This is really a cool story and helps explain why the US continues to import so much Saudi Arabian oil.
Bloomberg is reporting:
Taking a controlling interest last year in South Korea’s third-largest
refinery highlights the shifting dynamics of the oil business. With
crude prices down by more than half in the past two years, the Saudis
and other oil-rich countries are fighting to lock in customers. Asia,
which now accounts for 70 percent of Saudi oil exports, is the primary
battleground.
For Saudi Aramco, as the company is widely known, that means purchasing
stakes in refineries, with contracts guaranteeing most of the oil will
come from the kingdom. Aramco has invested in three processing
facilities in Asia. As Iran prepares to boost its own exports, the
Saudis are on the cusp of a dramatic increase in its commitment to the
region, eyeing billions of dollars of projects in countries from
Indonesia to Vietnam.
Owning refineries in Asia is “part of a long-term strategy to
consolidate” the Saudi market share in a key region, said Mustafa
Ansari, an analyst at the Arab Petroleum Investment Corp., a
state-controlled development bank in Dammam, the city at the heart of
Saudi oil country.
The Saudis pursued a similar path in the U.S.
three decades ago to lock in sales as crude prices tumbled, buying into
three oil-processing facilities in Texas and Louisiana since 1988. The
strategy worked: Motiva Enterprises LLC, the U.S. refiner half-owned by
Aramco, imported 65 million barrels of Saudi oil in the first eight
months of 2015 -- more than triple what ExxonMobil Corp. got from the
kingdom in that time, U.S. government data show.
More:
The push into Asia comes at a pivotal moment in Saudi Arabia. With oil
revenue falling after crude slumped 34 percent this year, the kingdom is
tightening its belt just as a new king ventures away from the kingdom’s
traditionally conservative diplomacy. The International Monetary Fund
predicts a budget deficit exceeding 20 percent of economic output this
year.
At Aramco, meanwhile, recently appointed Chief Executive Officer Amin
Nasser is overseeing a plan to make the world’s biggest oil company a
more integrated operation. Long focused on producing crude, Aramco plans
to almost double its refining capacity by 2025 to 10 million barrels a
day, equivalent to its current output of oil. That would put Aramco
ahead of ExxonMobil as the world’s largest refiner.
Much, much more at the link.
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