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Undeterred By Peak Oil, Saudis Look To Become World’s Largest Oil Trader

Consumption

Saudi Arabia’s state oil giant Aramco says that it doesn’t believe all the ‘peak oil demand hype’ and expects that its crude oil will be in high demand for decades to come.

While the Kingdom says that it’s working on the Vision 2030 strategy to diversify its economy away from oil, the Saudis and their oil firm are increasingly looking to lock in future oil demand in the refining and chemicals businesses in all major markets in the world to open new avenues of sales for their oil and to make sure that Saudi crude will have a market until the world needs oil.

Over the past few years, Saudi Aramco has been pursuing deals to take part in or to supply crude oil to China and India—the two largest oil demand growth centers and prized markets for any oil producer.

Now Aramco is setting its sights on Europe and the Mediterranean to more than triple its current oil supply to those markets as it aims to expand its downstream, refining, and marketing business and to make sure that it will have created demand for its oil on those markets in the long term.

Currently, Saudi Aramco supplies around 3 million barrels of oil to European markets monthly, and targets to boost this monthly supply to 10 million barrels within two years, Aramco’s senior vice president of Downstream, Abdulaziz Al-Judaimi, told Reuters in an interview this week.

“This means we have almost created a 300,000-bpd refining capacity in Europe,” Al-Judaimi said, noting that Aramco will be looking to seal swap deals to supply crude and to offtake refined products to market in Europe.

Aramco’s trading unit, Aramco Trading, is also aggressively expanding its trading business, rising from 300,000 bpd when it was set up in 2012, to 4.5 million bpd now. The Saudi giant aims to further boost the trading volume to 6 million bpd by the end of 2020, Al-Judaimi told Reuters.

Aramco and other national oil companies of the Middle East like the Abu Dhabi National Oil Company (ADNOC) aim to aggressively expand their trading businesses as they already rival international oil majors and the world’s top commodity trading houses. Vitol, for example, trades more than 7 million bpd of crude oil and refined products, with the crude trade at around 3.8 million bpd.

Saudi Aramco laid the groundwork for increased trading in Europe in 2017 by buying a stake in a Rotterdam oil terminal from commodity trader Gunvor.

Last month, Aramco Trading signed a supply deal with Poland’s leading oil refiner PKN Orlen in an agreement that “highlights Saudi Aramco’s commitment to the Polish market and its strategy to enhance the integration of its downstream network in Europe.”

“In addition, the agreement consolidates Saudi Aramco’s efforts to earmark new strategic outlets for crude oil enabling the company to accommodate a range of future market positions, as well as underpinning an optimal balance of geographic exposure between Asia, Europe, and North America,” the Saudi oil giant said in April.

Aramco already said last year that it aims to increase its refining capacity from 5 million bpd now to 8 million bpd-10 million bpd, and to double its petrochemicals production by 2030 in its pursuit of securing more downstream markets for its crude oil.

Earlier this year, Aramco signed an agreement to buy 9 percent in Zhejiang Petrochemical’s 800,000-bpd integrated refinery and petrochemical complex in China. Saudi Aramco is also said to be in “serious discussions” to buy up to 25 percent of the refining and petrochemicals businesses of India’s largest company, Reliance Industries.

During a visit to China in March for the Huajin Aramco Petrochemical joint venture, Aramco’s president and CEO Amin Nasser said that the JV project “aligns perfectly with our own downstream strategy of becoming a global leader in refining and marketing, base lube oils, and chemicals. And it also aligns with forecasts that petrochemicals are “set to account for more than a third of the growth in oil demand to 2030, and nearly half to 2050.”

The Saudi state firm doesn’t see peak oil demand happening any time soon, and is confident it is the oil producer best equipped to continue meeting that demand, thanks to its very low production costs.

In a rare strongly worded speech at the International Petroleum Week in London earlier this year, Nasser rebuked all those who predict the demise of the oil industry in the near future, saying that views that the world will soon run on anything but oil “are not based on logic and facts, and are formed mostly in response to pressure and hype.”

