Saudi Aramco potential SABIC deal to affect IPO timing, CEO says in interview

MOSCOW (MRC) - Saudi Aramco’s potential acquisition of a stake in petrochemicals maker SABIC would affect the timeframe of its own planned initial public offering, the firm’s chief executive, Amin Nasser, said in a TV interview, as per Reuters.

The offering is the centerpiece of an ambitious plan championed by Crown Prince Mohammed bin Salman to diversify Saudi Arabia’s economy beyond oil, but preparations for the IPO, which could prove the biggest in history, have slowed.

Saudi-owned Al Arabiya television cited Nasser as saying that buying a stake in a petrochemicals company would make the state oil giant less vulnerable to price volatility.

"If the deal is completed, with relevant regulations taken into account, it will definitely affect the timeframe for the partial IPO of Saudi Aramco," he said in a transcript provided by the government media office.

Aramco said on Thursday it was looking to buy a strategic stake in SABIC, which could boost its market valuation ahead of a planned IPO. When Aramco is ready to list, the IPO timing would be up to the government to decide, Nasser said.

"As I said in previous interviews when Saudi Aramco is ready, the decision of going ahead with the IPO is for the state to make," he said. On Thursday, Aramco said it was in “very early-stage discussions” with the kingdom’s Public Investment Fund (PIF) to acquire the SABIC stake in a private transaction, and had no plans to acquire any publicly held shares.

Riyadh-listed Saudi Basic Industries Corp (SABIC), the world’s fourth-biggest petrochemicals company, is 70 percent owned by the PIF, Saudi Arabia’s top sovereign wealth fund. It has a market capitalization of 385.2 billion Saudi riyals (USD103 billion).

Nasser also said Aramco had a long-term goal to convert 2 million to 3 million barrels of its oil products into chemicals. Nasser said the proposed deal with Sabic would help balance revenues from excavation and production with those from refining and chemicals, that normally remain strong even when oil prices dip.

Reuters reported on Wednesday that Saudi Aramco had invited banks to pitch for an advisory role on the potential acquisition of a strategic stake in SABIC, citing two sources with direct knowledge of the matter. Some sources close to the Saudi Aramco IPO process have said the plans for a domestic and international listing might be pushed further into next year or beyond.

A final decision has yet to be made by Prince Mohammed, who oversees the kingdom’s economic and oil policies, the sources said. Saudi Arabia’s energy minister, Khalid al-Falih, said last month it would be “nice” to see Aramco floated in 2019, adding that the timing was not critical to the government.

Aramco plans to boost investments in refining and petrochemicals to secure new markets and sees growth in chemicals as central to its downstream strategy to cut the risk of an oil demand slowdown.
MRC

MOSCOW (MRC) -- Russia's output of chemical products dropped in June by 1.7% month on month. However, this figure increased by 2.8% in the first quarter of 2018, according to Rosstat's data.

According to the Federal Service of State Statistics, last month's production of basic chemicals dropped by 1.7% from May 2018, with main reduction accounted fir mineral fertilizers. Overall production of chemical products grew in January-June 2018 by 2.8% year on year, with the greatest increase in output accounted for benzene.

June production of ethylene increased to 255,000 tonnes against 240,000 tonnes a month earlier; SIBUR-Neftekhim shut its capacities in May. 1.522 mln tonnes of this olefin were produced in the first six months of the year, down 0.1% year on year.

Last month's production of benzene rose to 115,000 tonnes from 113,000 tonnes in May. Overall output of this product reached 733,800 tonnes over the stated period, up 4.3%year on year.

June output of sodium hydroxide (caustic soda) amounted to 107,000tonnes (100% of the main substance) against 97,800 tonnes a month earlier, the output increased duw to the resumption of RusVinyl after the shutdown in April-May. Overall output of caustic soda grew to 630,500 tonnes in January-June 2018, which corresponded to the figure a year earlier.

Last month's production of mineral fertilizers was 1.834 mln tonnes (in terms of 100% nutrients) versus 2.006 mln tonnes in May; Russian producers have reduced the output of the full range of fertilizers. Overall, Russian plants produced about 11.682 mln tonnes of mineral fertilizers in the first six months of 2018, up 3.5% year on year.
Nitrogen fertilizers accounted for the greatest increase - up 6.8% year on year.
MRC

MOSCOW (MRC) - Saudi Aramco said that a minor fire that was controlled at its Riyadh refinery was due to "an operational incident.", as per Reuters.

"No personnel are injured and no impact on operations," Aramco said in an update on its official Twitter account after saying earlier that it had contained a limited fire that erupted in one of its storage containers.

The updated tweet came after the Iranian-aligned Houthi movement in Yemen said that one of its drones had attacked the refinery.

As per MRC, Saudi Aramco and France's Total are considering building a mixed-feed cracker and derivatives in Jubail, near their joint refining complex. The cracker is expected to have a capacity of 1.5 MMtpy.
MRC

MOSCOW (MRC) - Japanese oil refiners will likely stop loading Iranian crude by mid-September with final shipments arriving in the first half of October, the head of the nation's oil refiners association said on Thursday, as the U.S. pressures countries to halt such imports, as per Reuters.

U.S. President Donald Trump's administration has demanded nations cut all their imports of Iranian oil from November as it reimposes sanctions over Tehran's nuclear programme.

Although it has said that some allies who are particularly reliant on Iranian supplies may be granted waivers that would give them more time to wind down shipments.

