Aramco, as Saudi Arabian Oil Co. is known, is building refineries in the kingdom and in Asia to help it increase sales and purchases of gasoline, diesel and other products to more than 2 million barrels a day, said Ibrahim Al-Buainain, chief executive officer of Saudi Aramco Products Trading Co. The wholly owned subsidiary, known also as Aramco Trading Co. or ATC, benefits from its parent’s global network of refineries and access to tankers and storage sites, and it currently trades 1.5 million barrels a day, he said.
“ATC deals with 1.5 million barrels of products a day and plans to expand as new refineries come online, adding more product,” Al-Buainain said in an interview on Monday in Dubai. “The key is that you need to own assets.”
Aramco has stakes in 5.4 million barrels a day of refining capacity, from Saudi Arabia to South Korea to the U.S. The company targets doubling that capacity within a decade even as it battles other crude producers for market share. Such an increase would make Aramco the world’s biggest crude processor. It’s pursuing the expansion while also planning an initial public offering, which the government asserts will be the world’s largest.
Aramco Trading has 2.6 million barrels of storage capacity at the United Arab Emirates port of Fujairah and 1 million barrels of storage at Yanbu on the Saudi Red Sea coast, Al-Buainain said. It also blends fuels at those facilities to better meet customers’ requirements, he said on the sidelines of the Middle East Petroleum and Gas Conference.
“You make money because you can optimize,” he said. “You make a bigger shipment instead of a smaller one; you use blending to tailor products to markets and meet the product specifications you want.”
Traders, traditionally light on assets, are looking for new options to maintain profits, Vitol Group’s Chris Bake said at the same conference. “We look at integrating into the downstream a little further, integrating into refining a bit,” said Bake, an executive committee member and head of origination at Vitol, the world’s biggest independent oil trader. “We look to have more of a system.”
Aramco Trading, which started operating in 2012, will reach its targeted volume once its parent completes refining projects including a facility at Jazan on the Red Sea and some international ventures, Al-Buainain said. He didn’t specify a date for achieving the target. Aramco has said the 400,000 barrel-a-day Jazan refinery will start next year.
While about two-thirds of Aramco Trading’s transactions go toward supplying the Saudi domestic market and selling its parent’s refinery output, Al-Buainain said he sees opportunities elsewhere in the Middle East as well as in Africa and Asia.
ATC has about 200 employees, mainly at its headquarters in the eastern Saudi city of Dhahran. It plans to double the staff at its first international office in Singapore to about 20 people this year, Al-Buainain said.