Saudi Arabian Oil Co (Aramco) suggested that the global oil market moves closer to balance despite the increases in oil production in the United States, which lessens the prices down in the short-term. The company’s chief executive officer, Amin Nasser, said it is not a good indication of where the market is likely to be headed.
Nasser explained during an event at Columbia University that the large new production capacity and investment that will be needed in the future were lagging. “While the short-term market is pointing to a surplus of oil, the supply required in the coming years is falling behind,” he said, adding that there were several indicators which point to a more balanced market.
He stressed that the combined inventories of countries in the Organisation for Economic Cooperation and Development may drop, which is one of the signs that the market is tightening. The Organisation of Petroleum Exporting Countries’ (Opec) biggest producer, the Saudi Arabia, is reportedly cutting output as it leads efforts to get rid of a global crude glut and boost prices.
Last month, Saudi Arabia produced nearly 10 million barrels per day based on its report to Opec. All the oil from the country is pumped by Saudi Aramco, as the company is known.
Nasser said Aramco is currently in talks about various refining and marketing joint ventures in South-East Asia, including Indonesia. Bloomberg noted that it is focused to the Asia, with at least 60 percent to 70 percent of its exports heading here. These include looking for investments within China’s downstream sector.
Aramco also examine opportunities in the US in line with its plan to increase its global refining and marketing capacity. Its target is between eight million and 10 million barrels per day. Nasser said they will build their Motiva business in the United States as soon as transaction involving Shell and Aramco is done.
Additionally, the company reportedly plans what could be the largest stock sale in the world. The kingdom is doing attempts to attract foreign investors as it seeks to expand its economy and prepares for the planned sale of a 5 percent stake in the company. Aramco’s Saudi Refining unit is expected to take full ownership of the Motiva Enterprises name and legal entity, which includes the biggest refinery in the US at Port Arthur in Texas. Nasser has previously revealed that the initial public offering is likely to occur in the second half of 2018.