Saudi Arabia

Saudi Arabia’s Oil Supremacy Falters

22 Mar 2017   Saudi Arabia

Saudi Arabia is losing its grip on big oil markets it once dominated amid a deep production cut that has reshaped global petroleum trade routes and benefited rivals like Iran, Russia and the U.S. As it pursues a steep production cut aimed at putting a floor under oil prices, the world’s biggest crude exporter is conceding ground to American shale producers and hastening a retreat from the U.S., people familiar with current Saudi…

Beijing, Saudi Arabia agree to more oil cooperation, exports to China

20 Mar 2017   China, Saudi Arabia

China and Saudi Arabia will increase their cooperation in the oil sector, including in Saudi oil exports to China, the two countries said in a joint communique issued on Saturday at the end of Saudi Arabian King Salman’s visit to Beijing. The world’s largest oil exporter has been looking to cement ties with the world’s second-largest economy. After losing market share to Russia last year, Saudi Arabia has sought to boost oil sales to China, the world’s second-largest oil market, by working mostly with China’s top three state oil firms. “Both countries are willing to raise their level of cooperation in the oil sector, including supplying Saudi oil to the continuously growing Chinese market,” the two said in […]

Saudi king’s Asia tour trumpets Aramco’s moves downstream

20 Mar 2017   Saudi Arabia

Saudi King Salman’s lavish tour of Asia, arriving in each country on a golden escalator with 400 tons of luggage, had a hardnosed marketing mission – to cement the kingdom’s place as leading oil supplier to the world’s biggest consumer region. The string of deals inked on his three-week tour to Malaysia, Indonesia, Japan and China also point to a fresh strategy, one to increase Saudi leverage over refined product and petrochemical markets, known as the downstream sector. “Our strategy is about growth in the downstream,” said Amin Nasser, chief executive officer of state oil company Aramco, told Reuters on Sunday. “The growth in that sector is very important, and anything integrated between refining, petrochemical, with marketing and distribution, is of interest to us.” Saudi Arabia’s […]

Saudi ‘Mission Impossible’ Makes Longer OPEC Oil Cuts Inevitable

18 Mar 2017   Saudi Arabia

Saudi Arabia has set a near-impossible target to end the current round of OPEC oil-production cuts, indicating that a policy rollover into the second half of the year is a near certainty. OPEC, which pumps about 40 percent of the world’s oil, and several non-OPEC countries including Russia agreed in December to reduce production for six months in an effort to bring supply and demand into balance. At the time, the producers said they could extend the deal for an extra six months. In an interview with Bloomberg Television on Thursday, Saudi Energy Minister Khalid Al-Falih said that OPEC would extend the cuts after they expire in June if oil stockpiles were “still above the five-year average.” Because oil stocks are so far above that level, the target will probably still be out of reach when the Organization of Petroleum Exporting Countries gathers in Vienna on May 25. “It […]

Beijing, Saudi Arabia agree to more oil cooperation, exports to China

18 Mar 2017   China, Saudi Arabia

China and Saudi Arabia will increase their cooperation in the oil sector, including in Saudi oil exports to China, the two countries said in a joint communique issued on Saturday at the end of Saudi Arabian King Salman’s visit to Beijing. The world’s largest oil exporter has been looking to cement ties with the world’s second-largest economy. After losing market share to Russia last year, Saudi Arabia has sought to boost oil sales to China, the world’s second-largest oil market, by working mostly with China’s top three state oil firms. “Both countries are willing to raise their level of cooperation in the oil sector, including supplying Saudi oil to the continuously growing Chinese market,” the two said in […]

Saudi Arabia Says Oil-Supply Cuts May Be Extended If Needed

17 Mar 2017   Saudi Arabia

OPEC and its allies may prolong production cuts after they expire in June if the world’s crude inventories remain excessive, Saudi Arabia ’s Energy Minister said. The curbs will be sustained if stockpiles are “still above the five-year average, if the markets are still not confident in the outlook, if we don’t see companies and investors feel good about the health of the global oil industry,” Khalid Al-Falih said in a Bloomberg television interview in Washington. “We want to signal to them that we’re going to do what it takes to bring the industry back to a healthy situation.” The Organization of Petroleum Exporting Countries will meet on May 25 to decide whether to continue its production cuts, aimed at ending a slump that battered the economies of energy exporters around the world. The strategy is moving global markets in the “right direction” and fundamentals have improved considerably, Al-Falih […]

China, Saudi Arabia Ink $65-Billion Worth Of Preliminary Deals

17 Mar 2017   China, Saudi Arabia

China and Saudi Arabia have signed preliminary deals that could be worth as much as $65 billion if finalized, Xinhua reports . The news came on the first day of a four-day visit by Saudi King Salman to China. China’s Deputy Foreign Minister Zhang Ming said that President Xi Jinping and King Salman inked a total 14 cooperation agreements, including a memorandum of understanding on 35 projects for “production capacity and investment cooperation”. Among the industries that the agreements cover are oil production, petrochemicals, and even space. China is a crucial market for Saudi oil, and the king’s visit is widely seen as an attempt to secure future exports, preferably under long-term contracts, which is the standard approach of the Kingdom toward crude oil exports. Outside oil exports, Saudi Arabia is also looking for opportunities to expand its refining and chemical production markets, Reuters notes , as part of […]

