What should be next for Saudi Aramco

MOSCOW (MRC) -- The Saudi Arabian monarchy made a major change this week in the leadership of its national oil company, Saudi Aramco. Khalid Al-Falih, the former CEO and current oil minister, was removed as chairman and replaced by Yasir Al-Rumayyan, the head of Saudi Arabia’s sovereign wealth fund, as per Bloomberg.

With the kingdom readying plans for an Aramco IPO, what should we make of this shift, and is Al-Rumayyan – a confidante of Crown Prince Mohammed bin Salman with no experience in oil or energy – the best choice to fill the position.

On the one hand, removing Al-Falih from the board of Saudi Arabian Oil Co. will help the company establish itself as distinct from the Saudi government team that creates oil policy at OPEC. This should insulate Aramco from some antitrust allegations. If or when Aramco does go public, the move could help protect the company from investigations by other governments concerning its connections to the international oil cartel. As Al-Falih himself wrote in a tweet in Arabic, the new leadership of the board is a step toward an IPO:But Al-Rumayyan isn’t a choice that should promote confidence in the direction of the company.

For one, his background is in finance: After various jobs in Saudi banking, he was appointed to run the Public Investment Fund, or PIF, in 2015, and is said to consult very closely with Prince Mohammed. He has used a large portion of the PIF as a venture-capital fund – so much so that through the PIF, Saudi Arabia has become one of the single biggest investors in U.S. startups. Al-Rumayyan has also overseen the PIF’s position as a power broker in the kingdom, with the fund backing new ideas and even social causes such as a major investment that brought AMC Theaters to Saudi Arabia when cinemas were legalized. None of this points to any expertise in oil.

Al-Falih was an oil company veteran with a successful track record in the business, so it made sense for him to lead the board. In fact, it’s typical for major international oil companies to be led by energy professionals. At Exxon Mobil Corp. and Chevron Corp., for example, the chairmen are also the CEOs. Royal Dutch Shell PLC’s chairman is Charles Holliday, who once ran the chemicals firm DuPont. BP PLC’s chairman is the former CEO of BG Group and Statoil, both energy companies.

The monarchy could have replaced Al-Falih with the current CEO, Amin Nasser; one of several retired top Aramco executives still active in the company community; an outside industry veteran; or even Prince Mohammed's own half-brother, Abdul Aziz, who was a university professor and formerly a top bureaucrat in the oil ministry. Instead, it chose Al-Rumayyan, a yes-man for the monarchy.

More importantly, the shake-up points to the impending transfer of Aramco to the PIF portfolio, as Prince Mohammed has wanted to do for years. Before he even ascended to his current role, Prince Mohammed argued that Aramco should be just another portfolio company. In 2016, he said Aramco “is a company that has a value – an investment. You must own it as an investment. It should not be owned as a primary commodity or a major source of income.” That’s not inspiring for Saudi Arabia, which still relies on Aramco for most of its revenue. Nor is it inspiring for potential investors who are looking for the supremely profitable company to continue on its prior positive trajectory.
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MOSCOW (MRC) -- Brazil’s state-owned oil company Petroleo Brasileiro SA said that it would extend the deadline for parties to state their interest in buying four refineries it has put up for sale, based on high investor interest, as per Hydrocarbonprocessing.

Petrobras, as the firm is known, extended the deadline to Sept. 16 for firms to enter the first phase of the sales process, it said in a securities filing. Investors then have until Sept. 27 to sign confidentiality and other agreements required to advance in the sales process.

The oil firm is selling its Abreu e Lima, Landulpho Alves, Presidente Getulio Vargas and Alberto Pasqualini (REFAP) refineries and associated assets.

Together the four refineries represent 37% of Brazil’s refining capacity, according to Petrobras. The deal is expected to raise billions of dollars for the oil firm.
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MOSCOW (MRC) -- Fluor Corporation announced today that it was awarded the front-end engineering and design (FEED) for INEOS’ new processing plant at the Saltend Chemicals Park in Hull, UK, said Fluor.

