Aramco Inaugurates New Delhi Office to Support Saudi Oil Investments

Security personnel stand guard in front of the India Gate amidst the heavy smog in New Delhi

Dammam- Middle East oil giant Saudi Aramco announced its most dramatic expansion so far with the opening of Aramco Asia India’s new office in New Delhi. India is the world’s third-largest energy-consuming economy.

The State-run oil giant Aramco is in talks with several Indian refiners and hopes to land a joint venture deal by next year, the company’s chief executive told Reuters on Sunday.

“We are hoping to land on a JV sometime,” Aramco’s CEO Amin Nasser said at India Energy Forum by Cera Week in New Delhi.

Asked if a deal could be finalized next year, he said: “We hope so. We are in serious discussions.”

Aramco wants to buy a stake in the planned 1.2 million barrels per day (bpd) refinery in India’s west coast, India’s oil minister said in June.

The world’s biggest oil producer is investing in refineries abroad to help lock in demand for its crude and expand its market share ahead of its initial public offering next year.

Aramco plans to float up to 5 percent of its shares in 2018 in what could be the world’s largest IPO, raising as much as $100 billion.

Nasser said Aramco is interested in investing in India’s downstream sector – refining, petrochemicals and fuel retailing including lubricants.

Saudi Arabia is competing with Iraq to be India’s top oil supplier, with Iraq displacing it for the fifth month in a row in August, data compiled by Reuters showed.

Earlier this year Saudi Arabia pledged billions of dollars of investment in projects in Indonesia and Malaysia to ensure long-term oil supply deals.

The International Energy Agency estimates India’s refining capacity will lag fuel demand going forward, requiring investment in new plants.

Saudi Aramco earlier on Sunday launched a new office in New Delhi as it aims to expand its presence in India.

India’s oil minister Dharmendra Pradhan, who inaugurated Aramco’s India unit, said Aramco is interested in investing in refinery projects in the Asian country and “very soon they will come to India.”

Nasser said Aramco will increase its staff strength in India by four-fold compared to now. The company which had 14 employees has now raised staff numbers to around 30.

“India by itself is an important market. The size of India’s market is huge. The growth in India last year is 8 percent last year as compared to 1.5 percent globally in energy,” Nasser said.
“We need to be here.”

Aramco, Saudi Public Investment Fund to Found ‘Super Contractor’

Saudi

London – Saudi Arabia’s Public Investment Fund (PIF) and Saudi Aramco are planning to set up a “super contractor” in partnership with local and international contractors.

MEED reported on Saturday that Aramco, PIF, a local contractor and an international contractor, will each own a 25 percent stake in the new entity.

Among the companies interested in this partnerships are: Al-Muhadib Contracting, El-Seif Engineering Co., Al-Rashid Trading & Contracting Co., and Nesma & Partners Contracting Co.

According to MEED, the new entity will replace distressed contractors, particularly Saudi Binladin Group and Saudi Oger, which have suffered financial difficulties in recent years and have been forced to scale back their operations.

The new entity is expected to take over major projects announced by the Public Investment Fund such as the Red Sea Project and Jeddah Downtown.

The new company will be responsible for the construction projects, which were assigned to Aramco. The construction sector will be separated from the mother company, and it is expected to recruit about 15,000 employees and employees.

Aramco plans to sell about 5 percent of the giant oil company, the cornerstone of Saudi Vision 2030, as a major reform plan led by Crown Prince Mohammad bin Salman, aimed at diversifying the Saudi economy away from oil.

Aramco has signed five memorandums of cooperation with Russian hydrocarbon giants during the Russian-Saudi Investment Forum. The agreements include: a trilateral MoU with the Saudi Public Investment Fund and Russian Investment Fund, for direct investments in the energy and industry sectors.

A MoU with the Russian Energy Giant Gazprom (cooperation in the field of Gas), and another memorandum with LITASCO (cooperation in trade); a MoU with Gazprom (for cooperation in the field of technology, research, and development); and finally, an agreement with Sibur and the Russian Direct Investment Fund (RDIF) (for strategic marketing of petrochemicals). These MoUs will allow all parties to jointly assess the potential for joint investments and marketing in petrochemical projects in both countries.

Sibur, biggest petrochemicals company in Russia, and the RDIF, inked on Thursday a memorandum of understanding with Aramco on the possible cooperation opportunities in Russia and Saudi Arabia.