Saudi Arabia Tries To Reassure Markets After Oil Price Plunge

16 Mar 2017   Saudi Arabia

Saudi Arabia’s Oil Minister Khalid al-Falih has tried to reassure markets of The Kingdom’s commitment to the rebalancing of crude oil’s fundamentals, after benchmarks yesterday slid down on an announcement that Saudi Arabia had increase production in February to 10.01 million bpd . The Kingdom, al-Falih said,”is committed and determined to stabilize the global oil market by working closely with all other participating OPEC and non-OPEC producers.” Al-Falih then went on to explain that the self-reported level of production does not necessarily reflect the actual amount supplied to the market. It was Saudi Arabia’s self-reported figure for February that pressured prices, with WTI diving to $47.72 in midday trading, and Brent touching the psychologically significant $50 barrier, at $50.78 a barrel. Secondary sources, which OPEC uses to calculate each member’s monthly production, pegged the Saudi output at 9.797 million barrels daily. The 10.01 million bpd are still below Saudi […]

China, Saudi Arabia eye $65 billion in deals as king visits

16 Mar 2017   Saudi Arabia

Saudi Arabia’s King Salman oversaw the signing of deals worth potentially $65 billion as he began a visit to Beijing on Thursday, as the world’s largest oil producer looks to cement ties with the world’s second-largest economy. The octogenarian monarch, who has overseen the launch of an ambitious economic reform plan since his accession two years ago, is on a month-long Asian tour. The visits to countries that are some of world’s fastest growing importers of Saudi oil aim to promote investment opportunities in the kingdom, including the sale of a stake in its giant state firm Saudi Aramco. Saudi Arabia has sought to boost oil sales to China, the world’s second-largest oil market, after losing market share […]

Nasdaq CEO says tech partnership can help win $100 billion Saudi Aramco IPO

16 Mar 2017   Saudi Arabia

A view of the exterior of the Nasdaq market site in the Manhattan borough of New York City, U.S., October 24, 2016. REUTERS/Shannon Stapleton Nasdaq Inc is touting its technology credentials in its effort to win the listing of Saudi Aramco’s upcoming initial public offering, the exchange operator’s chief executive said in an interview. Financial centers around the globe, including New York, London and Tokyo, have been making a special effort to win the oil giant’s $100 billion listing, which is expected to be the largest IPO ever. Nasdaq is already the technology provider to Saudi Arabia’s exchange, and will use that relationship to promote the idea of a dual listing in Riyadh and another global market, Nasdaq CEO Adena Friedman said. Nasdaq is based in New York, where its exchange operates, but offers technology services to other global exchanges. “Every exchange in the world right now is competing […]

Saudi Aramco to resume oil product shipments to Egypt soon

16 Mar 2017   Egypt, Saudi Arabia

Saudi Arabian state oil company Aramco will resume oil product shipments to Egypt some six months after halting them suddenly, the Egyptian Petroleum Ministry said on Wednesday, signaling a potential thaw in relations after months of tension. The ministry said in a statement that it was working with Aramco on a timetable for the resumption of shipments and that the reasons behind the October cut-off were purely commercial. “It was agreed that the Saudi Arabian side would resume Aramco’s shipping of oil products as per the commercial contract signed between the Egyptian General Petroleum Corporation and Aramco,” the statement said. Saudi Aramco could not be reached for immediate comment. “Very shortly we will finalize the time and place for receiving shipments from Aramco,” a ministry official told Reuters, asking not to be identified because he is not authorized to speak to the media. Asked if shipments would resume within […]

Saudis stand by commitment to oil production cuts

15 Mar 2017   Saudi Arabia

Saudi Arabia, the world’s biggest oil exporter, moved to allay fears that the kingdom was backing away from its pledge to curb production, underlining its concern about a 10 per cent plunge in the crude price over the past week. The kingdom’s energy ministry rushed out a rare statement on Tuesday asserting its commitment to “stabilising the global oil market”, just as global benchmark Brent crude slipped towards $50 a barrel for the first time this year. The statement, released after 8pm in Riyadh, came after Opec’s monthly report showed Saudi Arabia’s production had increased in February, adding to pressure on the market that was already concerned about a rebound in US shale oil output. “Saudi Arabia assures the market that it is committed and determined to stabilising the global oil market by working closely with all other participating Opec and non-Opec producers,” the ministry said. Brent crude, the global benchmark, has dropped by almost 10 per cent to a low of $50.25 a barrel in the last week, while US marker West Texas Intermediate has fallen almost 11 per cent to $47.07 a barrel. Both benchmarks have erased all their gains since some of the world’s biggest producers agreed to curb supplies as part of a deal late last year as a rebound in prices has stoked a resurgence in US shale oil production.

