Saudi Aramco seeks to be “top three” oil trader
Part of a broader strategy to make the company more resilient to market downturns
Saudi Aramco has vowed to transform itself into a “top three” oil trader, setting its sights on taking on established players from BP and Royal Dutch Shell to Vitol as part of its overseas expansion.
Amin Nasser, chief executive of the Saudi state giant, told the Financial Times the company planned to be among the biggest traders by 2022 as part of a broader strategy to build a more robust oil and gas company that can withstand market downturns.
“Over the next three years, we should be one of the top three traders. We are increasing year on year,” said Mr Nasser in an interview at Saudi Aramco’s London office, which houses part of its European trading business.
“All of these companies are on the radar . . . We are trying to have a position like all of them. BP is big, Shell, Vitol, all of these are big. But we are expanding our position,” he said.
The trading expansion, which could involve Saudi Aramco’s own crude in years to come as well as liquefied natural gas, is far removed from its business today that largely only trades petroleum products.
“It is something that we will see in the future,” Mr Nasser said, indicating the potential for the kingdom to trade its own crude, which until now has been sold to customers in direct long-term contracts, though he added no final decision had been made.
The company is targeting trading around 6m barrels a day of crude and refined product, which would pitch it into an elite group of traders including BP, Shell, Vitol — the world’s largest independent trader — and Trafigura.
Other companies that have traditionally eschewed trading such as ExxonMobil have pushed into the arena in recent years, after seeing commodity houses like Vitol earn record profits during the slump in crude prices in 2014-16, while helping BP and Shell compensate for lower production revenues.
Saudi Aramco in recent years has pushed to bolster its downstream division that involves refining, marketing and chemicals — which can drive revenues when oil prices fall — so that it is better prepared for market volatility.
It has sought investments in refineries in Asian consumer nations such as in China and India, to secure long-term demand for Saudi crude. Mr Nasser said these joint ventures would also pave the way for trading business.
“Their position[s] will expand and their size will expand as we are expanding our overseas investment,” said Mr Nasser.
The company is the biggest revenue earner in the kingdom and it is trying to buffer itself from another crash. The plunge in oil prices from 2014 hit Saudi Arabia — the world’s largest exporter — hard.
Khalid Al Falih, Saudi Arabia’s energy minister and chairman of Saudi Aramco, told the FT earlier this month that the company would also seek to take its exploration and production prowess abroad.
For Mr Nasser, international gas expansion was the company’s priority and Saudi Arabia was in talks about potential investments in infrastructure in the US, Russia, Australia.
The chief executive said Saudi Aramco stood ready to supply additional barrels of heavy sour crude, which have been in demand with refiners due to the loss of output from Venezuela and Iran due to US sanctions.
“Depending on the market’s needs we always avail because we have spare capacity,” Mr Nasser said. “We are very responsive to our customers.”