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Aramco Optimizes Oil Trading Operations Ahead Of IPO

Oil

Saudi Aramco will enter crude oil trading as part of valuation-boosting efforts ahead of its planned IPO in 2018, unnamed sources close to the company told Reuters. Aramco Trading Company has so far dealt in oil products, base oil, and petrochemicals.

As per the new plan, the trading arm of the state oil giant will step in as supplier of non-Saudi crude oil blends to Aramco’s ventures abroad, including the biggest refinery in the United States, Motiva. Instead of Motiva going to the market to buy non-Saudi oil, Aramco Trading Company will do it for the refinery. Another client for the company will be the S-Oil refining joint venture of Aramco in South Korea.

Aramco Trading Company trades about 1.5 million barrels of refined products. The amount has been rising steadily over the past three years as Aramco expanded its refining presence abroad and Saudi Arabia turned into a net exporter of diesel.

The state energy company is working in several directions to improve its value for next year’s listing, which, Saudi Arabia’s Finance Minister earlier this week told investors, will go as planned. There were reports earlier this month that the IPO may face a delay.

The minister spoke with bond investors as part of preparations for a third international bond issuance, Reuters reported, after the company placed US$17.5 billion in bonds last year and a US$9-billion Sharia-compliant sukuk bond in April this year. Related: US Shale, End Of OPEC Cuts Could Stifle Oil Prices In 2018

Riyadh is hoping to pocket US$100 billion from the Aramco listing to fund the ambitious economic transformation program it calls Visions 2030 that should wean the Kingdom from its crude dependency. There are, however, doubts whether the IPO will fetch the desired amount of proceeds.

Meanwhile, Aramco is expanding into shale. It is currently working on the construction of production and transportation facilities for System A, as the project is called. By the end of the year, the project should yield 55 million cu ft of natural gas daily.

By Irina Slav for Oilprice.com

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