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Market Expansion Strategy To Be Pursued Ahead By Saudi Aramco: Reuters

Market Expansion Strategy To Be Pursued Ahead By Saudi Aramco: Reuters
The downstream expansion strategy of Saudi Aramco is planned to be put at par with Big Oil as the largest Saudi oil company hopes to regain lost market share following the end of the oil supply cut led by OPEC, said its chief executive, reported Reuters.
Talks with a number of possible partners for its expansion strategy of refining and petrochemicals segment is ongoing in Asia, Europe and the United States, said Amin Nasser, the CEO of the company. It is preparing for the launch of its first IPO next year. 
“We had to cut our allocations to certain markets based on the (OPEC) agreement ... hopefully we will regain these markets as soon as this deal ends,” he said in an exclusive interview.
“We have a very reliable customer base. I don’t see (any)sort of problems in terms of gaining market share beyond the OPEC agreement,” Nasser said, adding the company will continue to abide with the OPEC production targets.
With the aim of lowering of global oil glut, the ongoing production cuts by OPEC and non-OPEC producers such as Russia has been extended till the end of 2018.
This cut has led Saudi Arabia to reduce its production by around 500,000 barrels per day to about 10 million bpd. Saudi Arabia is the de-facto leader of OPEC.
Potential joint venture negotiations are being held with multiple Russian firms including the state controlled Rosneft, by the company, Nasser said.
The association between Saudi Arabia and Russia would continue well after the end of the current production cuts, both the countries have said earlier.
Because of the fact that neither Russia nor Saudi Arabia can afford any further drop in global crude prices, these two countries have been brought together despite their obvious economic and political differences.
“We are engaging ... with the Russian companies to identify opportunities whether in Russia or globally in terms of joint investments in areas of interest to both sides,” Nasser said.
“We have discussions with Rosneft in different areas, in terms of creating JVs. Essar is one area that we were interested in. And still the discussions (with other partners) are on going.”
Capturing the Indian oil export market is on the forefront of strategies of Saudi Arabia and the kingdom faces competition from Iraq in this matter. While Saudi Arabia had desired to get hold of a stake in Indian refiner Essar but was outmaneuvered by Rosneft. A number of potential downstream ventures are being planned by Saudi Aramco in India for which it is holding talks with several possible partners as the company has huge interest in expanding in the Indian market, Nasser said.
The possible largest IPO ever would be launched through the sale of 5 percent of sale of Aramco next year.
Aramco wants to expand its refining operations and petrochemical output which would help it to become the largest integrated energy firm in the world.
“If you look at our peers, their refining capacity is either equal or much higher than their production capacities. So we are looking at our refining capacity to be in that range,” Nasser said.
“The U.S. is an important market and we are looking at expanding after having taken the full ownership of Motiva. We are looking at expanding our footprint in the U.S. for sure,” he said.

Christopher J. Mitchell

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