Saudi Aramco bets on oil supply to Europe, trading expansion

MOSCOW (MRC) -- Saudi Aramco aims to boost its oil supply to Europe by 300,000 barrels per day (bpd) within the next two years as it expands its trading operations there with an office opening this summer in London, reported Reuters with reference to a senior company executive.

Aramco, the world’s biggest oil producer, is expanding its downstream, or refining and marketing, footprint globally by signing new deals and boosting the capacity of its plants to secure new markets for its crude.

The company’s trading arm has been focusing on a new processing arrangement in which it would supply European markets with both crude oil and products.

Aramco is looking to finalize deals in the next two years through swapping mainly Saudi crude with oil products to supply customers in Europe and the Mediterranean, Abdulaziz al-Judaimi, Aramco’s senior vice president for downstream, told Reuters.

"I am going to bet on Europe... We believe that Europe is a market that we are going to stay in for a long time," Judaimi said in a telephone interview this week.

"The whole idea is we supply crude, and we offtake refined products to supply markets like Italy, the Balkans, as well as Cyprus ... In Europe, having a virtual dedicated outlet and processing agreement is really the right winning strategy."

Aramco currently has more than 3 million barrels a month of oil supply and product swap arrangements in Europe, he said. The company has deals with Poland’s PKN Orlen, Greece’s Motor Oil Hellas and Egypt’s Midore.

"We are looking to expand the 3 million barrels to almost 10 million barrels in a month, within the next two years. This means we have almost created a 300,000 bpd refining capacity in Europe," Judaimi said.

The company has invested in its storage capacity in Egypt and the Dutch port of Rotterdam. About 60% of the capacity of the SUMED storage pipeline in Egypt is for Saudi crude, used by Aramco to reach its customers in Europe, he said.

The Rotterdam terminal now holds more than 6 million barrels of oil, he said.

Aramco will also continue to invest in Greece, Judaimi said.

The priority is to supply refiners with Saudi crude to lock in their capacity, but non-Saudi crude can also be supplied through spot trading.

"This is a win-win strategy because it helps the refiner ... and for us it is to place crude oil in the European refining assets," he said.

"The refining sector in Europe requires such deals and we are taking advantage of available capacity."

The state oil giant’s trading arm, Aramco Trading Co (ATC), plans to open an office in London in July, Judaimi said. ATC has been expanding its overseas operations and increasingly competing with global trading houses in new markets.

ATC logged record trading volumes in crude and refined products of 4.5 million bpd in the first quarter, and is on track to reach its target of 6 million bpd by the end of next year, Judaimi said, close to Vitol’s trading level.

"We started seven years back on trading activities and our growth story is quite a successful story, we started with 300,000 bpd and we are now at about 4.5 million bpd."

ATC was set up in 2012 initially to market refined products, base oils and bulk petrochemicals, but has since expanded into crude trading.

The trading sector faces increased rivalry between national oil companies (NOCs), international oil firms and Swiss merchants.

NOCs have cheap feedstock and strength in refining, allowing them to compete aggressively with oil majors and especially traders that lack their own production.

Aramco, the world’s top oil producer and exporter, aims to become the largest integrated energy firm, with plans to expand refining operations and petrochemical output. It pumps around 10 million bpd of crude, of which it exports about 7 million bpd.

The company plans to raise its refining capacity - inside Saudi Arabia and abroad - to 8-10 million bpd, from around 5 million bpd now. Aramco is expanding its refining business at home as well as in new markets, particularly in Asia.

Judaimi said Aramco’s new, 400,000-bpd refinery in the southwestern Saudi province of Jizan was expected to start later this year.

Aramco will make an investment decision to go with the front-end engineering for its refining joint venture with Chinese defense conglomerate Norinco by the third quarter of this year, he said.

"China focus is important; China now imports a lot of crude oil, and we believe that could be a market that is growing and strong as well."

He said Aramco was looking at multiple downstream opportunities in India.

As MRC wrote before, in October 2018, State oil giant Saudi Aramco signed an agreement to invest in a refinery-petrochemical project in eastern China, part of its strategy to expand in downstream operations globallys The memorandum of understanding between the company and Zhejiang province included plans to invest in a new refinery and co-operate in crude oil supply, storage and trading, according to details released by the Zhoushan government after a signing ceremony in the city south of Shanghai.

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.
MRC

MOSCOW (MRC) -- The impact on European refinery throughput in the second quarter of 2019 from contaminated crude on the Druzhba pipeline is seen at roughly 250,000 barrels per day, under 2% of the continent’s product demand, reported Reuters with reference to the International Energy Agency.

The Czech Republic released about 1.5 million barrels of crude from its emergency stocks, or 10 days of the country’s average refining throughput, the IEA said on Wednesday.

Although Hungary announced on April 30 that it would make 3 million barrels of crude stocks available, not all of this has been taken up, the Paris-based IEA said in a report.

No stock release has been reported for Slovakia.

"We assume a total of 100,000 bpd impact on refinery throughput in these three countries over May-June, but expect operations to ramp up from July, even if this implies further crude stock draws," the agency said.

Crude oil stocks in the three countries were at 27 million barrels at the end of February, or around nine months of forward cover.

Poland released 5.9 million barrels of crude stocks, while Germany had not released any emergency stocks as of May 14, the IEA said.