Saudi Arabia Says It Has Reversed a Third of Its Production Cuts

15 Mar 2017   Saudi Arabia

Saudi Arabia told OPEC it raised output back above 10 million barrels a day in February, reversing about a third of the cuts it made the previous month. The kingdom boosted production by 263,300 barrels a day to 10.011 million a day, according to a report from OPEC on Tuesday. Oil prices sank on speculation the country had grown impatient with fellow producers lagging in their own cutbacks. Saudi Arabia’s Energy Ministry said that the volume of crude supplied to markets nonetheless fell by 90,000 barrels a day to 9.9 million, as the extra supplies were moved into storage. Even after the increase, Saudi Arabia’s data show it’s cutting output more than required under the terms of OPEC’s Nov. 30 agreement. The kingdom remains determined to stabilize the global oil market, according to a statement from the ministry. Nevertheless, Energy Minister Khalid Al-Falih warned last week that the kingdom […]

Trump meets with Saudi deputy crown prince at the White House

15 Mar 2017   Saudi Arabia

President Donald Trump met with Saudi Arabia’s Deputy Crown Prince Mohammed bin Salman at the White House on Tuesday for a discussion that was likely to touch on investment opportunities in the kingdom and efforts to stop the war in Syria. Trump, who took office in January, and Prince Mohammed who is also the kingdom’s defense minister, kicked off their talks in the Oval Office, where they posed for a picture in front of journalists and did not take questions. U.S. Vice President Mike Pence, Trump’s senior adviser and son-in-law Jared Kushner, chief of staff Reince Priebus and strategist Steve Bannon were also present. The meeting was the first since Trump’s inauguration with the powerful prince, who is leading the […]

Saudi Crown Prince Flies To Washington To Meet With Donald Trump

14 Mar 2017   Saudi Arabia

Saudi Deputy Crown Prince, Mohammed bin Salman, responsible for the kingdom’s reforms, left on Monday for Washington to meet President Donald Trump on a visit expected to pitch the world’s top oil exporter as an attractive investment destination. It will be the first meeting since Trump took office in January between the U.S. President and the prince who is next in line to lead Saudi Arabia, and is in charge of the kingdom’s efforts to revive state finances by diversifying away from falling crude oil revenues, of which the upcoming Aramco IPO will be a critical component. Saudi Deputy Crown Prince Mohammed bin Salman Under the Saudi plan, which seeks to promote the private sector and make state-owned companies more efficient, Riyadh plans to sell up to 5 percent of state oil giant Saudi Aramco in what is expected to be the world’s biggest initial public offering. Last year, […]

Saudi Arabia Won’t Let Oil Head Back To $20s Again

13 Mar 2017   Prices, Saudi Arabia

Saudi Arabia and American frackers are gearing up for the second oil war. It will take oil lower, but not back to $20 again. Saudi Arabia has kept its promise. It has cut oil output by 486,000 barrels a day, in line with the OPEC agreement the Kingdom pulled together last October, helping oil stabilize above $50 per barrel. And it has set up an example for the rest of OPEC and Russia, who have kept their own promise to stick with the October accord, officially at least. For a while things in the oil market seemed like back in the old good days: oil prices headed north, approaching the magic number of $60, and the Saudi Kingdom was talking up its grand plan, the Aramco IPO. But in the last three days the oil market has gotten oversupplied, and oil prices are heading south again, dropping below the […]

Trillion-dollar question looms as Aramco audits oil reserves

13 Mar 2017   Saudi Arabia

Listed reserves haven’t changed in nearly 30 years * Falih says reserves could be bigger than those already booked * Disclosures likely to resemble those of BP and Shell * Market will not get detailed information by field – sources When Saudi Aramco reveals a Western audit of its oil reserves, investors will be looking for two answers: How much oil and how much detail? Saudi Energy Minister Khalid al-Falih has hinted at a surprise on the upside on reserve volumes ahead of Aramco’s 2018 share listing, but industry sources say detail on individual deposits – which investors have long sought – will be thin. Saudi Arabia’s reserves of easily recoverable oil have long been the world’s largest. But there also have long been questions about the volume and quality of those reserves. For nearly 30 years – despite […]

Saudi Arabia and the war on shale oil that never ended

13 Mar 2017   Saudi Arabia

Last week when Saudi Arabia let it leak that the kingdom has no intention of leading OPEC toward another cut in production to accommodate the growing volumes of oil from American shale deposits, it was another sign that the Saudi war on shale actually never ended. To properly understand this announcement, we need to return to last fall. Most people believed then that the cuts agreed to by OPEC under Saudi leadership marked the end of Saudi Arabia’s war on shale oil in America. At the time I cautioned against such a conclusion , and said I was doubtful that there would actually be any decline in world oil production because the Saudis didn’t really want a decline. And, guess what? The OPEC cuts have yet to be fully implemented and have been offset by rising production elsewhere . And, the Saudis are now complaining that the Russians who, […]

Saudi King Visits Japan, Seeks Help on Diversifying Economy

13 Mar 2017   Japan, Saudi Arabia

King Salman and hundreds of business leaders from Saudi Arabia are in Japan for talks Monday mainly expected to focus on economic ties. The visit is the first by a Saudi king in 46 years, though Salman visited more recently as crown prince. Saudi Arabia is one of Japan’s biggest suppliers of crude oil, accounting for about a third of its total imports of oil from the Middle East. The kingdom is striving to diversify its economy away from its heavy reliance on oil exports, and Salman is on a month-long tour of Asia to advance his kingdom’s economic and business interests. Japan’s Chief Cabinet Secretary Yoshihide Suga told reporters Monday that Japan is willing to provide support for the economic power […]

