Major Governance Issue: Concerns over Saudi control of Aramco

MOSCOW (MRC) -- Mark Mobius has "governance" concerns over investing in shares or bonds that could be issued by Saudi Aramco in the future because of Riyadh's control over the oil giant, the emerging markets investor said, as per Hydrocarbonprocessing.

"At the end of the day decisions about the company will not necessarily be for the benefit of the larger shareholders but for the government," Mobius told Reuters on the sidelines of an investment conference in Dubai.

Saudi Aramco is expected to issue its first international bond over the next few months with the proceeds likely to be linked to the acquisition of a controlling stake in petrochemical maker SABIC.

Mobius said he would not invest in Aramco's bonds unless the risk-reward ratio is balanced by high interest rates, which would have to be higher than what Saudi Arabia offers.

"Because at the end of the day if there is dissolution in one way or another the Aramco bond would be the first to go, the first to be sacrificed (before the sovereign)" he said.

Saudi Aramco pulled its planned $100 billion initial public offering (IPO) last year, partly because of concern on disclosure requirements, sources familiar with the decision said. The planned IPO is at the heart of Saudi Arabia's push to reform its economy and diversify its revenues from oil.

But Saudi energy minister Khalid al-Falih said in January a listing would happen by 2021.
MRC

MOSCOW (MRC) -- BP Marine has announced that it will begin to retail low sulfur fuel that meets new MARPOL regulations limiting the sulfur content of marine fuels. BP is introducing a new very low sulfur fuel oil (VLSFO), with a maximum 0.5% sulfur content, following successful sea trials with fuel manufactured and supplied by BP in the Amsterdam/Rotterdam/Antwerp (ARA) and Singapore hubs, as per Hydrocarbonprocessing.

Working closely with the International Maritime Organization, customers and partners, BP has developed a marine fuel offer that includes this new VLSFO along with marine gas oil and also high sulfur fuel oil for vessels that are equipped with scrubbers. BP intends to retail the new 0.5% sulfur VLSFO globally.

"BP supports the ambitions of MARPOL to reduce air pollution from ships and we have been actively working with partners to prepare for its introduction. We have undertaken a comprehensive test campaign, conducting ship-board trials of our new very low sulfur fuel. Following the success of these sea trials, and working closely with our customers, we believe we now have a robust commercial offer that will support customers in complying with MARPOL," said Eddie Gauci, Global Head, BP Marine.

In order to manufacture a full range of MARPOL-compliant marine fuels, BP’s refineries have made a number of configuration changes to support the segregation, handling and storage of the fuels.
MRC

MOSCOW (MRC) -- The United States is expected to drive global oil supply growth over the next five years, adding another 4 million barrels per day to the country’s already booming output, according to the International Energy Agency, as per Hydrocarbonprocessing.

U.S. oil output will climb to 19.6 MMbpd by 2024 from 15.5 million last year, the Paris-based agency said. Gross crude exports will double, leading to greater competition especially in the Asian market. The outlook points to pressure on demand for crude from the Organization of the Petroleum Exporting Countries as the United States and other rivals expand supplies. However, in a boost for the producers, the IEA doesn’t see a peak in global demand yet.

"The United States is increasingly leading the expansion in global oil supplies, with significant growth also seen among other non-OPEC producers, including Brazil, Norway and new producer Guyana," the IEA, an adviser to the United States and other industrialized countries, said in its five-year outlook. A boom in U.S. oil supply due to shale oil has countered efforts by OPEC and its partners led by Russia to restrain supplies. The so-called OPEC+ group began a new round of oil supply cuts in 2019 to support prices.

"By the end of the forecast (2024), oil exports from the United States will overtake Russia and close in on Saudi Arabia, bringing greater diversity of supply," the IEA said. Global oil demand growth is set to ease as China slows but will still rise by an annual average of 1.2 MMbpd to 2024 when it will reach 106.4 MMbpd.

Even so, the IEA doesn’t expect moves such as greater adoption of electric cars to put a cap on demand growth yet. Goldman Sachs has said oil demand could peak by 2024 under some circumstances. "The IEA continues to see no peak in oil demand, as petrochemicals and jet fuel remain the key drivers of growth, particularly in the United States and Asia, more than offsetting a slowdown in gasoline due to efficiency gains and electric cars," it IEA said.

Demand for OPEC crude will rise but given the growth expected from the United States and other non-OPEC producers, Saudi Arabia and its allies will probably have to maintain efforts to withhold supplies. "Market management by producers is likely to remain necessary for some time given the outlook for the call on OPEC crude," the report said.

The IEA forecasts demand for OPEC crude will drop in 2020 and then rise to average 31.3 MMbpd in 2023. The 2023 figure is up by just 600,000 bpd from this year and less than the previous forecast. Iraq, the IEA said, would reinforce its position as a top producer, becoming the world’s third-largest source of new supply and driving growth within OPEC.
MRC

MOSCOW (MRC) -- The IRPC EurAsia Advisory Board is pleased to announce the preliminary agenda for the downstream industry’s leading technical conference, said Hydrocarbonprocessing.

Featuring speakers from companies such as Neste, Borealis Polymers, ExxonMobil, Saudi Aramco, BP, Petrobras, Sinopec, Reliance, Eni, MOL Group, and SABIC, IRPC EurAsia is bringing together the industry’s leading minds for two days of learning and networking.

Produced by Hydrocarbon Processing, and supported by Host Sponsor Neste, IRPC EurAsia combines the experience of the industry’s leading technical publication with the operational understanding of top executives and engineers, and includes featured presentations by Neste, KBC, Borealis Polymers and ADNOC’s former chief economist.

Peter Vanacker, Chief Executive Officer, Neste, will start the conference with a focus on transforming business for a low-carbon society.

Stephen George, Chief Economist, KBC, will look to the future in a featured presentation entitled European refining 2050: Turning vision into reality.

Thomas Van de Velde, Vice President, BU Hydrocarbons and Energy, Borealis Polymers, will unpack the circular economy and digitalization as strategic opportunities for the European petrochemical industry.

And Kamel Ben-Naceur, General Manager, Nomadia Energy Consulting and former Chief Economist, ADNOC, will address global decarbonization scenarios for the petrochemical sector.
MRC

MOSCOW (MRC) -- Mexican Energy Minister Rocio Nahle said the oil refinery that the new administration seeks to build will cost between USD6 billion and USD8 billion and could be ready in three years, said Hydrocarbonprocessing.

Speaking on local radio, Nahle’s cost and timing estimates for the project are in line with what President Andres Manuel Lopez Obrador has said in the past.

As MRC informed earlier, Mexico produces about 1.84 million bpd of crude, more than 60 percent of which is exported, while it imports over 1 million bpd of refined products, including gasoline and diesel, according to U.S. and Mexican government data.
MRC