks, the White Moon sailed back to the Gulf. The tanker manager did not respond to a request for comment.

Two sources at Eni said the White Moon’s 1 million barrel cargo created panic within the company over fears the crude could be, at least partially, Iranian.

Handling Iranian oil would have breached sanctions the US reimposed or extended last year after quitting a nuclear deal between Iran and world powers.

Washington aims to reduce Iran’s exports to zero and force the Islamic Republic to renegotiate that nuclear deal, curb its missile program and modify its behavior in the Middle East.

Iran has called on other parties to the accord to shield it from the effects of US sanctions and has sought to circumvent US restrictions by selling more of its oil undercover.

Following the rejection of the White Moon shipment in June, the head of the Italian Senate Industry Committee wrote to Eni Chief Executive Claudio Descalzi to clarify the origin of an oil cargo labelled as coming from Iraq, the head of the committee said.

The head of the committee declined to comment to Reuters on the oil’s possible origins.

Eni said it bought the crude from Nigerian firm Oando, who in turn bought the oil from the London branch of Italy’s Napag.

Oando said it took back the cargo from Eni, but declined to comment further on the origins of the cargo as it was “in the middle of a resolution” over the rejected oil. Oando said the terms of the deal were “normal for the trading industry.”

Italian prosecutors cannot legally comment on any investigation unless there is an exceptional circumstance.

Trading sources familiar with the deal said the offer terms for the crude should have raised alarms internally even before its arrival off Sicily. The offer was at a significant discount to typical Iraqi trades, was paid for in euros and was from a firm that is new to the region, they said. Physical oil is commonly traded in dollars.

Eni said that the mismatch in the crude’s chemical composition “coupled with other red flags led to the decision to terminate the transaction.”

The oil loaded onto the White Moon came via two ship-to-ship transfers that makes the origin harder to track, sources said.

The crude bought from Oando was loaded onto the White Moon from another vessel, the New Prosperity, but that vessel itself had been loaded with oil from a third tanker, the Abyss.

The Abyss makes regular voyages through the Mideast Gulf with its transponder switched off for days at a time, according to Refinitiv Eikon ship tracking. The transponder was switched off between April 24 and May 3 when it transferred oil to the New Prosperity.