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

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.

World leaders prepare for Davos amid gloomy forecasts

Klaus Schwab, founder and executive chairman of the World Economic Forum. (AFP)
Updated 16 January 2019

World leaders prepare for Davos amid gloomy forecasts

  • Delegates to annual forum to include presidents of Iraq and Afghanistan

DUBAI: World leaders are preparing to head to the annual meeting of the World Economic Forum (WEF) in Davos, Switzerland, amid the riskiest global backdrop in years, according to a report from the event organizer itself.

As the WEF announced the names of some of the 3,000 participants set to attend the meeting and details of the four-day agenda, it also published a gloomy outlook on international politics, economics, the environment and technology. 

Rising geopolitical and geo-economic tensions are the most urgent risks in 2019, with 90 percent of experts surveyed expecting further economic confrontation between major powers, according to the WEF’s annual Global Risks Report.

“The world’s ability to foster collective action in the face of urgent major crises has reached crisis levels, with worsening international relations hindering action across a growing array of serious challenges. Meanwhile, a darkening economic outlook, in part caused by geopolitical tensions, looks set to further reduce the potential for international cooperation in 2019,” it added.

Although political and economic worries were top of the immediate agenda for the 1,000 experts polled by the WEF, the environment and climate change are also a cause for concern, as are “rapidly evolving” cyber and technological threats, the WEF said.

Børge Brende, the WEF president, said: “With global trade and economic growth at risk in 2019, there is a more urgent need than ever to renew the architecture of international cooperation. We simply do not have the gunpowder to deal with the kind of slowdown that current dynamics might lead us toward. What we need now is coordinated, concerted action to sustain growth and to tackle the grave threats facing our world today.”

The leaders who will begin to arrive in Switzerland in the next week include Shinzo Abe, prime minister of Japan; Jair Bolsonaro, president of Brazil; Angela Merkel, chancellor of Germany; and Wang Qishan, vice president of China.

With US President Donald Trump pulling out of the meeting to deal with the partial government shutdown, the American delegation is expected to be led by Steven Mnuchin, Treasury secretary, and Mike Pompeo, secretary of state.

The Middle East is well represented at the meeting, with at least nine heads of state or government from the region, including Palestine, Iraq, Egypt, Jordan and Lebanon. Saudi Arabia will be represented by a team of senior policymakers and business leaders.

The risk report will give them all food for thought in the Alpine resort.

Asking whether the world is “sleepwalking into a crisis,” the report responded: “Global risks are intensifying but the collective will to tackle them appears to be lacking. Instead, divisions are hardening. The world’s move into a new phase of strongly state-centered politics continued throughout 2018.

“The idea of ‘taking back control’ — whether domestically from political rivals or externally from multilateral or supranational organizations — resonates across many countries and many issues.”

Macro-economic risks have moved into sharper focus, it said. 

“Financial market volatility increased and the headwinds facing the global economy intensified. The rate of global growth appears to have peaked,” the report said, pointing to a slowdown in growth forecasts for China as well as high levels of global debt — at 225 percent of global gross domestic product (GDP), significantly higher than before the financial crisis 10 years ago.

Raising the prospect of a “climate catastrophe,” the report said extreme weather, which many experts attribute to rapid climate change, was a risk of great concern. “The results of climate inaction are becoming increasingly clear,’ the WEF said.

Of the 3,000 participants at Davos, which runs from Jan. 22 to 25, around 78 percent are men, with an average age of 54. 

The oldest will be the 92-year-old British broadcaster David Attenborough, the youngest 16-year-old South African wildlife photographer Skye Meaker.