Saudi Aramco ‘can meet customer demand despite Gulf tension’

Amin Nasser, Aramco president and chief executive, said the company has no plan to increase its current maximum output capacity of 12 million barrels per day. (AFP)
Updated 26 June 2019

Saudi Aramco ‘can meet customer demand despite Gulf tension’

  • ‘What’s happening in the Gulf is definitely a concern’
  • Aramco has no plan to increase its current maximum output capacity of 12 million barrels per day, given sizeable spare capacity

SEOUL: Saudi Aramco can meet the oil needs of customers using its spare capacity despite developments in the Gulf that are a cause for concern, the head of the state-run energy giant said on Tuesday.

Attacks in May and June on oil tankers near the Strait of Hormuz, the entrance to the Gulf, has raised concerns about the safety of ships using the strategic shipping route.

“What’s happening in the Gulf is definitely a concern,” Amin Nasser, president and CEO of Aramco, told Reuters in an interview in Seoul.

“At the same time we went through a number of crises in the past and we have always met our customer commitments, and we do have flexibility and the system availability in terms of available additional spare capacity,” he added.

Nasser, who is in the South Korean capital before a visit by Saudi Crown Prince Mohammed bin Salman, said Aramco had no plan to increase maximum output capacity of 12 million barrels per day (bpd), given its current output was well below that level.

“If you look at our production, it is hovering around 10 million bpd, so we do have additional spare capacity,” he said.

The oil giant, which has been developing its domestic gasresources, has been eyeing gas assets in the US, Russia, Australia and Africa.

Nasser said Aramco was in talks to buy a stake in Russian gas company Novatek’s Arctic LNG-2 project.

He also said the company was in discussions about buying a stake in India’s Reliance Industries and in talks with other Asian companies about investment opportunities.

“We will continue to explore opportunities in different markets and different companies, and these things take time,” he said.

Nasser said the company, South Korea’s top oil supplier, wanted to increase crude oil supplies to the Asian nation where it has partnerships and investments with South Korean refiners.

Aramco supplies between 800,000 bpd and 900,000 bpd to South Korea, the world’s fifth-largest crude importer.

Saudi Aramco said in April it had bought a 17 percent stake in Hyundai Oilbank. It is also the biggest shareholder in South Korea’s No.3 refiner S-Oil. 

BMW picks insider Zipse as CEO to catch up with rivals

Oliver Zipse
Updated 19 July 2019

BMW picks insider Zipse as CEO to catch up with rivals

  • German giant has lost ground to Mercedes-Benz and Tesla as tech steps up

FRANKFURT: BMW has named Oliver Zipse as its new CEO, continuing the German carmaker’s tradition of promoting production chiefs to the top job even as the auto industry expands into new areas such as technology and services.
Hailing Zipse’s “decisive” leadership style, BMW hopes the 55-year-old can help it win back its edge in electric cars and the premium market  from rival Mercedes-Benz.
But some analysts questioned whether Zipse was the right choice with new fields such as software and services like car-sharing becoming increasingly important.
“What is intriguing is the cultural bias to appoint the head of production. It works sometimes but ... being good at building cars is not a defining edge the way it was 20 years ago,” said Jefferies analyst Philippe Houchois.
Current CEO Harald Krueger, and former chiefs Norbert Reithofer, Bernd Pischetsrieder and Joachim Milberg were all former production heads.
Zipse joined BMW as a trainee in 1991 and served as head of brand and product strategies and boss of BMW’s Oxford plant in England before joining the board.
He will become chief executive on Aug. 16, taking over from Krueger who said he would not be available for a second term.
“With Oliver Zipse, a decisive strategic and analytical leader will assume the Chair of the Board of Management of BMW. He will provide fresh momentum in shaping  the future,” said Reithofer.
Zipse helped expand BMW’s efficient production network in Hungary, China and the US, in a move that delivered industry-leading profit margins.
Under Krueger, BMW was overtaken in 2016 by Mercedes-Benz as the best-selling luxury car brand.
It also had an early lead over US  rival Tesla in electric cars, but scaled back ambitions after its i3 model failed to sell large numbers.
Reithofer initially championed Krueger’s low-key consensus-seeking leadership, but pressured him to roll out electric vehicles more aggressively, forcing Krueger to skip the Paris Motor Show in 2016 to reevaluate BMW’s electric strategy.
Krueger’s reluctance to push low-margin electric vehicles led to an exodus of talented electric vehicle experts, including Christian Senger, now Volkswagen’s (VW) board member responsible for software, and Audi’s Markus Duesmann, who is seen as a future CEO of the company.
Both were poached by VW CEO Herbert Diess, a former BMW board member responsible for research who was himself passed over for BMW’s top job in 2015.
VW has since pushed a radical 80 billion euro ($90 billion) electric car mass production strategy, and a sweeping alliance with Ford.

Other skills
“A CEO needs to have an idea for how mobility will evolve in the future. This goes far beyond optimising an existing business,” said Carsten Breitfeld, chief executive of China-based ICONIQ motors, and former BMW engineer. “He needs to build teams, attract talent, and promote a culture oriented along consumer electronics and internet dynamics.”
German manufacturers have dominated the high-performance market for decades, but analysts warn shifts towards sophisticated technology and software is opening the door to new challengers.
“Tesla has a lead of three to four years in areas like software and electronics. There is a risk that the Germans can’t catch up,” UBS analyst Patrick Hummel said.
Germany’s Auto Motor und Sport car magazine, normally quick to champion German manufacturers, this week ran a cover questioning BMW’s future.
“Production expertise is important, but if you want to avoid ending up being a hardware provider for Google or Apple, you need to have the ability to move up the food chain into data and software,” a former BMW board member said.