Saudi Aramco bets on oil supply to Europe, trading expansion

An Aramco oil tank is seen at the Production facility at Saudi Aramco’s Shaybah oilfield in the Empty Quarter, Saudi Arabia. (File/Reuters)
Updated 15 May 2019
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Saudi Aramco bets on oil supply to Europe, trading expansion

  • Aramco is looking to finalize deals in the next 2 years through swapping mainly Saudi crude with oil products to supply customers in Europe and the Mediterranean
  • Aramco is expanding its footprint globally by signing new deals and boosting the capacity of its plants to secure new markets for its crude

DUBAI: Saudi Aramco aims to boost its oil supply to Europe by 300,000 barrels per day (bpd) within the next two years as it expands its trading operations there with an office opening this summer in London, a senior company executive said.
Aramco, the world’s biggest oil producer, is expanding its downstream, or refining and marketing, footprint globally by signing new deals and boosting the capacity of its plants to secure new markets for its crude.
The company’s trading arm has been focusing on a new processing arrangement in which it would supply European markets with both crude oil and products.
Aramco is looking to finalize deals in the next two years through swapping mainly Saudi crude with oil products to supply customers in Europe and the Mediterranean, Abdulaziz Al-Judaimi, Aramco’s senior vice president for downstream, told Reuters.
“I am going to bet on Europe... We believe that Europe is a market that we are going to stay in for a long time,” Judaimi said in a telephone interview this week.
“The whole idea is we supply crude, and we offtake refined products to supply markets like Italy, the Balkans, as well as Cyprus ... In Europe, having a virtual dedicated outlet and processing agreement is really the right winning strategy.”
Aramco currently has more than 3 million barrels a month of oil supply and product swap arrangements in Europe, he said. The company has deals with Poland’s PKN Orlen, Greece’s Motor Oil Hellas and Egypt’s Midore.
“We are looking to expand the 3 million barrels to almost 10 million barrels in a month, within the next two years. This means we have almost created a 300,000 bpd refining capacity in Europe,” Judaimi said.
The company has invested in its storage capacity in Egypt and the Dutch port of Rotterdam. About 60% of the capacity of the SUMED storage pipeline in Egypt is for Saudi crude, used by Aramco to reach its customers in Europe, he said.
The Rotterdam terminal now holds more than 6 million barrels of oil, he said.
Aramco will also continue to invest in Greece, Judaimi said.
The priority is to supply refiners with Saudi crude to lock in their capacity, but non-Saudi crude can also be supplied through spot trading.
“This is a win-win strategy because it helps the refiner ... and for us it is to place crude oil in the European refining assets,” he said.
“The refining sector in Europe requires such deals and we are taking advantage of available capacity.”
The state oil giant’s trading arm, Aramco Trading Co. (ATC), plans to open an office in London in July, Judaimi said. ATC has been expanding its overseas operations and increasingly competing with global trading houses in new markets.
ATC logged record trading volumes in crude and refined products of 4.5 million bpd in the first quarter, and is on track to reach its target of 6 million bpd by the end of next year, Judaimi said, close to Vitol’s trading level.
“We started seven years back on trading activities and our growth story is quite a successful story, we started with 300,000 bpd and we are now at about 4.5 million bpd.”
ATC was set up in 2012 initially to market refined products, base oils and bulk petrochemicals, but has since expanded into crude trading.
The trading sector faces increased rivalry between national oil companies (NOCs), international oil firms and Swiss merchants.
NOCs have cheap feedstock and strength in refining, allowing them to compete aggressively with oil majors and especially traders that lack their own production.
ASIAN GROWTH
Aramco, the world’s top oil producer and exporter, aims to become the largest integrated energy firm, with plans to expand refining operations and petrochemical output. It pumps around 10 million bpd of crude, of which it exports about 7 million bpd.
The company plans to raise its refining capacity — inside Saudi Arabia and abroad — to 8-10 million bpd, from around 5 million bpd now. Aramco is expanding its refining business at home as well as in new markets, particularly in Asia.
Judaimi said Aramco’s new, 400,000-bpd refinery in the southwestern Saudi province of Jizan was expected to start later this year.
Aramco will make an investment decision to go with the front-end engineering for its refining joint venture with Chinese defense conglomerate Norinco by the third quarter of this year, he said.
“China focus is important; China now imports a lot of crude oil, and we believe that could be a market that is growing and strong as well.”
He said Aramco was looking at multiple downstream opportunities in India.


Huawei secretly helped North Korea build, maintain wireless network: Washington Post

Updated 16 min 57 sec ago
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Huawei secretly helped North Korea build, maintain wireless network: Washington Post

WASHINGTON: Huawei Technologies Co. Ltd. , the Chinese company put on a US black list because of national security concerns, secretly helped North Korea build and maintain its commercial wireless network, the Washington Post reported on Monday, citing sources and internal documents.
The Chinese telecommunications giant partnered with a state-owned Chinese firm, Panda International Information Technology Co. Ltd., on a number of projects in North Korea over at least eight years, the Post reported.
Such a move would raise questions of whether Huawei, which has used US technology in its components, violated American export controls to furnish North Korea with equipment, according to the Post.
The United States put Huawei on a blacklist in May, citing national security concerns. The move banned US companies from selling most US parts and components to Huawei without special licenses but President Donald Trump said last month American firms could resume sales in a bid to restart trade talks with Beijing.
Huawei did not immediately respond to a request for comment, but said in a statement to the Washington Post it had “no business presence” in North Korea. It was not immediately possible to reach the Panda Group.
The Commerce Department, which also did not immediately respond to a request for comment, has investigated possible links between Huawei and North Korea since 2016 but has not publicly connected the two, the Post said.
Huawei and Panda vacated their Pyongyang office in the first half of 2016, the newspaper reported.