In a statement, Sibur said both companies are planning to assess perspectives of the Russian and Saudi petrochemical markets, and to likely expand the cooperation in this sector.

Dmitry Konov, chairman-Mgmt Board at Sibur Holding said: “This partnership with one of the biggest Saudi petrochemicals companies will allow Sibur to develop its expertise and sales, along with studying the Middle Eastern market.”

Russian Energy Minister Alexander Novak said on Wednesday that Sibur would sign a $ 1.1 billion deal to build a plant to produce gas chemicals in Saudi Arabia.

Saudi-Russian Scenario to Extend OPEC Agreement till End of 2018

Saudi Arabian Energy Minister Khalid al-Falih attends a meeting of the 4th OPEC-Non-OPEC Ministerial Monitoring Committee in St. Petersburg, Russia July 24, 2017.

Kuwait- Russia and Saudi Arabia’s remarks Thursday have revived oil markets and hopes of another year of trying to rebalance the oil market after the Kingdom showed its support for the Russian proposal to extend the current global agreement between oil-producers until the end of 2018.

Oil rose above $56 a barrel on Thursday, supported by expectations Saudi Arabia and non-OPEC member Russia would extend the curbs, but prices are still half their mid-2014 levels.

Saudi Energy Minister Khalid al-Falih was speaking in a television interview a day after Russian President Vladimir Putin said the supply reduction deal that is due to expire in March could run to the end of next year.

“In the kingdom, we have to keep all options open, President Putin agreed with us on this and expressed his readiness to extend until the end of 2018 if this is agreed, and if this is the best option,” Falih told Al Arabiya television.

Saudi Arabia and Russia helped secure a deal between the Organization of the Petroleum Exporting Countries (OPEC) and 10 rival suppliers to cut output until the end of March 2018 in an effort to reduce a glut.

Falih said he welcomed the “flexibility” shown by Russia on the issue and added the Saudi government aimed to “be flexible in leading the producing countries in and outside of OPEC to a consensus that takes the market to where we want it to be.”

Bloomberg quoted last month sources as saying that OPEC and non-OPEC producers and countries are studying the extension of the agreement for at least three months, and it is expected to extend for six months or until the end of the year.

Falih, who is also Aramco’s chairman, said on Thursday that the IPO would happen in the second half of 2018, adding that the listing would be used as a “catalyst” for opening up the Saudi economy.

“Work is ongoing to list Saudi Aramco in 2018,” Aramco’s Chief Executive Amin Nasser said at an energy forum in Moscow.

We will be looking at evaluating investors as we continue to make progress related to timing and location.”

Nasser said the Saudi government would decide on the listing venue and that there were no current talks with Russian companies on them taking part in the IPO.

The plan to float around 5 percent of Aramco in an initial public offering (IPO) is a centerpiece of Vision 2030, a wide-ranging reform plan to diversify the Saudi economy beyond oil which is being championed by Saudi Crown Prince Mohammed bin Salman.

The Saudi Crown Prince said that the IPO, which could be the world’s biggest, will value Aramco at a minimum of $2 trillion and could raise as much as $100 billion.

When talking about Shale oil, Falih said inventories were still falling despite the fact that climbing US shale production has kept a lid on price gains.

“Shale coming in and happening again in 2018 doesn’t bother me at all. The market can absorb it,” Falih said, speaking alongside Russian Energy Minister Alexander Novak on a panel at an energy forum in Moscow.

“We have seen a steady reduction in inventories. We see as we enter the fourth quarter that supply is less than demand and inventories are declining around the world,” Falih said.

Novak said he was satisfied with oil prices and Moscow would welcome other producers joining the deal to curb output.

Saudi Arabia, Russia to Set Up $1 Billion Energy Fund- Novak

Russian Energy Minister Alexander Novak speaks during a news conference of the 4th OPEC-Non-OPEC Ministerial Monitoring Committee in St. Petersburg

London- Russian Energy Minister Alexander Novak said that Saudi Arabia and Russia will establish a new energy investment fund worth USD1 billion, noting that final touches would be put during the visit of Custodian of the Two Holy Mosques King Salman bin Abdulaziz to Moscow this week.

