Saudi Aramco looks to become China’s biggest crude supplier

Saudi Aramco’s crude supply deals with China come as Beijing looks to reduce its reliance on US crude imports amid a trade war with Washington. Above, Aramco’s Abqaiq oil facility. (Reuters)
Updated 28 November 2018

Saudi Aramco looks to become China’s biggest crude supplier

  • New supply contracts make it very likely that Saudi Aramco next year will become China’s largest supplier
  • Russia currently accounts for the lion’s share of China’s oil imports, supplying some $23.7 billion worth of crude last year

LONDON: Saudi Aramco is moving closer to becoming China’s largest supplier after striking five new crude supply deals with Beijing.
It will help to take the total volume to 1.67 million barrels per day (bpd).
“The new supply contracts make it very likely that Saudi Aramco next year will become China’s largest supplier, a position it also held from 2006 until 2016,” the Saudi oil company said in a statement.
Russia currently accounts for the lion’s share of China’s oil imports, supplying some $23.7 billion worth of crude last year, or 14.6 percent of its total oil imports.
Top Aramco officials this month attended the first China International Import Expo in Shanghai.
The delegation included Ahmed Al-Khunaini, manager of Saudi Aramco’s Crude Oil Sales and Marketing Department, and Anwar Al-Hejazi, Aramco Asia president.
Aramco earlier agreed a crude oil supply agreement with Zhejiang Petroleum and Chemical Co. (ZPC) on the sidelines of the Asia Pacific Petroleum Conference (APPEC) in Singapore.
“Large, integrated crude-to-chemical projects like ZPC and Hengli are the future of China’s downstream industry and I am excited Saudi Aramco will be part of their success story,” said Saudi Aramco Senior Vice President Abdulaziz Al-Judaimi.
The new supply agreements are the result of Aramco’s marketing efforts that focus on customer diversification, strategic relationships, and tapping regional demand previously not supplied by Saudi Aramco, the national oil company said.
They are an important part of diversifying Saudi Aramco’s customer base and capturing a large share of China’s future incremental oil demand, which will increasingly come from private refiners.
Annual economic growth of more than 6 percent is supporting demand for oil imports in China as the country adds more refining and petrochemical capacity.
Beijing is also seeking to reduce its reliance on US crude imports amid a trade war with Washington, analysts say.
“Chinese buyers, anticipating that crude and LNG could go on the list if tensions escalate further, are looking to alternative sources,” Richard Mallinson, co-founder of London consultancy Energy Aspects, told Arab News in August.
OPEC already provides 56 percent of China’s oil imports, according to the International Energy Agency.
China’s crude imports grew year on year during the third quarter of 2018 according to data from Bloomberg NEF, despite a fall in imports coming from Iran.
China imported nearly 10 million barrels of oil per day last month.


Automechanika Riyadh opens, featuring leading global suppliers

Updated 25 February 2020

Automechanika Riyadh opens, featuring leading global suppliers

  • Saudi auto deals grew 40 percent last year with influx of female buyers

RIYADH: Leading names in the global auto services industry are out in force at Automechanika Riyadh — which opened on Monday at Al Faisaliah Hotel — vying to increase their share of a growing market expected to reach a value of $10.15 billion by 2023.

Automechanika Riyadh is the regional arm of the world’s largest trade fair, congress and event organizer, Messe Frankfurt, which has licensed the Automechanika brand to event organizer Al Harithy Company for Exhibitions (ACE) Group.

Mansour Abdullah Al-Shathri, vice chairman of the Riyadh Chamber of Commerce, inaugurated the trade event, which will run from Feb. 24-26.

It was revealed that Saudi auto deals grew approximately 40 percent last year, with female buyers accounting for between 10-15 percent of sales after the landmark decision to allow women to drive in the Kingdom for the first time.  

“International suppliers are stepping up their marketing for the resurgence in Saudi’s market, and this impacts the entire supply chain,” said Mahmut Gazi Bilikozen, show director for Automechanika Riyadh.

“While there is growth potential in the market, it is becoming a more competitive landscape and one which will also have to contend with evolving customer preferences. The conditions are ripe for new business relationships for those wishing to succeed in this transformative environment,” he added.

Zahoor Siddique, vice president of ACE, said: “Future vehicles will become more complex and challenging for the aftermarket industry. It is therefore imperative for manufacturers, local garages, technicians and mechanics to upskill and remain above the curve. 

 “Automechanika Riyadh is one such platform that can enable us to share and learn what the industry needs to unleash its potential.”

Two major US players — disc pad producer Giant Manufacturing and United Motors Mopar, the Kingdom’s sole distributor of Chrysler, Dodge, Jeep and Fiat cars — forecast a bullish market over the next few years.

Giant’s vice president, Eli Youssian, said he believed car sales in the Kingdom would grow by 9 percent annually until 2025, while United Motors District CEO Hassan Elshamarani expected another three million female drivers to be on the Kingdom’s roads by the end of the year.

Both Giant and United Motors launched new products at the show, with the former rolling out its new German-engineered Euro Premium Metallic Disc brake pads, and the latter introducing its Magneti Marelli spare parts.

The high potential of the new-look Saudi automotive landscape has also struck a major chord with South Korean suppliers.

The show’s Korean pavilion is hosting new-to-market entrants and existing suppliers all looking for business partners. With products from wiper blades to filters and air-conditioning parts to brake pads, the Korean contingent was positive about the Kingdom’s prospects.

One exhibitor, D Only Automotive, is looking to ring fence 10 percent of the Saudi brake market. “With more vehicles on the road, demand for brakes will increase, (so) we believe this is possible,” said President Jeon JaeWon.

Global research and analytics firm Aranca — Automechanika’s knowledge partner — has forecast that Saudi Arabia’s automotive spare parts and service market will grow at approximately 6 percent over the next five years to reach a value of $10.15 billion by 2023.

“The spare parts and service market for passenger cars alone is expected to eclipse $6.9 billion by 2023,” said Vishal Sanghavi, Aranca’s automotive practice head.