Saudi Aramco CEO: Company's strategy will include more downstream acquisitions

Saudi Aramco CEO: Company's strategy will include more downstream acquisitions
Published: 27 November 2018 - 9:45 a.m.
By: Carla Sertin

Saudi Aramco President and CEO Amin Nasser told delegates attending the 13thannual Gulf Petrochemicals and Chemicals Association (GPCA) Forum that a key Saudi Aramco objective is to bring its downstream business to the same prominence as its upstream, as the company undergoes substantial expansions in refining, marketing and lubes.

“Saudi Aramco will make the most of those prospects with chemicals investments of more than $100 billion over the next 10 years—not including a prospective acquisition. We are expanding this business both in Saudi Arabia and in fast-growing overseas markets like China and India, with the aim of converting two million barrels per day of crude oil into petrochemicals—and we may eventually move our target higher to three million barrels.”

Nasser highlighted chemicals as the most promising element of the company’s downstream strategy. He said that chemicals will represent about one-third of world oil demand growth between now and 2030, and nearly half by 2050. Petrochemicals will add nearly seven million barrels per day (bpd) of oil demand by 2050, reaching a total of some 20 million bpd. This growth will be driven by an expanding world population and a growing middle class.

“Our ultimate target of 8-10 million barrels per day of integrated refining and marketing capacity will create a better balance between our upstream and downstream segments,” Nasser said.

He added, “Our downstream business ventures will provide a reliable destination for Saudi Aramco’s future oil production, and diversify both the company’s business portfolio and the Kingdom’s economy.”

Saudi Aramco’s downstream strategy seeks to enhance its resource base by targeting increased horizontal and vertical integration across the hydrocarbon value chain. “With a diversified, integrated, and robust business portfolio,” Nasser said, “our supply, trading, and marketing model will mitigate oil price volatility, generate additional revenues, and expand opportunities for conversion industries, local manufacturers, and service providers —all of which drive job growth and value creation.”

Negotiations are underway for a 70% stake in Riyadh-based diversified chemicals leader SABIC, with the aim of creating one of the world’s strongest integrated energy and chemicals companies. The acquisition would leverage Saudi Aramco’s innovative developments in crude oil to chemicals technology, or C2C, a process that eliminates the refinery stage to transform crude oil directly into valuable petrochemicals.

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