Saudi deputy crown prince to meet Trump, investment in focus

13 Mar 2017   Saudi Arabia, USA

Saudi Deputy Crown Prince Mohammed bin Salman attends a graduation ceremony and air show marking the 50th anniversary of the founding of King Faisal Air College in Riyadh, Saudi Arabia, January 25, 2017. Deputy Crown Prince Mohammed bin Salman, in charge of Saudi Arabia’s reforms, left on Monday for Washington to meet President Donald Trump on a visit expected to promote the world’s top oil exporter as an investment destination. It will be the first meeting since Trump took office in January between the U.S. President and the powerful prince leading the kingdom’s efforts to revive state finances by diversifying away from falling crude oil revenues. Under the plan, which seeks to promote the private sector and make state-owned companies more efficient, Riyadh plans to sell up to 5 percent of state oil giant Saudi Aramco in what is expected to be the world’s biggest initial public offering. Facing […]

Saudi Arabia’s Secret Meetings With The World’s Largest Oil Traders

9 Mar 2017   Saudi Arabia

Something unprecedented happened last November when OPEC sat down in Vienna to hammer out the final terms of its oil production cut deal (which, incidentally, has yet to translate into a drop in record high inventories): one day before the summit, the oil producing cartel – or rather Saudi Arabia – secretly invited hedge funds to sit in on the negotiations and provide OPEC with input on what to do. However, news of the meeting leaked shortly thereafter, and was reported by the FT: “Saudi Arabia convened private talks with the world’s largest oil traders in Vienna before OPEC’s crunch meeting on whether to cut oil output.” Mark Couling, head of crude oil at Vitol, the world’s biggest independent oil trading company, was invited to Vienna by the Saudi delegation, according to people with knowledge of the talks. Pierre Andurand, who runs the $1.5bn Andurand Capital fund, one of […]

Saudi to supply full crude contract volumes to Asia

9 Mar 2017   Saudi Arabia

Saudi Aramco will supply full contract volumes of crude oil to multiple Asian buyers in April, three industry sources with knowledge of the matter said. Despite commitments to cut production in an OPEC deal, Saudi Aramco had agreed to supply at least one customer in Asia with incremental crude on top of contracted volumes next month, as it holds to a strategy of maintaining market share in the fastest-growing market, one of the sources said. Saudi Arabia led a pact between the Organization of the Petroleum Exporting Countries (OPEC) and other major producers, including Russia, Mexico and Kazakhstan, to cut global crude output by about 1.8 million barrels per day (bpd) from Jan. 1, and bring supply closer to demand. The kingdom had cut beyond the level […]

Saudi Oil Rations Mirror Pricing as Heavy Crudes Cut Over Lights

9 Mar 2017   Saudi Arabia

Saudi Arabia is handing customers in the world’s biggest oil market sweet treats while limiting sour supplies. The producer cut volumes of its Arab Medium and Arab Heavy crude for April sales to at least two North Asian refiners, according to people with knowledge of the matter. It instead gave the buyers more of the Arab Light and Arab Extra Light varieties to compensate, said the people, who asked not to be identified because the information is confidential. One other buyer in the region received cuts in volumes for all grades it sought. Saudi Arabian Oil Co. also gave full volumes of contractual supplies to two other North Asian refiners, which mostly buy lighter “sweet” crudes that typically have less sulfur and are easier to process than heavier “sour” oils. Processors in South Asia and Southeast Asia got all the oil they asked for in April. The state-run producer […]

Saudi oil min says no ‘free rides’ for non-OPEC producers

8 Mar 2017   Saudi Arabia

Saudi Oil Minister Khalid al-Falih said on Tuesday that oil market fundamentals were improving as an agreement to curb supply by OPEC and non-OPEC producers took effect. But he said the Organization for the Petroleum Exporting Countries would not let rival producers take advantage of the cuts to underwrite their own production investments. The group is expected to meet again in May, when it could consider extending the production curbs. Saudi Arabia had cut beyond what it had pledged in the agreement and brought the kingdom’s output below 10 million barrels per day, he said. “We should not get ahead of the market,” Falih told a group of oil industry executives at the CERAWeek energy conference. Overall, he said the production reductions have had their intended effect, citing greater price […]

Burning less oil at home will help Saudi exports and Aramco IPO

8 Mar 2017   Saudi Arabia

Saudi Arabia is likely to reduce the amount of oil it burns to generate power this summer as the kingdom hikes domestic energy prices and uses more natural gas in power stations, industry sources said. Burning less crude at home means the world’s top oil exporter may not need to push output to the record high of 10.67 million barrels per day (bpd) reached in July last year, even if the Organization of the Petroleum Exporting Countries and other producers end supply curbs in June. It may also make the sale of a 5 percent stake in Saudi Aramco more attractive to investors because the national energy giant will have more crude to export, if needed, and can sell fuel at higher prices […]

