Aiming to Expand, Saudi Aramco and its Subsidiary Sign New Deals

Aiming to Expand, Saudi Aramco and its Subsidiary Sign New Deals 

Last updated on July 31st, 2020

Increasing concerns over global warming and the contribution of the world’s biggest fossil fuel producer – Saudi Aramco – in aggravating temperatures has been an issue of major concern for both investors and the general public in the Middle East. Besides being focused on shifting to cleaner fuels, the firm and its subsidiaries are entering into new deals worldwide to improve their market share.

With a stake of more than 63 percent, Saudi Aramco is the largest shareholder of petroleum and refinery company, S-Oil. Recently, the international trading unit of Aramco – Aramco Trading signed a contract worth 3.14 trillion won ($2.67bn) with S-Oil, giving the former a confirmed customer for 2020 fuel sales.

The contract is to last from January 1 till the end of 2020. It includes delivery of 11mn-15mn bl (30,140-41,100 b/d) of naphtha, 9mn-10mn bl (24,660-27,400 b/d) of diesel, nearly 40,000 bl (110 b/d) of methyl tertiary butyl ether (MTBE) and 10mn-11mn bl (27,400-30,140 b/d) of jet fuel. Volumes of gasoline supplies have not been disclosed.

As compared to 2019, naphtha sales will be higher this year and diesel sales volume will be low. Every year, a similar contract is signed between S-Oil and Aramco for trading overseas.

As a part of its expansion plans, Saudi Aramco subsidiary, Energy Ventures recently invested $5 million in the Vakt block chain platform. The deal will ensure that Aramco Trading becomes a future platform user. Handling post-trade processing in the North Sea BFOET crude oil market, the digital platform considers Equinor, Shell and BP among its 12 existing shareholders.

As per the Managing Director of Saudi Aramco Energy Ventures – Hans Middelthon, the platform had the capability to digitize “what is currently a very manual process and be truly transformative to end users and customers”.

Statements from Vakt reveal that the deal would make Aramco Trading a platform user bringing its own North Sea trading volumes and multiplying Vakt’s “high market share”. So far there is no news about Vakt’s plans to further its post-trade reconciliation services to US crude oil pipelines.

Meanwhile, the construction of the gas reservoir project of Saudi Aramco, labelled Hawiyah Unayzah Gas Reservoir Storage (HUGRS), will now be managed by Samsung Engineering. The engineering, procurement and construction (EPC) contract worth $1.85bn is for the project located in Hawiyah, 260km east of the capital city Riyadh.

The work included in the contract is associated to a gas infection facility equipped with booster compressors. Some injection compressors, off site facilities and a gas reproduction facility with reproduction compressors, is also included. The project is expected to be complete by 2023.

Earlier in March 2018, Samsung Engineering bagged two EPC contracts from Adnoc Refining, a subsidiary of Abu Dhabi National Oil Company.

Considering the strategic dealing that Saudi Aramco has been doing in the past few days, it is quite likely that the state-owned oil firm continues to be the largest companies of the world in terms of revenue.

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