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.


Oil prices climb as Saudi capacity cushions impact

Updated 20 September 2019

Oil prices climb as Saudi capacity cushions impact

  • Kingdom pledges return to capacity by end of November as Kuwait strengthens security for oil sector

LONDON: Oil prices gained on Thursday, supported by supply risks as the market assesses the fallout from last weekend’s drone attacks on Saudi oil
infrastructure.

Brent crude futures gained $1.78 to $63.80 a barrel, while US West Texas Intermediate crude was up $1.28 at $58.40 a barrel.

The attacks knocked out around half of Saudi Arabia’s crude production and severely limited the country’s spare capacity, a cushion for oil markets in any unplanned outage.

“Global available spare capacity is extremely low at present following the weekend attacks, leaving little room for additional outages, which tends to be price supportive,” UBS oil analyst Giovanni Staunovo said.

Earlier this week Saudi Arabia set out a timeline for a resumption of full operations, saying it had restored supplies to customers at levels prior to the attacks by drawing from its oil inventories.

HIGHLIGHTS

• US to impose more sanctions on Iran.

• Cushing stocks at lowest since October, 2018.

• Global excess capacity at low level.

The Kingdom said it would restore its lost production by the end of this month, and bring its output capacity back to 12 million barrels per day by the end of November.

“These plans suggest Saudi Arabia will have no spare capacity for at least the next two and a half months,” consultancy Energy Aspects said.

Saudi Arabia, the world’s leading oil exporter, has said the crippling attack on its oil sites was “unquestionably sponsored” by Iran.

US President Donald Trump said there were many options short of war with Iran and added that he had ordered the US Treasury to “substantially increase sanctions” on Tehran. Iran has denied involvement in the strikes.

Iran warned President Trump against being dragged into all-out war in the Middle East.

US Secretary of State Mike Pompeo has described the weekend strike as an act of war and has been discussing possible retaliation with Saudi Arabia and other Gulf allies.

Kuwait’s oil sector has raised its security to the highest level as a precaution, a Kuwaiti official said.

Separately, weekly data from the Energy Information Administration on US oil inventories provided a mixed snapshot.

Stockpiles of crude in the US the world’s largest oil producer, rose by 1.1 million barrels last week against analysts’ expectations for a drop of 2.5 million barrels.

However, stocks at Cushing, Oklahoma, the delivery point for benchmark futures, fell to their lowest since October 2018.