This step falls under both parties’ efforts to increase cooperation, given that they are among the biggest oil producers. “In principle, the talk revolves around earmarking $1bn just for energy projects and I as an energy minister am pleased by this because we are focusing on developing our cooperation not just within the framework of OPEC or even outside OPEC, but also developing cooperation in the fields of oil, gas, power and renewable energy,” Novak told the Dubai-based Al Arabiya news channel on Monday.

Russia and Saudi Arabia are leading efforts to trim global oil production by 1.8 million barrels of oil per day through a six-month agreement that ended in June and which was extended to the end of next March to help prop up oil prices and reduce the glut in the market.

Novak also said a number of Russian companies are exploring various aspects of cooperation with Saudi Arabia.

Gazprom Neft, the oil arm of Russian gas giant Gazprom, and other companies are expected to sign agreements with their Saudi counterparts, he added.

Russian energy companies are also exploring the possibility of working with Saudi Aramco, the world’s biggest oil producer, in the oil services field in the kingdom. Russian companies and in particular Rosneft, the country’s biggest oil producer, are also interested in oil trading cooperation.

Strategic Partnership Between Aramco, Malaysia’s Petronas Chemicals

Dammam – Saudi Aramco has entered into a strategic partnership with Petronas Chemicals Group Berhad (PCG) to enhance the value and competitive positioning of its petrochemicals projects within the Petronas Pengerang Integrated Complex (PIC) in Johor, south of Malaysia.

Under the terms of the venture’s share purchase agreement signed between PCG and Aramco Overseas Holding Cooperative U.A. (AOHC) subsidiary, the parties have equal ownership in PRPC Polymers Sdn Bhd (PRPC Polymers) within PIC.

The agreement was signed by Saudi Aramco vice president International Operations, Said al-Hadrami and Petronas vice president and PCG CEO Sazali Hamzah.

Hadrami believed that this venture leverages the historic partnership between Saudi Aramco and Petronas which was recently sealed during the visit of the Custodian of The Two Holy Mosques King Salman to Malaysia.

“Given PCG’s strength in the region’s petrochemicals sector, Saudi Aramco is proud to be entering into a deeper, mutually beneficial partnership in PIC.,” said Hadrami.

He added that this agreement strengthens Aramco’s position and growth in South East Asia through crude supply and world-scale downstream operations.

“We will also achieve a high degree of integration between refining and petrochemicals, with petrochemicals production greater than 10% of crude intake. It is also in tandem with our downstream growth strategy where we are investing in a global refining and petrochemicals system of strategically located world-scale manufacturing complexes with the participated refining capacity of several million barrels per day,” he explained.

Vice president Sazali Hamzah stated the petrochemicals projects in PIC is one of the largest growth projects for PCG and Petronas’ largest downstream investment on a single site to date.

He described the signing of the agreement as a momentous milestone for the industry as it brings together two key leaders in petrochemicals, entering into a partnership in a world-scale greenfield project.

“We are proud to be joining hands with Saudi Aramco, a world leader in integrated energy and chemicals with an unrivaled track-record in mega-project execution and efficiency,” he added.

“By 2020, our petrochemicals projects under PIC will provide a strong foundation for us to move into derivatives and specialty chemicals. Beyond 2020, PCG will also focus on assessing opportunities in downstream derivatives and specialty chemicals at Pengerang, Kertih, Gebeng and East Malaysia,” concluded Hamzah.

Aramco in Talks with Russia’s Biggest Petrochemical Producer

Logo of Saudi Aramco is seen at the 20th Middle East Oil & Gas Show and Conference (MOES 2017) in Manama

Kuwait- Saudi Arabian Oil Co. Aramco is in talks with Sibur Holding PJSC, Russia’s largest petrochemical producer, about forming a joint venture in the kingdom. Saudi Aramco and Sibur are expected to sign a memorandum of understanding for the project next month when Saudi King Salman Bin Abdulaziz visits Russia.

This would be the second rubber-producing venture with a foreign firm. In 2015, Aramco announced acquiring a stake of 50 percent in a joint venture to produce rubber with the Dutch company Lanxess.

Aramco and Sibur aspire to expand in the petrochemical field since Aramco is willing to diversify income sources through introducing several projects in the refining and petrochemical fields. Sibur has been expanding in markets outside Russia since 2011 when the company reached an agreement with Sinopec to set up two rubber joint ventures.

Sinopec and Silk Road Fund bought 10 percent each in the Russian company. Aramco is linked with Sinopec in oilfield project in China while the kingdom is holding talks with China to discuss investment opportunities in the Silk Road, supported by China.

