Saudi Aramco to venture into non-Saudi crude oil trading

SINGAPORE / Reuters

Saudi Aramco’s trading arm will start trading non-Saudi crude oil to mainly feed its international joint ventures as the world’s largest oil exporter seeks to optimise profits, industry sources familiar with the move said.
The expansion into crude comes as Saudi Aramco is working to boost its valuation ahead of the planned listing of up to 5 percent of its shares on one or more international stock exchange next year, in what could
be the world’s biggest initial public
offering.
Set up in 2012 to market refined products, base oils and bulk petrochemicals, Aramco Trading Company (ATC) will expand into crude to mainly feed international Aramco joint ventures like the Motiva refinery in the US and S-Oil in South Korea, the sources said. They declined to be identified because they weren’t authorised to speak to media.
The Saudi Aramco ventures abroad buy a certain portion of non-Saudi crude for better economics and crude specifications, the sources said. Motiva’s 603,000-barrels-per-day (bpd) Port Arthur refinery in Texas became a subsidiary of Saudi Aramco on May 1 after Aramco and Royal Dutch Shell ended a 20-year refining partnership.
“Rather than that Motiva for example goes into the market and buy non-Saudi crude, Aramco Trading now can supply those barrels,” said one source with knowledge of Aramco’s strategy.
The unit of Saudi Aramco trades around 1.5 million barrels a day of refined, liquid chemical and polymer products, according to its website. ATC opened its first office abroad in Singapore in 2015 to market oil products and win new business for the parent company from Asia.
ATC has been trading higher volumes in derivatives markets since late 2014 as Saudi Arabia flipped from a net diesel importer to an exporter of the fuel as Saudi Aramco expands its global refining footprint.
Middle East oil producers are venturing into buying and selling oil to boost their incomes as a sharp drop in crude prices since mid-2014 has forced the industry to become more efficient and commercially
focused.
shale gas project
State oil giant Saudi Aramco is expected to finish building facilities soon in the north of the kingdom that will allow it to produce shale gas for the first time, industry sources said.
The project, known as System A, involves gas processing facilities, wellheads and pipelines in Turaif which will feed the Waad al-Shamal phosphate mining project in the region. “It is in the final stages, mechanical completion will happen soon,” one of the sources said.
A second source said the facilities would achieve mechanical completion in a month or two before production starts. An update on the project in Aramco’s 2016 annual report released in July said 55 million standard cubic feet of gas per day (scfd) would be delivered to industrial and power facilities at Waad al-Shamal by the end of 2017.
The search for natural gas is a top priority for Saudi Arabia as it struggles to keep pace with rapidly rising domestic demand for power. The kingdom also pledged to cut its carbon emissions and gas is cleaner than oil for power generation. Saudi Aramco has said its gas production will double to 23 billion standard cubic feet per day in a decade, including 2 billion to 3 billion from shale.
Early projections estimated shale gas intake of Waad Al Shamal mining complex and power plant being built for Saudi mining firm Ma’aden would be 200 million cubic feet per day by 2018. The complex is expected to hit full capacity by 2019.