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DMEA CommentAry DMEA
is produced through JVs, with around 2-3mn bpd of the total envisaged being converted to petrochemicals, to add to the 17mn tpy of pet- rochemicals already manufactured.
Aramco’s owned and affiliated refineries absorbed 38% of the company’s crude last year, providing a signi cant hedge against the oil mar- ket uctuations of the past few years.
Crude supply agreements have been a central feature of the company’s international invest- ment projects, and the prospectus noted that Saudi oil accounted for 68% of the feedstock adsorbed by its international re neries.
In August, perhaps the most significant move came by way of a provisional agreement to acquire a 20% stake in Indian company Reliance Industries Ltd’s (RIL) oil-to-chemicals division, which includes the world’s largest re nery.
The deal was unveiled by RIL chairman Mukesh Ambani during the company’s AGM in Mumbai. With RIL’s OTC division valued at $75bn, Aramco is expected to pay $15bn to acquire the 20% interest in the rm’s re ning, petrochemicals and fuels marketing businesses.
Meanwhile, a week later, Aramco’s JV inte- grated downstream project with Malaysia’s Petronas reported that it had restarted a crude distillation unit (CdU) at the complex in Johor.
The Pengerang Refining & Petrochemical Co. (PRefChem) is part of the broader $27bn Refinery & Petrochemical Integrated Project (RAPId), which is a 50:50 JV between the two companies in Pengerang.
iPo focus
Aramco has also been spending big in the
Americas with the acquisition of the US’ Port Arthur re nery as well as nearby petrochemical projects and reports circulating that it is consid- ering buying up downstream assets in Brazil. Talks ended without success for Aramco’s US subsidiary Motiva to buy Curacao’s Isla plant earlier in the year.
All of this plays well into the aforementioned downstream strategy, but is also likely to be enor- mously supportive of a higher company valua- tion when the IPO is ready.
Aramco CEO Amin Nasser said this week that the company was “ready” for the listing and it seems that around 1% of the rm will now be oated on the local Saudi stock exchange, with a larger stake to be o ered on an overseas market. Presumably this will be the remaining 4% of the proposed 5% total.
e government and corporate reshu e has perhaps attracted a lot of attention away from Aramco’s moves in the downstream, but once these deals are signed and current developments reach fruition, the rm will be the single largest oil re ner in the world.
With Aramco having tied in feedstock sup- ply deals to most agreements and its trading arm now starting to ex its muscles, the company will be leveraging its position as the world’s largest exporter to create downstream economies of scale around the globe.
Even though the 5% stake that will be up for grabs when Aramco lists will not cover any of the concession for upstream production, the capabilities of “Aramco downstream” are enough to make even the most hawkish investor take notice.
Saudi Aramco’s SATORP re nery near Jubail.
Image: Total
Week 36 12•September•2019 w w w . N E W S B A S E . c o m
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