Aramco believes that the world will continue to need a lot of oil for decades to come and looks to lock in as much global demand for Saudi oil as possible.

By Tsvetana Paraskova for Oilprice.com



29 Comments on "Undeterred By Peak Oil, Saudis Look To Become World’s Largest Oil Trader"

  1. Mick on Thu, 16th May 2019 3:33 am 

    An article from Oilprice.com so it has to be true. sac off.

  2. Mick on Thu, 16th May 2019 3:43 am 

    Btw what is there water cut? im pretty sure its way above 90%. GOOD LUCK WITH THAT.

  3. Sunspot on Thu, 16th May 2019 3:48 am 

    We created this civilization with fossil fuels, and we need 100 million barrels a day of the stuff to keep civilization running. We know that using it is ruining the atmosphere for human and most other life, but we can’t stop. “Renewable energy” will keep your TV running, but it won’t run civilization the way we operate today. That’s a bad joke. Oil is finite, and as it depletes it gets more expensive to acquire. First it will get too expensive for most people – $5 gas sounds horrible, no reason for the price to stop there – and then it will simply be unavailable unless you are rich and connected. And if you are, better get more locks for that gate, because we are hungry and we know you have food.

  4. Mick on Thu, 16th May 2019 4:59 am 

    Nice rant Sunspot. im with you totally on that . were totally fucked but just live your lives. what can u do’

  5. majece majece on Thu, 16th May 2019 6:04 am 

    I recommend you to check https://writemyessay4me.org/blog/how-to-assess-students out if you want to know how to assess students. It will help you to achieve success

  6. Robert Inget on Thu, 16th May 2019 6:25 am 

    So On Topic

    https://srsroccoreport.com/the-end-of-the-oil-giants-and-what-it-means/

    THE END of Oil Giants

    When giant oil fields go into decline, they usually decline abruptly. Ghawar’s decline is ominous. It was discovered in 1948 and until recently represented about 50% of the oil crude production of the Kingdom of Saudi Arabia (KSA). Ghawar is representative of some 100 to 200 giant oil fields. Most of them are old. The most recently discovered giants are of a diminutive size compared with those old giants.

    open link for entire article.

  7. Cloggie on Thu, 16th May 2019 8:04 am 

    That’s good news for KSA. Now let’s see if they manage to get their merchandise past Hormuz.

  8. Robert Inget on Thu, 16th May 2019 8:07 am 

    WOW Ghawar over 5 Million barrels/day……is in fact down to 3.8Mb/d. Matt Simmonds is proven right

    Recently, Saudi Aramco, the world largest oil exporter, has acknowledged that Ghawar, the world largest oil field, is in decline. The news went mostly unnoticed except in the specialized media. OK, so the Saudi have a bit of bother, so what? In fact, this piece of news is extremely important. Previously the oil world had been led to believe that Ghawar was producing over 5 Million barrels/day (Mb/d).[1] As part of its fund-raising, Aramco has disclosed that it is in fact down to 3.8Mb

  9. Robert Inget on Thu, 16th May 2019 8:53 am 

    Iranians Clear Ship Channel for Traffic

    (click bait)

    https://www.reuters.com/article/us-texas-tanker-crash/houston-ship-channel-reopens-to-two-way-traffic-after-wreckage-removed-idUSKCN1SL1U7

    Still, the channel was closed to traffic better part of week.

  10. Robert Inget on Thu, 16th May 2019 9:10 am 

    If you are reading this you’ve lived long enough…
    to experience ELECTRIC flying taxis.

    https://www.theverge.com/2019/5/16/18625088/lilium-jet-test-flight-electric-aircraft-flying-car

    German air taxi startup Lilium announced the first test of its full-scale, all-electric five-seater aircraft. It was the latest in a series of successful tests for the nascent electric flight industry, which aims to have “flying cars” whizzing above cities within the next decade.