In May, the official magazine of Aramco The Arabian Sun revealed that the giant government oil company plans to establish a new unit for chemicals. The weekly magazine added that the board of directors approved to establish a new unit that handles chemical activities of the company.

Embarking on the Maritime Industry

The Sirius Star, a Saudi oil tanker in an undated photo.

It is only natural for a country like Saudi Arabia surrounded by water to consider investing in maritime industries and services. The kingdom overlooks about 2600 kilometers of very long shores from Ras al-Khafaji in the Gulf to the Gulf of Aqaba in the Red Sea.

This is the first time Saudi Arabia aims to benefit from its naval location near the three continents: Asia, Africa, and Europe with their huge markets.

By announcing an alliance with major international companies to establish King Salman International Complex for Maritime Industries and Services, Aramco added a new task in addition to its activity in oil.

According to Aramco, execution of the initial phase of the contract will be completed by the end of next year in Ras al-Khair, near Jubail in the Eastern Province of Saudi Arabia on the banks of Gulf waters.

This project paves the way for many other big projects promised in Vision 2030 to enhance resources and enable the country to enter new fields relevant to the Kingdom’s economies. The important point is to establish the correlation between these giant projects and their tributaries.

This maritime project will provide 80,000 direct and indirect job opportunities of which a huge percentage is supposed to be attributed to locals.

As long as the project will be finalized over stages, meaning its production capacity will be completed five years from now, we can assume that local educational institutions, including those specialized in maritime engineering and sciences, can focus their studies on serving this project in particular to meet human resources’ expectations.

Five years after the project is completed, we can’t justify unemployment claiming there are no trained and qualified competencies in the field.

As many as 80,000 jobs is a good number, however, it is still not enough to meet the market’s needs, assuming that 1 million students will graduate from university within the next five years.

However, it is all a series of projects and plans that complement one another in one market.

Just as King Salman International Complex for Maritime Industries and Services, we look forward to the government getting ahead in line and building large institutions that combine the local content and are capable of succeeding without the need for the government’s support.

It should not be a burden on the local economy. It must excel with quality and efficiency to compete in the international markets as the Vision 2030 promised to build an economy that doesn’t depend on oil revenues.

The complex, as part of the Vision’s projects, doesn’t deny its connection with oil. A large part of the international maritime market is dedicated for oil transportation and part of the promised complex’s projects will be to construct and maintain oil carriers.

The purpose is not to take oil out of the economic equation, but rather reduce dependence on crude oil revenues, as the situation is today.

This brings us back to the talk about multiple oil industries and services like manufacturing sectors.

Manufacturing is an old-new option through which the market can greatly expand on the basis of “comparative advantage” theory.

Oil is still a major economic merit of any economic program of the Kingdom of Saudi Arabia. But it is no longer enough as almost the sole commodity to depend on for the country’s incomes.

Oil is a dream we should wake up from. We should wake up to the reality that there might not be enough oil revenues anymore.

Aramco Licenses NOMADD for Waterless Solar Cleaning System

Aramco Licenses NOMADD for Water-less Solar Cleaning System

Dammam– Saudi Aramco signed a licensing agreement with NOMADD Desert Solar Solutions granting the company the right to develop and manufacture solar array cleaning technology that was developed in-house by Aramco’s research and development team based at King Abdullah University of Science and Technology (KAUST).

NOMADD is locally-owned and funded by KAUST and created to commercialize the NO water Mechanical Automated Dusting Device

The technology will integrate with NOMADD’s fully automated waterless solar cleaning system.

This is the first commercial licensing agreement between Aramco and a KAUST funded start-up company. NOMADD will distribute solar cleaning technology in Saudi Arabia and serves as an example of how a technology can be developed, commercialized, manufactured and sold creating local jobs and providing value to the Kingdom.

Vice President of Technology, Oversight and Coordination, Ahmad al-Khowaiter, said that the commercialization of technology positively impacts the Kingdom and is a great achievement and demonstrates Aramco’s commitment to a clean energy future.

Founder and chief executive officer of NOMADD Jos van der Hyden declared that NOMADD is excited to partner with Aramco, KAUST and other local institutions to bring this vision to fruition.

“NOMADD is gaining strong commercial traction in the solar industry, winning several industry awards for technology and leadership in the field,” he added.