In 2018, Poland received about 300,000 bpd through the pipeline for its Gdansk and Plock refineries, while Germany’s Leuna and Schwedt refineries received 440,000 bpd.

As MRC informed earlier, Belarus state oil firm Belneftekhim said in a statement on Saturday that not enough clean oil is available for the Novopolotsk refinery to work at its optimal capacity, after contaminated oil was received via the Russian Druzhba pipeline.
MRC

MOSCOW (MRC) -- Trinseo, a global materials solutions provider and manufacturer of plastics, latex binders and synthetic rubber, today announced that the Company is evaluating strategic alternatives for its polycarbonate (PC) resin activities, as per the company's press release.

The Company has not set a timeline for this evaluation process.

Trinseo is fully committed to continue serving its customers in specialty polycarbonate applications, as well as polycarbonate compounds and blends - for industries including automotive, medical devices, durable goods, and consumer electronics. The Company’s Performance Plastics business segment continues to be a focus area for growth.

As MRC wrote before, Trinseo and its affiliate companies in Europe has announced a price increase for all polystyrene (PS). Effective May 1, 2019, or as existing contract terms allow, the contract and spot prices for the products listed below increased as follows:

- STYRON general purpose polystyrene grades (GPPS) - by EUR50 per metric ton;
- STYRON and STYRON A-Tech and STYRON X- Tech and STYRON C- Tech high impact polystyrene grades (HIPS) -by EUR50 per metric ton.

Trinseo is a global materials company and manufacturer of plastics, latex and rubber. Trinseo's technology is used by customers in industries such as home appliances, automotive, building & construction, carpet, consumer electronics, consumer goods, electrical & lighting, medical, packaging, paper & paperboard, rubber goods and tires. Formerly known as Styron, Trinseo completed its renaming process in 1Q 2015. Trinseo had approximately USD4.6 billion in net sales in 2018, with 16 manufacturing sites around the world, and approximately 2,500 employees.
MRC

MOSCOW (MRC) -- Volgograd Kaustik, Russia's fourth largest polyvinyl chloride (PVC) producer, has begun shutting down its polyvinyl chloride (PVC) production capacities for a scheduled turnaround, according to ICIS-MRC Price Report.

The plant's customers said the shutdown of PVC production for scheduled maintenance started from 15 May. The outage will be short and will last for three weeks. The plant's PVC production capacity is 90,000 tonnes/year.

It is also worth noting that next shutdowns for maintenance at Russian PVC plants are scheduled from mid-July.
SayanskKhimPlast and Bashkir Soda Company, which annual capacities are 350,000 tonnes and 240,000 tonnes, respectively, will take off-stream their production capacities for maintenance.

PVC production at Volgograd Kaustik was launched in December 1972 with the assistance of the Japanese firm Kureh's specialists. Nikokhim Group is one of the leaders of the Russian chemical industry, the main production assets of which are located in the southern industrial hub of Volgograd.

The holding company includes: JSC Kaustik is the principal plant of the group, manufactures basic products - caustic soda, chloroparaffins, synthetic hydrochloric acid, chlorine trademark, polyvinyl chloride, sodium hypochlorite, etc .; CJSC NikoMag - production of anti-icing materials, magnesium chloride, magnesium oxide and hydroxide; Zirax, Ltd. - production of high-purity reagents for various industries and JSC Poligran - the production of plastic compounds and rigid PVC compounds.
MRC

MOSCOW (MRC) -- In a move to build its extrusion coating business in Asia, extrusion equipment maker Davis-Standard LLC is expanding the floorspace and manufacturing capabilities of its Chinese division Davis-Standard (Suzhou) Plastics Packaging Machinery Co. Ltd., as per Canplastics.

Newly opened, the company added an additional 35,000-square-foot (3,251-square-meter) facility near the existing shop in Suzhou that will house control panel assembly and provide additional warehousing.

"The additional space will allow us to build more extrusion coating lines at our main plant while supporting other machine services, including faster delivery," said Jinsong Lin, general manager at Suzhou.

The medical tubing and packaging segments continue to be strong markets for Davis-Standard throughout Asia, Lin added.

Equipment sold to regional customers for medical tubing, extrusion coating and co-extrusion applications is built in Suzhou, as is assembly of electrical control panels, extruders and gearcases.

The plant also housed an R&D facility, equipped with technology for testing a range of rigid and flexible products, as well as FPVC tubing for IV and fluid delivery. Examples include microbore tubing, multi- lumen and catheter tubing, endotracheal and tracheotomy tubing, bubble tubing, taper tubing and others. Most recently, Davis-Standard added a new dsX flex-packTM 300S to this lab for customer trials – this is a single-station extrusion and lamination line built specifically for the Asian flexible packaging market.

Davis-Standard is headquartered in Pawcatuck, Conn. The company is represented in Canada by Auxiplast Inc., of Sainte-Julie, Que.

As MRC informed earlier, Davis-Standard LLC has acquired Thermoforming Systems LLC (TSL), a manufacturer of thermoforming equipment for the North American food packaging industry. The terms of the deal have not been disclosed.

Davis-Standard designs, develops, and distributes extrusion and converting technology. The company employs more than 1,300 workers, and has manufacturing and technical facilities in the U.S., China, Germany, Finland, Switzerland, Canada, and the UK.
MRC