Oil markets remain robust, thanks to the steadying hand of Saudi Arabia, Russia, and other OPEC members and allies. Oil prices are trading above USD 90 per barrel through the adept management of supplies even as demand rises in a post-COVID-19 environment.
OPEC’s latest monthly report in February suggests global oil consumption will rise 4.2 million barrels per day (bpd) in 2022 to average 100.8 million bpd, surpassing the levels seen in 2019.
The non-OECD region is forecast to grow by 2.3 million bpd in 2022, outpacing the pre-pandemic level of 2019 by around 2 million bpd for total demand. Within the region, China, India, and Other Asia are the main drivers, making up more than two-thirds of the growth volumes.
The main challenges for 2022 remain the containment of the coronavirus pandemic and any resulting restrictive measures, supply chain disruptions, inflation, and labour shortages, which could dampen economic growth, OPEC’s monthly reported noted.
“Nevertheless, upside potential to the forecast prevails, based on an ongoing observed strong economic recovery with the GDP already reaching pre-pandemic levels, supported by fiscal stimulus, and global trade levels reaching an all-time high in volume terms,” OPEC said.
DOWNSTREAM EXPANSION
Saudi Arabian Oil Company (Aramco) is expanding its global downstream presence with a string of investments in Europe and Asia.
Aramco acquired a 30% stake in Polish oil company PKN Orlen’s 210,000-bpd refinery in Gdansk, Poland, a 100% stake in an associated wholesale business, and a 50% stake in a jet fuel marketing joint venture with UK oil giant BP Plc. Completion of the transaction is subject to regulatory approvals, including from the European Commission.
The investment expands Aramco’s footprint in the European downstream sector and aligns with PKN Orlen’s strategy of diversifying its energy supplies.
In addition, Aramco also signed a memorandum of understanding (MoU) with PKN Orlen and SABIC to explore joint opportunities in Poland and elsewhere in Central and Eastern Europe. Another MoU was signed by Aramco and PKN Orlen, which focuses on exploring potential opportunities for research and development.
“These acquisitions will support the diversification of Aramco’s product portfolio across the hydrocarbon value chain — including a focus on liquids-to-chemicals pathways,” said Mohammed Al Qahtani, Aramco senior vice-president of downstream. “Our expanding global network of refineries and chemical joint ventures allows us to reach new markets with our products, and strategically place crude oil volumes across different geographies.”
Aramco also signed a deal and nine MoUs with South Korean companies to advance its downstream strategy.
The deal between Korea’s Doosan Heavy Industries & Construction Company and the Saudi Arabian Industrial Investments Company, Dussur, was inked to develop a casting and forging facility that will supply domestic manufacturers with industrial and process equipment such as valves, pumps, compressors, wellheads, flanges, heat exchangers, and gas and wind turbines, with the objective to enhance local content.
The joint venture will have the capacity to produce 60,000 tonnes per year of products, and has the potential to supply original equipment manufacturers (OEMs) in the rig, drilling, maritime, and engine fields to the domestic and wider GCC market.
“The agreements also include MoUs with Korean energy companies KEPCO, S-Oil, POSCO, Hyundai Oilbank, H2Korea and LOTTE Fine Chemical to explore potential collaboration in the supply, transportation, utilisation and certification of hydrogen and ammonia,” Aramco noted.
LOW-CARBON HYDROGEN
The companies are also exploring the feasibility of converting exported ammonia into hydrogen – a process known as ammonia back-cracking, which could lead to the development of a large-scale production facility for hydrogen and ammonia in the kingdom, including a carbon capture and storage (CCS) facility.
“In addition to focusing on cutting-edge development in a range of areas, they also support our shared goal of finding climate solutions and lowering greenhouse gas emissions through the development of low-carbon hydrogen and ammonia production, as well as carbon capture and storage,” said Amin Nasser, Aramco president and CEO. “Together, these initiatives with Korea’s industry leaders will further enhance our downstream expansion and integration strategy.
Finally, Aramco is playing a leading role in boosting domestic enterprise through its In-Kingdom Total Value Add (IKTVA) programme. Last year, 59% of Aramco’s spending was directed at domestic suppliers, up from 35% in 2015 when the IKTVA programme was launched.
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