OPEC, Russia planning long-term oil alliance: Saudi crown prince

NEW YORK / Reuters

Saudi Arabia and Russia are working on a historic long-term pact that could extend controls over world crude supplies by major exporters for many years. Saudi crown prince
Mohammed bin Salman told Reuters that Riyadh and Moscow were considering a deal to greatly extend a short-term alliance on oil curbs that began in January 2017 after a crash in crude prices.
“We are working to shift from a year-to-year agreement to a 10 to 20 year agreement,” the crown prince told Reuters in an interview in New York. “We have agreement on the big picture, but not yet on the detail.”
Russia, not a member of the Organization of the Petroleum Exporting Countries, has worked alongside the 14-member group during previous oil gluts, but a 10 to 20 year
deal between the two would be unprecedented.
Top OPEC producer Saudi Arabia recruited Russia and other non-OPEC countries to help drain oversupply when oil prices collapsed to below $30 a barrel in 2016 from over $100 in 2014. Crude has since recovered to $70 but fast-rising output from US shale producers has capped prices.

ARAMCO IPO LATE 2018, EARLY 2019
The crown prince predicted that world oil demand would not peak until 2040, despite advances in renewable energy technologies and the electric vehicle. In an attempt to end Saudi Arabia’s reliance on oil, he is leading a push to diversify the Saudi economy away from oil and gas by 2030.
Riyadh plans to raise funds through the flotation of a 5 percent stake in state Saudi oil company Aramco. Time is running out for an initial public offering this year but the crown prince said the IPO could still take place at the end of 2018 or in early 2019, depending on financial market conditions.
Saudi Oil Minister Khalid al-Falih said last week that documentation was ready but that a venue for the IPO had not yet been decided.
The New York stock exchange is still in the running for the IPO, alongside London and Hong Kong, but Falih said there was a risk of a “frivolous” legal action if Aramco were listed in the United States.

Refinery deal with Malaysia’s Petronas
Saudi Aramco finalised a deal on Wednesday with Malaysian state energy company Petroliam Nasional Berhad (Petronas) to invest in a refinery project off Malaysia.
Saudi oil giant Aramco agreed in February last year to buy a $7 billion stake in Petronas’s Petrochemical Integrated Development (RAPID) project, but the issue was then delayed by “technical issues”.
RAPID is a $27 billion project located between the Malacca Strait and the South China Sea, conduits for Middle East oil and gas bound for China, Japan and South Korea.
The two companies said in a statement that they signed the deal on Wednesday but did not confirm the value of Aramco’s investment.
Saudi Aramco will supply 50 percent of the refinery’s crude oil with an option of increasing it to 70 percent, the statement said.
The development will contain a 300,000 barrel-per-day oil refinery and a petrochemical complex with a capacity of 7.7 million metric tonnes a year. Refinery operations are set to begin in 2019, with petrochemical operations to follow 6-12 months afterwards.

OPEC set to stick to supply curbs despite crude rally to $71
LONDON / Reuters

OPEC and its allies look set to keep their deal on cutting oil supplies for the rest of 2018, five sources familiar with the issue said, although some producers are starting to worry that high prices may be giving too much stimulus to rival output. OPEC, Russia and several other non-OPEC producers have curbed output since January 2017 to erase a global glut of crude that had built up since 2014. They have extended the pact until the end of 2018, and meet on June 22 to review policy.
The deal has boosted oil prices, which topped $71 a barrel this year for the first time since 2014. They were close to $70 on Wednesday. But it has also encouraged a flood of US shale oil, fuelling a debate about how effective the curbs are. “June will be a rollover until the meeting later in the year to make a decision for next year, depending on market conditions,” an OPEC source said.