Saudi Energy Minister Says OPEC Will Remain Stabilizing Force for Oil Prices

8 Mar 2017   OPEC, Saudi Arabia

Saudi Arabia’s energy minister said Tuesday that the Organization of the Petroleum Exporting Countries will continue to be the world’s “only catalyst” for stabilizing oil prices, but he warned that the group won’t take steps to bail out the market. Investors should not fall prey to “wishful thinking that OPEC or the kingdom will underwrite the investments of others at our own expense and long-term interests,” Khalid al-Falih…

Saudi Aramco to Pay Royal Dutch Shell $2.2 Billion in Motiva Breakup

State-oil giant Saudi Arabian Oil Co. will pay Royal Dutch Shell PLC $2.2 billion to finalize the breakup of their two-decade Motiva Enterprises refining partnership in the U.S. The deal gives Saudi Arabia sole control over the largest refinery in the U.S., a 600,000-barrels-a-day facility in Port Arthur, Texas. The Saudi state oil company, known as Aramco, will take full ownership of the Motiva Enterprises LLC name and legal entity….

Saudi Oil Minister Says Market Intervention Is Ineffective

8 Mar 2017   Saudi Arabia

Saudi Arabia will only play steward of global oil production for a limited period before stepping back and allowing the free market to complete the supply rebalancing act, Saudi Oil Minister Khalid A. Al-Falih told CNBC on Tuesday. “History has demonstrated that intervention in response to structural shifts is largely ineffective, and I believe we in the organization have learned that lesson. That’s why Saudi Arabia does not support OPEC intervening to alleviate the impacts of long-term structural imbalances,” he said. As the largest producer in the Organization of Petroleum Exporting Countries (OPEC), the KSA is the de facto leader of the group, which includes other major Persian Gulf producers, namely Iran and Iraq. The members of the bloc, along with 11 other non-members, agreed to cut production by 1.8 million barrels in an effort to lower supply after 2.5 years of glut. Overall, compliance to the deal has […]

What the Saudi Aramco sale says about the state of the oil industry

8 Mar 2017   Saudi Arabia

As the oil and gas industry gathers in Houston for CERAWeek, a major annual event, geopolitical drivers to oil prices will be a focus. U.S. shale producers will be particularly attuned to backroom discussions about how Saudi Arabia and Russia are viewing new indications of restored momentum in drilling in the U.S. tight oil patch. The bullish reports on U.S. drilling rates come against the backdrop of statements from close advisers to President Donald Trump that the Organization of Petroleum Exporting Countries (OPEC) will make room for U.S. shale. Chances are OPEC will not abandon attempts to shore up the global oil market, regardless of the newfound staying power of U.S. production. That’s because Saudi Arabia has bigger fish to fry when it comes to oil prices. Saudi Arabia’s leaders are betting the farm that the sale of 5 percent of Saudi Aramco, the country’s national oil company (NOC), […]

Saudi oil min says no ‘free rides’ for non-OPEC producers

8 Mar 2017   Saudi Arabia

Saudi Oil Minister Khalid al-Falih said on Tuesday that oil market fundamentals were improving as an agreement to curb supply by OPEC and non-OPEC producers took effect. But he said the Organization for the Petroleum Exporting Countries would not let rival producers take advantage of the cuts to underwrite their own production investments. The group is expected to meet again in May, when it could consider extending the production curbs. Saudi Arabia had cut beyond what it had pledged in the agreement and brought the kingdom’s output below 10 million barrels per day, he said. “We should not get ahead of the market,” Falih told a group of oil industry executives at the CERAWeek energy conference. Overall, he said the production reductions have had their intended effect, citing greater price […]

Saudi Energy Boss Al-Falih Says Peak Oil Demand Talk Misguided

Saudi Arabia ’s top oil official dismissed the notion that global demand may soon peak and leave billions of barrels of untapped crude stranded in fields that will never be drilled. Khalid Al-Falih, energy minister for the world’s biggest oil-exporting nation, called talk about peak demand among energy executives, analysts and activists “misguided,” and predicted worldwide demand will reach 100 million barrels a day “very soon.” Al-Falih made his remarks Tuesday in a packed-house address at CERAWeek by IHS Markit in Houston, the most influential oil industry conference of the year. Although Al-Falih framed his comments in the wider context of the need to invest in future oil production, his warning comes as the kingdom prepares to sell shares in its state-owned energy giant Saudi Aramco . The Aramco public offering is on track for a 2018 listing, he said. The company and government officials are working on bringing […]

Saudi Arabia, Russia Offer United Front on Oil Supply Cuts

Saudi Arabia and Russia, the architects of an oil production cut that has stabilized prices, presented a united front on compliance just as rising U.S. inventories have sparked doubts about the OPEC and non-OPEC deal. Khalid Al-Falih, the Saudi energy minister, acknowledged that global crude inventories aren’t draining as quickly as he expected, opening the door for an extension of the production cuts into the second half of the year. The potential rollover is a subtle yet significant shift from just six weeks ago, when the minister said that an extension probably wouldn’t be needed. Al-Falih’s concern about the slow pace of stockpile reductions was echoed by Suhail Al-Mazrouei, the oil minister for the United Arab Emirates. Since the Organization of Petroleum Exporting Countries and some of its rivals, including Russia, agreed to cut output in late 2016, oil prices have stabilized at around $50-$55 a barrel, up from $45-$50 a barrel before. Yet, prices are struggling to rise further as U.S. crude stocks increased to record levels.  With the market starting to believe the cuts were backfiring by reviving U.S. oil production, Al-Falih and his Russian counterpart Alexander Novak called a news conference in Houston after a round of meetings to offer a united front, and insist the cuts will work.

