Aramco aims to be the top refiner

Saudi Aramco is pressing ahead with plans to become the world’s biggest oil refiner and a top chemicals maker to secure future demand for its crude.

Saudi Aramco is pressing ahead with plans to become the world’s biggest oil refiner and a top chemicals maker to secure future demand for its crude and bolster growth.

The state oil producer is looking to invest in projects that are already built or under construction in markets with the fastest-growing demand such as India and China, said Abdulaziz Al-Judaimi, Aramco’s senior vice-president for downstream.

Expanding in chemicals will boost profitability in this business, which processes crude into fuels like petrol or products like plastics, he said.

“We have huge reserves” of oil, Al-Judaimi said at a presentation at the company’s Dhahran headquarters. “Our first objective is to monetise those reserves,” he said.

Aramco is pursuing its downstream expansion as the Saudi government and its bankers seek to persuade investors to accept a nearly $2-trillion valuation for the firm, before a planned share sale.

The initial public offering, billed as the world’s largest, has been delayed repeatedly. The IPO was rescheduled in 2018 to give Aramco time to acquire state chemical maker Sabic. The share sale was pushed back again last week, days before it was to be formally announced.

Using Saudi Arabia’s nearly 300-billion barrels of oil in the ground — the worlds’ biggest conventional reserves — to attract cash into government coffers is the cornerstone of Crown Prince Mohammed Bin Salman’s push to diversify the Saudi economy.

Part of that plan rests on Aramco’s ability to create jobs by spurring new factories that turn its chemicals into finished consumer goods. Some analysts have asked whether Aramco should continue to pursue its downstream ambitions or seek to save cash.

The company has recovered from aerial strikes on some of its largest oil facilities in September, which temporarily cut production by more than half.

Most domestic refineries, which reduced processing runs after the attacks to make more crude available for export, have returned to full capacity, AlJudaimi said.

One domestic refinery in Jubail is undergoing 40 days of scheduled maintenance and is set to be back online in midNovember, he said.

Aramco is processing all of its crude to export quality after restoring capacity at the damaged Abqaiq processing plant and Khurais field, said Ibrahim Al-Buainain, CEO of Aramco’s energy trading unit.

By September 25, the group had raised production at the two facilities to 6-million barrels a day, slightly higher than the level of output at the time of the September 14 attacks, he said.

The company is back to producing crude at normal levels after it raised output briefly to restock storage depleted after the September attacks, AlBuainain said.

Saudi energy minister Prince Abdulaziz bin Salman said the country would pump about 9.9million barrels a day in October.

Aramco’s $69bn acquisition of a majority stake in the state chemical company officially named Saudi Basic Industries is set to close in the first or second quarter in 2020, propelling it to be one of the biggest makers of the products that are the building blocks for consumer goods, AlJudaimi said.

A separate deal to buy a stake in Indian refiner Reliance Industries could close in 2021, AlJudaimi said.

The transaction would boost Aramco’s gross refining capacity to more than 8-million barrels a day, meeting the company’s target for the end of the decade, he said.

THE COMPANY HAS RECOVERED FROM STRIKES ON SOME OF ITS OIL FACILITIES, WHICH TEMPORARILY CUT PRODUCTION BY MORE THAN HALF