Saudi Aramco eyes bigger market share in Asia ahead of possible OPEC cut

Amin Nasser, chief executive of the state oil giant, told Reuters that his company would abide by any OPEC agreement to cut crude production in 2019. (AFP)
Updated 28 November 2018
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Saudi Aramco eyes bigger market share in Asia ahead of possible OPEC cut

  • “We are always going to be attempting to expand our market share but at the same time the company is obliged to meet any agreement by OPEC”
  • Aramco aims to become a global leader in chemicals and the world’s largest integrated energy firm

DHAHRAN: Saudi Aramco will expand its market share in Asia despite likely OPEC limits on output next year, and is eyeing deals in China and Africa as it aims to become a global leader in chemicals, the head of the world’s top oil producer said on Monday.
Amin Nasser, chief executive of the state oil giant, told Reuters that his company would abide by any OPEC agreement to cut crude production in 2019, less than two weeks before the exporter group meets to decide output policy.
But he added that he still sees growth opportunities in Asia — identifying China, India, Malaysia and Indonesia — and will push ahead with refining ventures to guarantee new outlets for Aramco’s crude.
“We are always going to be attempting to expand our market share but at the same time the company is obliged to meet any agreement by OPEC,” Nasser said in an interview in Dhahran, Saudi Arabia.
“Asia is a very important market for us. We are looking at two potential JVs (joint ventures) for refineries in China right now ... We continue to expand our market share in different markets.
“We are looking at India, we are looking at Malaysia, we are looking at Indonesia, we are looking at China. All these markets are very important to us. And other markets as well, even in Africa,” he added.
Aramco said last week it would sign five crude oil supply agreements with Chinese customers, taking its supply to China to a record-high 1.67 million barrels per day (bpd) in 2019.
Nasser did not explain how Aramco would meet that higher demand if the Organization of the Petroleum Exporting Countries, of which Saudi Arabia is the de facto leader, decided to restrict production next year.
Asked whether the company planned to reduce crude exports to the United States as inventories there increase, he said: “All markets are important for us. Asia is the biggest market for sure, then Europe and the US“
Nasser added that plans to expand the company’s Motiva refinery in the United States and move into petrochemical production at that plant were going ahead as scheduled.
OPEC meets in Vienna on Dec. 6, amid expectations that Saudi Arabia will push for a production cut of up to 1.4 million bpd by the producer club and its allies to prop up sagging oil prices.
Benchmark Brent crude was trading near $60 a barrel on Monday, clawing back some losses after plunging nearly 8 percent the previous session amid fears of a supply glut.
Saudi Arabia’s crude production has hit an all-time high in November of about 11.1-11.3 million bpd, an industry source familiar with the matter told Reuters on Monday.
Saudi Energy Minister Khalid Al-Falih said earlier this month that Aramco would ship less crude in December compared to November due to lower seasonal demand.
A chemical leader
Aramco aims to become a global leader in chemicals and the world’s largest integrated energy firm, with plans to expand its refining operations and petrochemical output.
The company plans to raise its total refining capacity — inside the kingdom and abroad — to 8-10 million bpd from around 5.4 million bpd now, Nasser said.
“We are the industry leader when it comes to upstream oil and gas. But when it comes to downstream, even though we have a big position in refining ... our ambition is much bigger, we are looking at 8-10 million bpd in refining,” he said.
“Chemicals is a major area for expansion. We are going to be the global leader when it comes to chemicals.”
To get there, Aramco is embarking on the possible acquisition of a strategic stake in Saudi Arabia’s SABIC, the world’s fourth-largest petrochemicals maker.
Nasser said he hoped to finalize talks “soon” with the Public Investment Fund to buy the sovereign wealth fund’s stake in SABIC.
“We are doing partly the due diligence and the negotiations at the same time. These things take time,” he said.
“And then if we are able to conclude the negotiations, still there is the process of antitrust in different countries and that also takes some time. We did not put a timeframe that we need to have but we are hoping to have it soon.”
Aramco aims to allocate some 2-3 million bpd of its crude production to petrochemicals, Nasser said.


Oil prices rise on Libyan export interruption, but markets remain weak

Updated 20 min 22 sec ago
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Oil prices rise on Libyan export interruption, but markets remain weak

  • The rise came after crude prices dropped by 3 percent the session before amid ongoing weakness in global stock markets and concerns that slowing oil demand-growth could erode supply cuts
  • Crude futures have lost around a third of their value since early October amid the financial market slump and an emerging oil supply overhang

SINGAPORE: Oil prices edged up on Tuesday after Libya’s National Oil Company declared force majeure on exports from the El Sharara oilfield, which was seized at the weekend by a local militia group.
Despite that, overall sentiment on oil prices remained weak amid worries over global stock markets and doubts that planned supply cuts led by producer club OPEC will be enough to rein in oversupply.
International Brent crude oil futures were at $60.19 per barrel at 0336 GMT, up 19 cents, or 0.3 percent, from their last close.
US West Texas Intermediate (WTI) crude futures were at $51.16 per barrel, up 16 cents, or 0.3 percent.
Libya’s National Oil Company (NOC) late on Monday declared force majeure on exports from the El Sharara oilfield, the country’s biggest, which was seized at the weekend by a militia group.
NOC said the shutdown would result in a production loss of 315,000 barrels per day (bpd), and an additional loss of 73,000 bpd at the El Feel oilfield.
The rise came after crude prices dropped by 3 percent the session before amid ongoing weakness in global stock markets and concerns that slowing oil demand-growth could erode supply cuts announced last week by the Organization of the Petroleum Exporting Countries (OPEC) and some non-OPEC producers including Russia.
Crude futures have lost around a third of their value since early October amid the financial market slump and an emerging oil supply overhang.
In a show of no confidence, money managers cut their bullish wagers on crude to the lowest in more than two years in the week ending Dec. 4, the US Commodity Futures Trading Commission (CFTC) said on Monday.
The financial speculator group cut its combined futures and options position in New York and London by 25,619 contracts to 144,775 during the period. That is the lowest level since Sept. 20, 2016.
In physical markets, Kuwait and Iran this week both reduced their January crude oil supply prices to Asia
“There remains a lot of uncertainty if the production cut is thick enough to make a significant dent in global supply,” said Stephen Innes, head of trading for Asia-Pacific at futures brokerage Oanda in Singapore.
“The general risk-off tone in global markets and the stronger dollar ... are contributing to the selling pressure.”
The OPEC-led group of oil producers last Friday announced a supply cut of 1.2 million barrels per day (bpd) in crude oil supply from January, measured against October 2018 output levels.