In other news, Aramco sponsored the first of its kind Materials Performance and Welding Technologies Conference & Exhibition 2017 taking place between September 11 and September 17 in Dammam.

The event is co-organized by National Association of Corrosion Engineers (NACE) International West Asia & Africa Area and American Welding Society (AWS) Saudi Arabia section.

The event presents three keynote speeches, 81 technical papers, and six highly specialized workshops with participation by subject-matter experts and professionals from Saudi Aramco.

Goldman Sachs: 50% of Harvey-Affected Refineries Could Return Thursday

Goldman Sachs: 50% of Harvey-Affected Refineries Could Return Thursday

Kuwait- Reconstruction in the aftermath of Hurricane Harvey’s deadly gash through Texas could prove positive for the oil market in a few months, according to Goldman Sachs Group Inc.

“More than half of the US oil refining capacity that was shut because of Harvey’s winds and rain will be back online by Thursday,” Goldman analysts said in a Sept. 5 report.

Dry post-storm weather should help minimize the loss of demand for gasoline and diesel, according to the bank.

As refineries along the Gulf Coast restart, about 2 million barrels a day of capacity will remain offline by Thursday, down from a peak of 4.6 million, Goldman estimated; about 1.4 million could remain offline through mid-September.

While fast recovering, the refining outages heavily outweigh production losses, which are about 320,000 barrels a day between the Gulf of Mexico and south Texas’s Eagle Ford shale formation, Goldman said. In total, the storm will have added about 40 million barrels to US crude stockpiles in the month following Harvey’s landfall, according to the bank. The storm will reduce gasoline supplies by 16 million and diesel by 13 million.

The Organization of the Petroleum Exporting Countries (OPEC) and producers seek to reduce world oil stocks, especially in the industrialized countries, to five-year average; Hurricane Harvey may, however, hinder this and increase the time needed to balance the market.

Harvey hurricane damage has been on the US refining sector after Saudi Aramco’s wholly-owned subsidiary, Motiva Enterprise, announced last week it would completely suspend work at the US-based Port Arthur refinery because of the hurricane.

The 603,000 barrel per day (bpd) Port Arthur Refinery was shut on Wednesday due to flooding from Tropical Storm Harvey.

In a statement last week, Motiva said it “cannot provide a timeline for restart at this time.” The oil company said it will begin assessing the refinery “as soon as the local area flooding has receded,” although Motive is uncertain about how long it will take for floodwaters to diminish.

Aramco Re-explores the Empty Quarter with ‘Exceptional Techniques’

Saudi

Al-Khobar– Saudi Aramco is using new technology to re-explore areas of the desert Empty Quarter, which could help enhance its reserves of oil and gas before the company offers its shares to the public.

In a statement issued, Aramco explained that a team of about 900 people is using advanced seismic technology that has been under development for the past few years. The team will explore 15,400 square kilometers around Turayqa field in Saudi Arabia.

In 2013, Turayqa, an onshore conventional gas field, was discovered but no oil has been found.

“Data processing is ongoing. The area partially covers areas relinquished by some of the joint ventures,” the company told Reuters.

In 2003 and 2004, Aramco set up four alliances to explore the Empty Quarter, but the search was concluded after failing to find commercial volumes of gas.

Aramco hopes that the new seismic technology would improve the chances of successful exploration. The technique itself cannot prove the existence of oil and gas reserves as drilling is needed for that.

Seismic technology uses artificially induced shockwaves in the earth. While conventional crews have 9,000 frequencies available to monitor the results, the crew at Turayqa has over 50,000, according to Reuters.

The technology provides a three-dimensional picture of the structure of rock going down several kilometers and tells the user physical characteristics of the rock, such as its density and fluid saturation, a former executive at Aramco told Reuterts.

Industry analysts said it was not clear whether Aramco’s new exploration efforts would affect the company’s estimate of its oil and condensate reserves, which total 261 billion barrels and have been unchanged for many years.

It is possible that any change in the reserves could affect next year’s planned international offer of a stake of roughly 5 percent in Aramco.

Some of the models of investors are based on valuations of the reserves.

An industry informed source said that Aramco’s exploration effort in the Empty Quarter and around the kingdom would help the company maintain its current reserves estimate for some time to come.

“At current production of 10 million barrels per day, and assuming reserves of 261 billion barrels, a discovery of 1.5 percent of the reserves replaces the reserves depleted in a year,” he said.