State-owned Saudi Aramco is rethinking its overseas refineries and joint ventures (JV) strategy. The formation of Saudi Aramco Products Trading Company (Aramco Trading) in January 2012 was the first step in a restructuring aimed at allowing the oil giant to use its overseas assets in a more creative way, including the ability to respond rapidly to market developments. The immediate function of Aramco Trading is to find spot buyers for cargos of refined products which Aramco’s regular marketing arm is unable to place with term customers. Drivers for the rethink include: rising Saudi domestic demand, the fact that the Kingdom will soon become a net exporter of gasoline and diesel (for which it is currently a net importer), the growing importance of Asia as a market and the North American ‘shale revolution’.
Aramco has bought stakes in several refineries in the US and Asia Pacific over the past three decades with the motivations of finding a home for its crude and gaining geopolitical leverage (see table). But as part of its rethink Aramco is analyzing how distribution centers, refineries or JVs could be used to gain local trading advantage. For example, what works in North America – where low cost shale oil is impacting the market – would not be appropriate for Asia-Pacific countries that will continue to import feedstock. Any move to shift crude supplies from North America to Asia-Pacific would also assure Eastern buyers of Aramco’s ability to supply crude without disruption. (CONTINUED - 2156 WORDS)