PETROANALYSIS || ARTICLE
Aramco downstream in Gwadar, part of Belt and Road
The internationalization of the downstream sector of ARAMCO continues advancing. Already the company has presence in China, Japan, South Korea, Indonesia, India, the Netherlands, the United States, Malaysia, and Pakistan will soon be added to the list.
These are joint efforts that include direct participation in petrochemical complexes and refiners and long-term supply plans for Saudi crude. The struggle to firmly secure a foot in the competitive Asian Pacific and Indian markets is a strategy to guarantee the profitability of ARAMCO’s upstream expansion plans. According to BP, 66% of global growth in final energy consumption before 2040 will be seen in Asia, most of which corresponds to fossil energy.
Source: BP 2018 Energy Outlook
It is no secret how the struggle for that market has deepened since December 2015 when President Obama lifted the suspension of US crude, and an increasing part of the light and sweet crude produced in the shale basins broke through at the end of very attractive prices in China, South Korea, Taiwan, Japan and India.
Equally, competition is also taking place on the Russian side through the strengthening of relations between China and that country, extending this approach to natural gas, along with new and expanded oil and gas pipelines. On the other hand, African oil from Nigeria and Angola, has been gaining an increasing share of the Asian market, highlighting the Chinese participation in the exploitation and production of oil in these two countries.
In China and India, their growing dependence on imported oil jeopardizes their plans to become the world’s two largest economies in 2040. In addition, their ambitious energy transition plans to give more participation to renewable energies is a slow road that will force these economies to invest heavily in energy projects, internal and external, based on fossil fuels. Hence, for Saudi Arabia it is a priority to secure a growing part of that business, and thus meet those needs.
In the case of the joint refinery that was announced to be developed in the deep-water port of Gwadar, in Pakistan, in the southwest of the province of Baluchistan, it will be a venture between Pakistan’s state oil company and ARAMCO. According to local sources in Pakistan, the refinery is expected to have a production capacity of 500,000 barrels per day and storage of up to 3 million tons, at a cost of around US$ 9 billion. Pakistan currently imports 85% of its oil requirements.
Gwadar, the site where the refinery is planned, is part of the ambitious Chinese Belt and Road Initiative which seeks to connect China by land or sea routes to other parts of Asia, Eurasia, Europe, and Africa through transport and energy projects. The Gwadar link is included in the China-Pakistan Economic Corridor.
Source: Pakistan invest