 

What the Saudi Aramco sale says about the state of the oil industry

As the oil and gas industry gathers in Houston for CERAWeek, a major annual event, geopolitical drivers to oil prices will be a focus. U.S. shale producers will be particularly attuned to backroom discussions about how Saudi Arabia and Russia are viewing new indications of restored momentum in drilling in the U.S. tight oil patch. The bullish reports on U.S. drilling rates come against the backdrop of statements from close advisers to President Donald Trump that the Organization of Petroleum Exporting Countries (OPEC) will make room for U.S. shale. Chances are OPEC will not abandon attempts to shore up the global oil market, regardless of the newfound staying power of U.S. production. That’s because Saudi Arabia has bigger fish to fry when it comes to oil prices. Saudi Arabia’s leaders are betting the farm that the sale of 5 percent of Saudi Aramco, the country’s national oil company (NOC), […]

Fund Managers Value Aramco Below $1.5 Trillion

7 Mar 2017   Saudi Arabia

International fund managers and institutional investors largely expect Saudi Aramco to be valued at up to USD$1.5 trillion in the IPO expected next year, according to a survey by investment bank EFG Hermes, with most experts disagreeing with Saudi officials who have said that Saudi Arabia’s oil giant is worth around US$2 trillion. Among the respondents in a survey by EFG Hermes carried out at an investment conference in Dubai, 39 percent expect the market to evaluate Aramco in the range of between US$1 trillion and US$1.5 trillion, Reuters reported on Monday. A total of 36 percent of respondents expect the valuation to be below US$1 trillion, while another 24 percent of fund managers see Saudi Aramco valued at more than US$1.5 trillion. Since the Saudis announced plans to sell 5 percent in their oil giant last year — saying the company could be worth the staggering US$2 trillion […]

Saudi Aramco to Pay Shell $2.2 Billion in Refinery Breakup

7 Mar 2017   Saudi Arabia

Saudi Arabian Oil Co. will pay Royal Dutch Shell Plc $2.2 billion including debt to finalize the breakup of a 19-year refining partnership known as Motiva Enterprises LLC. Saudi Aramco’s Saudi Refining unit will take full ownership of the Motiva Enterprises name and legal entity, including the largest refinery in the U.S. at Port Arthur in Texas, and 24 distribution terminals, according to a joint statement dated March 6. Shell will take sole ownership of the Norco and Convent refineries in Louisiana and 11 distribution terminals, according to the statement. Saudi Aramco will make a $2.2 billion balancing payment, subject to adjustments including working capital, Shell said in a separate statement . The payment is split between debt and cash. Saudi Aramco will assume nearly all of Motiva’s $3.2 billion of net debt, including $1.5 billion of Shell’s share. A cash payment will cover the balance, Shell said. “Motiva […]

Saudi cuts light oil prices to Asia as global oversupply persists

3 Mar 2017   Saudi Arabia

Oil tanks seen at the Saudi Aramco headquarters during a media tour at Damam city November 11, 2007. World’s top crude exporter Saudi Arabia cut April prices of light crude it sells to Asia for the first time in three months in a bid to shore up demand in an oversupplied market, trade sources said on Friday. The OPEC kingpin raised prices for two straight months to March after production cuts by the Organization of the Petroleum Exporting Countries and Oman strengthened Middle East oil benchmark Dubai, but it unexpectedly cut prices in April as oversupply of light crude persisted. The April (OSP) for Arab Light was set at the low end of forecasts in a Reuters survey and the 75 cent cut for Arab Extra Light was deeper than expected. Saudi Aramco took into account other factors such as a stronger Oman-Dubai benchmark and recent sharp declines in […]

Saudi Arabia Still Bears Brunt of Oil Cuts as OPEC Output Drops

3 Mar 2017   Saudi Arabia

Citi’s Ed Morse Says OPEC Is Losing Its Clout Saudi Arabia continued to lead OPEC’s efforts to cut production, helping the organization get closer to a goal set out in a historic accord last year. Riyadh lowered oil supply by 90,000 barrels a day from a month earlier to 9.78 million in February, according to a Bloomberg News survey of analysts, oil companies and ship-tracking data. It was the second month in a row that the world’s biggest crude exporter pumped below its own target of 10.06 million barrels a day. Overall, the Organization of Petroleum Exporting Countries’ production fell to 32.17 million barrels a day in February, a 65,000 barrel-a-day drop from January, the first month of the accord. The 10 members of the group that pledged to make cuts in Vienna in November implemented 104 percent of those reductions, […]

Saudi Aramco Offers Crude Discounts in Every Region

3 Mar 2017   Saudi Arabia

Saudi Arabian Oil Co. has lowered prices for almost all of its crude grades for April delivery. The world’s largest oil exporter, known as Saudi Aramco, said on Thursday that it had reduced super light and extra light crude prices for its customers in the…