  11. Robert Inget on Thu, 16th May 2019 9:35 am 

    Breaking;
    https://thehill.com/homenews/administration/443978-trump-frustrated-with-advisors-over-iran-wants-to-speak-to-iranian

    Trump say he doesn’t want war with Iran.
    (I believe him)

  12. Robert Inget on Thu, 16th May 2019 9:53 am 

    Trump may throw Bolton under bus if he’s getting too much heat from his base. Trump promised No More ‘elective wars’. Lower taxes.

    Tariffs and high gasoline prices are exactly what his base Do Not Want. Getting tough on Iran and War on Trade are really adding to Trump’s problems not distracting as he had hoped.

    Trump had zero understanding of international economics. Maybe, a little more today.

    Trump does know how to watch TV.
    Thousands of his supporters are hurting and they are letting him know.

  13. Antius on Thu, 16th May 2019 10:13 am 

    “German air taxi startup Lilium announced the first test of its full-scale, all-electric five-seater aircraft. It was the latest in a series of successful tests for the nascent electric flight industry, which aims to have “flying cars” whizzing above cities within the next decade.”

    Looks a bit too cumbersome to really be called a taxi. The 300km range is impressive though. More than I would have expected. It still makes this a short range solution, especially when you consider that safe fuel margins must be maintained. Then again, a lot of transport is short range. Hopefully, it will be more affordable and less incendiary than Tesla.

  14. Cloggie on Thu, 16th May 2019 5:13 pm 

    Could Paul Craig Roberts be right?

    https://edition.cnn.com/2019/05/16/politics/donald-trump-iran-john-bolton-mike-pompeo/index.html

    “Trump’s irritation with top aides grows over Iran strategy”

    https://www.paulcraigroberts.org/2019/05/12/trump-is-being-set-up-for-war-with-iran/

    “Trump Is Being Set-up for War with Iran”

  15. Davy on Thu, 16th May 2019 5:24 pm 

    Trump might be playing the players also. He is not very predictable. Trump thrives on chaos especially now that he has cut his political teeth with a two year witch hunt.

  16. makati1 on Thu, 16th May 2019 6:14 pm 

    “Undeterred By Peak Oil, Saudis Look To Become World’s Largest Oil Trader”

    A war with Iran in the ME will end that pipe dream pretty fast. After the first few weeks, it will take years to rebuild the refineries, ports and other shipping necessities in all of the ME oil countries. But, they could still be the ‘largest’ as US oil finances/debt will destroy US production.

    Interesting times. Pass the popcorn. GO TRUMP!

  17. Cloggie on Thu, 16th May 2019 6:24 pm 

    This is the time to buy shares in the renewable energy industry.

  18. I AM THE MOB on Thu, 16th May 2019 7:15 pm 

    Trump ‘most authoritarian president’ in US history, says Watergate journalist Carl Bernstein

    https://www.independent.co.uk/news/world/americas/us-politics/trump-carl-bernstein-cnn-interview-mueller-report-barr-russia-a8916126.html

  19. Davy on Thu, 16th May 2019 7:28 pm 

    Carl Bernstein??? Well yea, WTF MOBster. He is a loser fake news CNN regular. The old guy looks worse than some corpses I have seen at a cheap funeral. Move on to something worth discussing or get lost.

  20. I AM THE MOB on Fri, 17th May 2019 4:15 am 

    Davy

    Least I don’t spam Zero Hedge. A right wing libertarian news outlet that peddles George Soros conspiracy theories, xenophobia, racism, and denies climate change.

    You uneducated low life..

  21. Davy on Fri, 17th May 2019 5:30 am 

    Over half of Zero hedge is other contributions. I also view Rice Farmer another news amalgamator. I view energy sites and ecological sites. The MOBster views click bait extremist American liberal sites, the fraudulent US MSM, and fraudulent resistance sites. MOBster’s stupid liberal scum bag shit has been crushed. No more Mullertime talk. LMFAO. These scumbags are going down in history as the final nail in the out of control US government. I am not sure what is going to rise out of the ashes but is not MOBster shit.