"Japanese oil refiners have been making preparations for lifting plans on the assumption that U.S. sanctions are to be applied," the president of the Petroleum Association of Japan (PAJ), Takashi Tsukioka, said. "Considering that payment is to be finished by end of October, it is important that the refiners would finish loading (Iranian oil) before mid-September."

Tsukioka added that the industry is asking the Japanese government to push to maintain current levels of Iranian imports in talks with the United States. But a Japanese government source, who declined to be identified, said winning a waiver was seen as "difficult".

PAJ had said last month that Japanese refiners would likely stop importing from Iran, but on Thursday gave more details on potential timings.

Many refiners in Japan, the world's fourth-biggest oil importer, say they are resigned to completely halting imports from one of their historically important suppliers, unlike during a previous round of sanctions when they substantially reduced imports from the Middle Eastern country.

Three industry sources familiar with the matter said shipping companies had told refiners in Japan that they would stop carrying oil cargoes from Iran. The sources declined to be identified as they were not authorised to speak with media.

That would follow similar announcements by the world's biggest shipping companies including A.P. Moller-Maersk of Denmark.

Unlike Japan, China and some countries in Europe have significantly raised purchases following the lifting of previous sanctions.

"It would be unreasonable for (Japanese refining) industry to be influenced similarly by such countries," said Tsukioka, who also serves as chairman of Japan's second-biggest refiner, Idemitsu Kosan.

Japan's largest banks had already said they would stop handling all Iran-related transactions to meet the November deadline set by Trump, Reuters reported last week.

Japanese refiners are looking to secure alternative supplies from the Middle East and the U.S. among others, industry sources have said.

Japan last year imported 172,216 barrels per day of Iranian crude, down 24.2 percent from a year earlier, with Iranian oil accounting for 5.3 percent of the nation's total imports.
MRC

MOSCOW (MRC) -- His Excellency Dr. Sultan Ahmed Al Jaber, UAE Minister of State and Abu Dhabi National Oil Company (ADNOC) Group CEO, held a series of meetings with Chinese oil, gas, refining and petrochemical industry leaders, focused on expanding and deepening investment and partnership opportunities across ADNOC’s integrated Upstream and Downstream value chain, during a visit to Beijing, as per Hydrocarbonprocessing.

H.E. Dr. Al Jaber was in the Chinese capital as part of the effort to expand and deepen business and economic relations with one of the UAE’s largest trading partners.

"Energy cooperation is an important aspect of the UAE’s relations with China, which is the number one oil importer globally and a major growth market for ADNOC’s crude, refined products and petrochemicals. We are keen to expand and deepen that relationship and believe there are mutually beneficial partnership and co-investment opportunities across our Upstream and Downstream value chains. ADNOC is also ready to work with its existing and potential new partners to meet the growing demand for energy and petrochemical products in China," H.E. Dr. Al Jaber said.

At the meetings, H.E. Dr. Al Jaber discussed ADNOC’s plans to develop new Upstream oil and gas resources and to expand ADNOC’s Downstream operations, which will see production of petrochemicals triple to 14.4 million tons per annum by 2025.

As announced earlier this year during ADNOC’s Downstream Investment Forum, the company is making significant investments in new Downstream projects, both domestically and internationally, to grow its refining capability and expand its petrochemical production three-fold to 14.4 mpta by 2025. Planned projects include a world-scale, mixed liquid feedstock Naphtha cracker, as well as investments in new refinery capacity. As a result of the planned expansions in its Downstream business, ADNOC will create one of the world’s largest integrated refining and petrochemical complexes at Ruwais, located in Abu Dhabi’s Al Dhafra region.

H.E. Dr. Al Jaber added, "We are keen to partner with value-add strategic partners who can contribute technology, know-how and market access. We believe there is enormous potential to expand our relationship with Chinese companies, especially in the Downstream, as we continue our transformation journey, grow our portfolio of products and maximize value."

The agenda also touched on ADNOC’s new licensing strategy announced earlier this year, which will see six offshore and onshore exploration, development and production blocks made available for competitive bidding.

"The release of the six blocks for competitive bidding represents a rare and exciting opportunity to invest in the UAE’s stable and secure exploration and production sector, as we accelerate delivery of a more profitable Upstream business and generate strong returns for the UAE. At the same time, the expansion of our Downstream portfolio will allow partners who contribute finance, give access to technology and knowledge and facilitate market access, to invest and benefit, with us, from the growing demand for petrochemicals, particularly in Asia," H.E. Dr. Al Jaber said.

Over the past 14 years, the UAE and China have established a number of partnerships in the UAE’s energy sector, starting in 2014, when ADNOC and CNPC established the Al Yasat joint venture. More recently, in February 2017, CNPC and China CEFC Energy were awarded minority stakes in the UAE's onshore oil reserves; and in March of this year, CNPC, through its majority-owned listed subsidiary PetroChina, was granted a 10% interest in each of the Umm Shaif and Nasr and Lower Zakum offshore concession areas.

Meanwhile, ADNOC remains focused on market expansion in China and Asia, where demand for petrochemicals and plastics, including light-weight automotive components, essential utility piping and cable insulation, is forecast to double by 2040. China is the largest export customer in Asia for Borouge, a petrochemicals joint venture between ADNOC and Borealis, accounting for 1.2 million tons per year of polyolefins, equal to one third of its sales worldwide.

As MRC informed before, in May 2018, ADNOC unveiled plans to invest AED 165 billion (USD45 billion) alongside partners, over the next five years, to become a leading global downstream player, enabling it to further stretch the value of every barrel it produces to the benefit of ADNOC, its partners and the UAE.
MRC