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Bloomberg
OPEC member Kuwait plans to start trading energy and not just producing it, joining other Middle Eastern producers eager to claw back some of the profit traders like Vitol Group and Glencore Plc earn by buying and selling the region’s oil.
State-run Kuwait Petroleum Corp. is in talks with both commodities dealers along with some international oil companies about forming a joint venture to trade refined products as early as next year, a KPC official said. Saudi Arabia and Oman already have trading units, and Abu Dhabi National Oil Co. said earlier this month it may seek partners as it expands into
trading. Iraq’s state oil-marketing company in May began
selling crude in a venture with the trading unit of Lukoil PJSC.
National oil companies in the world’s biggest crude-producing region prospered for decades by supplying the raw commodity
to refiners and independent traders. Now they’re expanding into refining and petrochemicals to add value to their main export. By trading their oil and
refined products, these companies hope to squeeze more money from each barrel they produce, with help from partners like Glencore and Vitol
— or in competition with them.
“The playing field is changing,†said Olivier Jakob, an analyst at consultant Petromatrix GmbH in Zug, Switzerland. “Greater competition means there’s less room for traders. There’s less of a
market for those traders that don’t have assets.â€
KPC is discussing its plans for a trading venture with oil producers BP Plc, Royal Dutch Shell Plc and Total SA, as well as with Vitol and Glencore, the Kuwaiti company official said on Monday. The venture would help sell fuel from refineries KPC is building, including one at Duqm in Oman, the official said. The international companies and traders all declined to comment.
The regional trend toward trading began with Oman, the biggest Arab oil producer that’s not a member of OPEC. Oman formed a trading company with Vitol in 2006, then bought out its partner in 2015.
Saudi state oil giant, known as Saudi Aramco, started a
trading unit in 2012 as the country planned adding more
than 1 million barrels a day of refining capacity.
The unit has tripled its trading volume since then to about 1.5 million barrels a day, and it targets increasing that by about a third after the kingdom opens a new refinery next year.