The plant will produce vinyl acetate monomer, (VAM) a key component for laminated wind screens, toughened glass, adhesives, films, coatings and textiles. Fluor booked the undisclosed contract value in the second quarter of 2019.

"Fluor is pleased that INEOS has chosen us to continue supporting the company’s strategic investment plans with the return of this important VAM processing capability to the UK market,” said Simon Nottingham, president of Fluor’s Energy & Chemicals business in Europe, Africa and the Middle East. “Our early involvement in this FEED allows Fluor to optimize cost and schedule certainty by leveraging our in-house construction-driven expertise."

The new plant will be designed to have the capacity to produce 300,000 metric tons of VAM per year. The front-end work will establish the design basis and technology selection for the plant with associated cost and schedule estimates. Fluor’s Farnborough office is leading the work supported by the company’s global experts and with input from INEOS engineers.

Fluor’s UK office serves a wide range of industries including the energy, chemicals, government, life sciences, advanced manufacturing, infrastructure, mining and power market sectors.

Founded in 1912, Fluor Corporation (NYSE: FLR) is a global engineering, procurement, fabrication, construction and maintenance company that transforms the world by building prosperity and empowering progress. Fluor serves its clients by designing, building and maintaining safe, well executed, capital-efficient projects around the world. With headquarters in Irving, Texas, Fluor ranks 164 on the Fortune 500 list with revenue of USD19.2 billion in 2018 and has more than 53,000 employees worldwide.
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MOSCOW (MRC) -- US refiner Valero Energy Corp said it has started a cost review of a new plant in Port Arthur, Texas, along with food processor Darling Ingredients Inc., according to Hydrocarbonprocessing.

The facility, which aims to tap into the growing global demand for renewable diesel, is expected to produce 400 million gallons of diesel and 40 million gallons of renewable naphtha a year.

The final investment decision on the project is expected in 2021. If approved, the construction of the first renewable diesel facility in Texas could begin in the same year, with expected operations starting in 2024.

It will be owned and operated by Diamond Green Diesel Holdings LLC, a joint venture between Valero and Darling.

"We expect low-carbon fuel mandates across the globe to continue to drive demand growth for renewable fuels," Joe Gorder, Valero’s Chief Executive Officer said in a statement.

Production from the plant would increase Diamond Green Diesel Holdings’s annual renewable diesel production to about 1.1 billion gallons, with nearly 100 million gallons of renewable naphtha production, the companies said.

As MRC reported before, in early May 2018, CB&I has announced that its CDAlky technology had been selected by Valero Refining - New Orleans LLC for its St. Charles Alkylation Project located in Norco, Louisiana
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MOSCOW (MRC) -- Azelis Americas CASE, LLC has agreed with Huntsman Advanced Materials’ for a territory expansion, as per Coatingsworld.

As of Oct. 1, 2019 Azelis will provide its customers access to HAM products in the West Coast and Northeast, complementing its existing relationship in other regions. The new agreement expands the geographic coverage to include the West Coast and Northeast.

Azelis Americas CASE will distribute the Huntsman brands including ARALDITE, ARADUR, ARA COOL, TACTIX, KERIMID, MATRIMID, as well as HAM’s full line of matting agents and accelerators. The expanded product offering allows Azelis to deliver complete formulation services to its CASE customers across the entire U.S.

Customers have access to Huntsman's product line from any Azelis Americas CASE region and applications labs nationwide.

"The expansion of our relationship with Azelis is a terrific opportunity to offer customers improved efficiencies and align our strategies for future growth," said Jim Coneys, distribution manager, Huntsman Advanced Materials. "Its technical sales teams and application labs have delivered exceptional value to users of Huntsman products and we are excited to take this next step with Azelis."

"The combination of HAM’s leading products and technologies with our technical expertise and market intelligence offers the best solutions for the needs of the high performance epoxy market across the country," added Dan Gruber, managing director, Azelis Americas CASE.
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