Saudi Arabia Oil Tanker Tracking Shows Another Slide in Exports

2 Mar 2017   Saudi Arabia

Saudi Arabia’s shipments of crude oil fell last month, indicating OPEC’s biggest producer is continuing to cut supplies by more than it originally pledged. The world’s largest crude exporter shipped 7.04 million barrels a day in February, a drop of 126,000 barrels a day from January, vessel-tracking data compiled by Bloomberg show. Measured against the country’s own figures, outflows are down by about 1 million barrels a day since December. Saudi Arabia is at the forefront of an agreement by the Organization of Petroleum Exporting Countries to curb output for at least six months to reduce a worldwide surplus that depressed oil prices since mid-2014. Production figures from January showed that OPEC members were at about 90 percent in adhering to the deal. However, 11 non-OPEC nations that had joined the effort lagged, with a compliance rate of about 50 percent. Higher prices caused by lower output may increase […]

Saudi King Goes East In Search Of Friends And Cash

2 Mar 2017   Saudi Arabia

The Saudi King kicked off a month-long tour of Asia this week, as the oil kingdom looks to bolster ties in the east as it loses confidence in the U.S. as a stable ally. The trip began in Malaysia where King Salman inked a $7 billion deal , promising to invest in a Malaysian petrochemical complex run by state-owned oil company Petronas. From there, he will tour Indonesia, Brunei, Japan, China and the Maldives. The objectives of the trip are multiple. First, Saudi Arabia wants to keep and expand its market share in Asia. China is the largest crude oil importer in the world, and Saudi Arabia is China’s top oil supplier. However, competition is stiff and growing amid an oversupplied market. Russia and Saudi Arabia have battled for several years over the Chinese market, with Russia fast gaining ground. While Saudi Arabia has a slight edge in terms […]

Saudi Arabia Bulks Up in Asia to Boost Appeal Before Oil IPO

1 Mar 2017   Saudi Arabia

Saudi Arabian Oil Co. bought half of a Malaysian oil refinery and petrochemical plant as it prepares for what may be the biggest ever initial public offering by bulking up its business in Asia, its largest market. The Middle Eastern oil giant, known as Saudi Aramco, signed a deal with state-owned Petroliam Nasional Bhd. to develop an oil refinery and naphtha cracker in Malaysia’s southern state of Johor and provide up to 70 percent of the crude requirements, the companies said at a briefing Tuesday. Saudi Aramco will invest $7 billion for its stake in the integrated oil and petrochemicals complex and plans to finalize a similar deal in Indonesia on Wednesday. “This will strengthen the equity story for Saudi Aramco,” Khalid Al Falih, the kingdom’s energy minister, said in Kuala Lumpur. “Investors will be looking for a company that has breadth in its portfolio.” The deal is part […]

Trillions or Billions – What Is Aramco’s IPO Actually Worth?

1 Mar 2017   Saudi Arabia

Since Saudi Arabia said last year that it planned to sell a small portion of its crown jewel Aramco, analysts and industry specialists have been questioning the Kingdom’s evaluation of the oil giant – a mind-boggling US$2 trillion. As the provisional timing set for the IPO – 2018 – is drawing nearer, Saudi Aramco has been busy picking advisers for what would be the world’s biggest share sale ever, if the company were indeed to be valued at around that US$2 trillion figure. Meanwhile, analysts have been trying to put a price tag on the oil giant using metrics such as cash flow expectations and the current tax regime for the company in Saudi Arabia, rather than just multiplying the 261 billion barrels of crude oil and condensate reserves Aramco claims to have by US$8, a benchmark to value reserves. The latest evaluations of the company put its value […]

Saudi Aramco buys $7 billion stake in Petronas’ RAPID refinery project

Saudi oil giant Aramco IPO-ARMO.SE will buy an equity stake in Malaysian firm Petronas’ refining and petrochemicals project in the southeast Asian country, the companies confirmed on Tuesday, investing a total of $7 billion. In a joint statement, the firms said Aramco will take a 50 percent stake in select ventures and assets in the Refinery and Petrochemical Integrated Development (RAPID) project developed by Malaysian state-controlled Petroliam Nasional Berhad, known as Petronas. The deal signing was formally witnessed by Malaysian Prime Minister Najib Razak and Saudi King Salman, currently on a state visit to Malaysia. Petronas’ Chief Executive Officer Wan Zulkiflee Wan Ariffin told reporters Aramco will take a 50 percent stake in RAPID’s refinery and cracker project. Aramco will supply up to 70 percent […]

Exclusive: Saudi Arabia wants oil prices to rise to around $60 in 2017 – sources

28 Feb 2017   Prices, Saudi Arabia

Saudi Arabia wants crude oil prices to rise to around $60 a barrel this year, five sources from OPEC countries and the oil industry said. This is the level the OPEC heavyweight and its Gulf allies – the United Arab Emirates, Kuwait and Qatar – believe would encourage investment in new fields but not lead to a jump in U.S. shale output, the sources said. The Organization of the Petroleum Exporting Countries, Russia and other producers pledged last year to cut production by about 1.8 million barrels per day (bpd) from Jan. 1. The first cut in eight years is intended to boost prices and […]