    Zero Hedge has many contributors that are too long to list. Some are not on this list like RT and Asia Times, and the oil sites.
    “Zero Hedge Reads: Acting Man Alt-Market Ask Brokers Benzinga Boom Bust Blog Capitalist Exploits China Financial Markets Chris Martenson’s Blog Contrary Investor Daneric’s Elliott Waves Dr. Housing Bubble ETF Daily News Financial Revolutionist First Rebuttal ForexLive Fundist Gains Pains & Capital Gefira Gold Core Guerrilla Capitalism Hedge Accordingly Implode-Explode Investing Contrarian Jesse’s Cafe Americain Letters From Norway Liberty Blitzkrieg Market Montage Max Keiser Mises Institute Mish Talk Naked Capitalism Newsbud Of Two Minds Oil Price Peter Schiff Quoth The Raven Rsrch Rebooting Capitalism Safehaven Shanky’s Tech Blog Slope of Hope SmartKnowledgeU Blog TF Metals Report The Automatic Earth The Burning Platform The Economic Populist The Hammerstone Group The Vineyard Of The Saker Themis Trading True Sinews Value Walk Wolf Street”
    I also visit these sites daily:
    bbc.com, bloomberg.com, cleantechnica.com, vice.com, surplusenergyeconomics.wordpress, tomluongo.me, euanmearns.com, theecologist.org, unz.com, cassandralegacy.blogspot.com, notechmagazine.com, fasterthanexpected.com/blog, renewableenergyworld.com, peaksurfer.blogspot.com, livescience.com, lowtechmagazine.com, ecowatch.com, tradingeconomics.com, climateandcapitalism.com, jembendell.com, theautomaticearth.com,, doomsteaddiner.net/blog, questioneverything.typepad.com, and anything Korwiczian

    I also follow many of the contributors here on PO dot com. I follow all persuasions because I am looking for an edge with global collapse. My platform is Real Green Deep Adaptation that is local and individual. Real Green is what I care about and what I live. If I fuck around with anti-Americans and liberal scumbags it is because there are so mush agenda lies, embellishments, history revisions, and personal bragging, and extremist anti-American puke. This activity is just fun. It is fun to kick as and take names with losers who butcher the truth. I don’t know the truth but I am pretty good with BS that is not the truth. If you will notice I don’t say much if not attacked. If somebody says something that is legit and I don’t agree with, I don’t say anything. It is the wild selfish shit I attack. MOBster that means a lot of your shit.

  22. I AM THE MOB on Fri, 17th May 2019 6:15 am 

    Davy

    You spam from ZeroIQ non stop..You only use one source 99 percent of the time..Because you are narrow minded and need a news source that doesn’t conflict with your delusional worldview..

  23. I AM THE MOB on Fri, 17th May 2019 6:20 am 

    Tesla’s SolarCity panels are a massive $1 billion flop. California since 2016, has only installed 21 panels.

    https://www.technologyreview.com/f/613541/teslas-trumpeted-solar-shingles-are-a-flop/

  24. Davy on Fri, 17th May 2019 6:34 am 

    “You spam from ZeroIQ non stop..You only use one source 99 percent of the time..Because you are narrow minded and need a news source that doesn’t conflict with your delusional worldview..”

    PROOF?

  25. Davy on Fri, 17th May 2019 6:35 am 

    “Tesla’s SolarCity panels are a massive $1 billion flop. California since 2016, has only installed 21 panels.”

