MOSCOW (MRC) -- Saudi Arabia's "brilliant move" to unilaterally reduce oil output additionally by 1 million b/d has been a great contribution to the stabilization of the global oil market, reported S&P Global with reference to the statement of Kirill Dmitriev, the head of the Russian sovereign wealth fund RDIF, on Jan. 27.
Starting Feb. 1, Saudi Arabia is expected to severely lower its crude production to 8.119 million b/d instead of its OPEC+ quota of 9.119 million b/d. The pre-emptive cut was announced by energy minister Prince Abdulaziz bin Salman after the latest OPEC+ meeting on Jan. 4 in order to bring down oil inventories accumulated during the pandemic.
"The surprise cut that they have done recently is a really brilliant move that led to stabilization of the market joined by other OPEC members at the most critical time," Dmitriev, who has been leading Russia's diplomacy in Saudi Arabia alongside Deputy Prime Minister Alexander Novak, said at the Saudi Future Investment Initiative conference.
His comments come ahead of the group's next meeting on Feb. 3, where compliance with be monitored by the OPEC+ advisory committee.
Russia's own compliance with production quotas remains far from perfect, as the country seeks to gradually regain its market share.
Nevertheless, Dmitriev reiterated Russia's commitment to the OPEC+ agreement and applauded Saudi Arabia's leadership "in doing great things to producers and consumers."
"This partnership is an example of how we can also unite our efforts to address other issues that the world is facing. Energy is definitely something that we have done really well together," Dmitriev added.
His speech echoed Russian President Vladimir Putin's earlier address at the Davos forum. Putin deemed energy cooperation with Saudi Arabia and the US on energy productive "despite different and sometimes even opposite views on other global issues."
As MRC informed earlier, Saudi Aramco's shareholders may consider selling more shares of the company if market conditions are right. The Saudi government sold over 1.7% stake in Aramco in an initial public offering (IPO) in 2019 that raised a record USD29.4 billion.
We remind that in October 2019, McDermott International announced that it had been awarded a contract by Saudi Aramco and Total Raffinage Chimie (Total) for their joint venture (JV) Amiral steam cracker project at Jubail, Saudi Arabia. Amiral is a JV in which Aramco holds 62.5% and Total the rest. The plant, designed to produce 1.5 million metric tons/year (MMt/y) of ethylene, will be one of the world's largest mixed-feed crackers.
Aramco and Total launched their USD5-billion Amiral JV project in October 2018. The steam cracker will be fed with a mixture of 50% ethane and refinery off-gases. It will supply ethylene to a downstream 1 MMt/y polyethylene manufacturing complex and other petrochemical products. The project aims to fully exploit operational synergies with the adjacent refinery, owned by Satorp, another JV between Aramco and Total. Third-party investors, including Daelim and Ineos, will locate plants at the value park adjacent to Amiral with a combined investment of USD4 billion. A final investment decision is expected in 2021.
Ethylene and propylene are feedstocks for producing polyethylene (PE) and polypropylene (PP).
According to MRC's DataScope report, PE imports to Russia decreased in January-November 2020 by 17% year on year and reached 569,900 tonnes. High density polyethylene (HDPE) accounted for the greatest reduction in imports. At the same time, PP imports into Russia increased by 21% year on year to about 202,000 tonnes in the first eleven months of 2020. Propylene homopolymer (homopolymer PP) accounted for the main increase in imports.
MRC