Saudi Aramco is planning to merge two energy trading units, people familiar with the matter said, with Aramco Trading Co (ATC) due to absorb Motiva Trading ahead of a potential initial public offering of the business, said Reuters.
The move to combine the businesses is expected to give potential investors a better sense of the scale of Aramco's trading and would also allow the state oil producer to simplify financial reporting and cut duplication. The restructuring is likely to be announced before the end of the year, one of the two people familiar with the matter said. The merger would come four years after Shell Plc exited Motiva Enterprises, leaving Aramco in control of Motiva Trading and Motiva's refinery, the largest in the United States.
Saudi Aramco and other Middle East producers accelerated their trading efforts as a way to boost incomes after the 2014 collapse in oil prices. They have slowly gained market share from oil majors and Swiss commodity merchants, using access to their own feedstocks and strength in refining to compete aggressively.
Plans for the combination come amid reports Aramco plans an initial public offering of its trading business and as European countries move away from buying Russian crude over its invasion of Ukraine. The two people familiar with the situation, who are not authorized to speak to reporters, did not confirm plans for an IPO.
Motiva and Saudi Aramco spokespeople declined to comment, while ATC did not immediately respond to requests for a comment. Saudi Arabia's state oil monopoly, Saudi Aramco, is the world's top oil producer. It plans to increase output capacity to 13.4 MMbpd by 2027 from 12.4 MM currently and from May's actual 10.5 MMbpd.
Aramco's share of U.S. oil imports has declined in recent decades as it turned more to Asia and as U.S. shale output grew. However, refiner Motiva remains an important outlet for Saudi crude and its entry point into the world's biggest oil consuming market.
It was not immediately clear which of the two businesses' executives would be put in charge of the merged operation. Aramco's listing plans are part of a wider Saudi 2030 vision which encourages extracting maximum value from traditional fossil fuel industries to help diversify the economy.
ATC was set up in Dhahran in 2012 and has offices in London, Singapore and the United Arab Emirates. It began by marketing refined products and petrochemicals and later expanded into crude trading that fed ventures such as Motiva and S-Oil in South Korea.
ATC is a top blender in the Arabian Gulf and India and the largest charterer of refined products in the Middle East, according to its LinkedIn profile. The bulk of ATC's traded crude belongs to third parties – Kuwaiti and UAE crudes with some Guyana and indirectly, Iraqi Basra.
Motiva Trading trades crude oil, feedstocks, refined products and bio-fuels, managing transactions covering 2.8 MMbpd, according to its website. Competition between Saudi Arabia and Russia in European and Asian markets has been heating up in recent years even as the two major producers cooperated under the OPEC+ production-limiting deal.
Since the start of the year, ATC and its parent company have signed at least two crude supply deals in northern Europe. ATC agreed to exclusively supply Klesch Group's Kalundborg refinery in Denmark and in Poland, Aramco bought refining assets and agreed to supply the country's top refiner.
As per MRC, Saudi Aramco posted a record first-quarter net profit of riyal (SR) 148bn (USD39.5bn), up by about 82% year on year, thanks for strong crude oil prices and sales volumes, as well as improved downstream margins.
The energy giant’s total hydrocarbon production in the first three months of the year stood at 13m boe/day (barrels of oil equivalent per day), Saudi Aramco said in a statement on 15 May. Capital expenditure in January-March 2022 was USD7.6bn, it said.
As per MRC, Aramco is exploring further collaboration with Thailand’s national oil company PTT, as it expands its downstream presence in Asia. The two companies signed a memorandum of understanding at a ceremony in Bangkok on May 11. The companies aim to strengthen cooperation across crude oil sourcing and the marketing of refining and petrochemical products and LNG. Other potential areas of activity include blue and green hydrogen and various clean energy initiatives.
Saudi Aramco, officially the Saudi Arabian Oil Company, is a Saudi Arabian national oil and natural gas company based in Dhahran, Saudi Arabia. Saudi Aramco's value has been estimated at up to USD10 trillion in the Financial Times, making it the world"s most valuable company. Saudi Aramco has both the largest proven crude oil reserves, at more than 260 billion barrels, and largest daily oil production.
mrchub.com