    It’s not solar’s fault for that low IQ MOBster. Musk is a fraud and so many blind lying liberal fake green scum idolize him. I am amazed somebody as extremist liberal as you is attacking him. For you it is collapse at any cost because you have a failed life to try to prove. Renewables are on your shit list because they might extend out collpase. OH the horror of that. When we look at the liberal lefts fake green shit we can look to clean technica which is like a Tesla commercial dot com. I still can’t figure out how fake green liberals think EV’s are clean currently. It is baffling and a primary reason they are fake. EV’s have the potential to be greener and a vital niche away from the increasingly problematic fossil fuel complex. We have to diversify transport and energy. That said Real Green acknowledges most forms of transport, greener or not are dirty because they do not scale to planetary realities. The only course for someone who wants to be Real Green is localization as much as is possible. Driving is the number one non green activity you can do EV or ICE.

  26. Robert Inget on Fri, 17th May 2019 1:43 pm 

    (snatched from victory’s jaws or just a chat room)

    “I’m concerned that we may be entering an era in which tech (like autonomous aerial and underwater drones) will empower state and non-state actors to disrupt oil traffic anywhere.”

    Several nights ago, I listened to a conversation between a high powered Patent Attorney (who specializes in high tech and armaments) and a person who is the head of a firm involved in electronic infrastructure (including work for government agencies whom I am reluctant to name).

    I understand that there are YouTube videos online detailing how to weaponize drones; a number of these are in Arabic.
    As an example: A drone available on Amazon.com, coupled with a Glock and Face-Recognition software could be programmed to seek and destroy any particular individual; were their approximate location known.

    Off the shelf cheap drones, high school level robotics, cheap GPS, Thermal Imaging, Google Earth, LIDAR, copious software …. this stuff can essentially get into the hands of anyone with a modicum of technical ability.

    Disruption of oil traffic is one of many situations at risk. (30)

    One reason to instill fear, permit a police state to rise without much opposition.

  27. Robert Inget on Fri, 17th May 2019 1:47 pm 

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  28. Robert Inget on Mon, 20th May 2019 8:50 am 

    Up-date on Russian Contaminated Crude

    Oil traders try to ship dirty Russian crude to Asia

    SINGAPORE/MOSCOW (Reuters) – Trading companies Vitol and Unipec are sending around 700,000 tonnes of contaminated Russian oil to Asia in an attempt to place the barrels rejected by buyers in Europe, according to trading sources and ship tracking data.

    A key Russian pipeline to Europe, Druzhba, and a major port Ust-Luga have been contaminated with organic chloride, which can damage refining equipment. As a result, Russia was forced to reduce exports in the worst ever supply disruption.

    Vitol and Unipec are mainly targeting Chinese independent refiners, or teapots, which have shown interest in taking the oil, traders said.

    According to Reuters sources with Chinese refiners, they have been recently shown cargoes of Urals crude that contain organic chloride ranging from 30-50 parts per million (ppm) to 200 ppm without mentioning prices.

    Buyers are treading cautiously because the contaminated Urals crude needs to be stored in tanks and diluted multiple times with clean oil to reduce the organic chloride content in order not to damage refining equipment.

    “The final price is to be set. More quality tests are needed. Then it is possible to figure out the price, the way it can be refined and if it can be refined at all,” a trader with a Chinese major told Reuters.

    Organic chloride in crude oil can cause corrosion and destroy refining units.

    “I was shown barrels with 200 ppm and I said: “No, thanks,” a Singapore-based trader said.

    “The logistics is very challenging and only big refiners can manage,” he said, adding that a cargo with 200-ppm of organic chloride will need 20 cargoes of the same volume to be diluted to a normal level of 10 ppm.

  29. Duncan Idaho on Mon, 20th May 2019 10:03 am 

    “Re: Game of Thrones

    Well, I’ve come across a few advertisements, but I always thought it was some kind of children’s video game. I cannot imagine why anyone other than a socially stunted and mis-developed American or Americanised adolescent could want to watch such infantile deranged garbage.

    If it is Hollywood, then you can be certain the intention is to manipulate the younger generation to supporting and idolising their permanent wars. On the face of it, that indeed appears to be the case.”

    Haven’t had a Tee Vee for 50 years.
    Is this true?

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