Cooking The Books? Saudi Aramco Could Be Overvalued By 500%

28 Feb 2017   Saudi Arabia

The world’s most valuable oil company, Saudi Aramco, is approaching its first IPO in 2018, as the government of Saudi Arabia prepares to sell off portions of the company in order fill a sovereign wealth fund crucial to the country’s transition away from an oil-based economy. Saudi Aramco is worth $2 trillion, according to Riyadh, and its five percent initial offering could yield $200 billion. This would be the largest IPO in history, blowing away the offering of China’s Alibaba in 2014. The problem, however, is that the company itself may not be worth as much as the Saudi government claims. Recent reports and growing skepticism regarding Aramco’s actual worth have cast some doubts on whether the world’s largest IPO will be as earth-shattering as originally thought. The original estimate offered by Saudi Arabia, which placed Saudi Aramco’s worth at around $2 trillion, was based on a valuation of […]

Saudi Arabia and Iraq Crude Exports to US Hit Five-Year High

27 Feb 2017   Iraq, Saudi Arabia, USA

Crude oil imported to the United States from Saudi Arabia and Iraq combined has reached a peak not seen since 2012, but the U.S. Energy Information Administration says the volume will likely decline soon.  oward the end of 2016, high production in Saudi Arabia and Iraq, coupled with low domestic demand in Saudi, contributed to the crude export volumes. Saudi exported 8.3 million barrels per day (Mmbpd) in November – its highest volume since May 2003 – before dropping to 8 Mmbpd in December, EIA said in a recent brief. Iraq’s exports hit a record high of almost 4.1 Mmbpd in November, which continued through December.  Both countries’ production was relatively high prior to OPEC’s pledge in November to cut production. Saudi Arabia produced 321,000 bpd and Iraq volumes increased by 700,000 bpd, above the previous year’s levels, according to information from the Joint Organizations Data Initiative. In 2015, Iraq’s production was impaired by economic sanctions.

But with the implementation of the OPEC production cut pledge in January, coupled with U.S. refiners’ ability to use domestic Mars crude oil as feedstock, the export totals may decline, EIA said.  In the United States, Congress is considering a tax on imported goods and services, which could also cut imports from the Middle East. The border adjustment tax (BAT) could boost income for domestic oil and gas producers, but refiners’ are wary of its impact on the heavy crude imports they use for feedstock.

As Saudis prepare to sell shares in oil giant, some have misgivings

25 Feb 2017   Saudi Arabia

Mohammed Jamil Farsi, a prominent Saudi Arabian jewelry tycoon, made an impassioned plea to the investment minister at a meeting of the Jeddah Chamber of Commerce this month. “I don’t know anything about economics but I beg you, and I beg the officials in the country, not to sell Aramco – not 5 percent, not 1 percent,” he said. Investment minister Majed al-Qasabi replied the economy would benefit from the sale of shares in national oil giant Saudi Aramco. It is expected to be the world’s largest initial public offer, raising tens of billions of dollars. But Farsi’s plea underlined misgivings among substantial parts of the public and the business community about the sale. […]

Saudi Arabia Says Aramco Is Worth More Than $2 Trillion

24 Feb 2017   Saudi Arabia

Saudi Arabia has said oil giant Saudi Aramco is worth more than $2 trillion, enough to consume Apple Inc. twice, and still have room for Google parent Alphabet Inc. The kingdom may have to settle for less. A lot less. Industry executives, analysts and investors told Bloomberg their analysis — based on oil reserves and cash flow projections under different tax scenarios — suggests Aramco is worth no more than half, and maybe as little as a fifth, of that amount. This means Saudi Arabia would earn a fraction of the $100 billion implied by its valuation if it sells 5 percent to the public in 2018, as planned. For example, Wood Mackenzie Ltd. came up with a rough valuation of Aramco’s core business of $400 billion, according to clients who attended a private meeting at the oil consultant’s City of London office this month and asked not to […]

Saudi Aramco Weighs Offering Citizens Discounted Shares

22 Feb 2017   Saudi Arabia

Saudi Arabian Oil Co. , gearing up for what may be the world’s biggest initial public offering, is considering discounted shares for local investors, according to people with knowledge of the matter. The oil company has discussed ways to structure the offering in different tiers, allowing Saudi buyers to receive the stock at a lower price than international investors, the people said, asking not to be identified as the talks are private. Shares in companies owned by the Saudi government have traditionally been offered to locals at a nominal value of about 10 riyals ($2.67) each — usually far below their true worth. The stock market regulator last year approved new rules to price initial public offerings based on demand. “The government has in the past used the IPO process as way to share wealth with its nationals,” John Sfakianakis, director of economic research at the Gulf Research Center, […]

Saudi Aramco Picks J.P. Morgan, HSBC, Morgan Stanley as Lead IPO Underwriters

22 Feb 2017   Saudi Arabia

Saudi Arabia’s state-owned energy company has told J.P. Morgan,HSBC and Morgan Stanley they will be the lead underwriters for its planned initial public offering, set to be the largest ever, according to people familiar with the matter. The three banks will lead the giant offering of about as much as 5% of Saudi Arabian Oil Co., known as Saudi Aramco, the people said.  The three banks declined to comment. A spokesperson for Aramco said the firm doesn’t comment on rumor or speculation.