Aramco sees rising demand in China, expects more investment By Reuters

By Maha El Dahan and Youssef Saba

DUBAI (Reuters) – Saudi Aramco ( TADAWUL : ) Chief Executive Officer Amin Nasser said on Sunday the oil giant was looking at additional investment opportunities in China, where he said oil demand was stable and growing.

State-owned Aramco is boosting its presence in China in a series of deals in refining and petrochemicals, some of them with crude oil withdrawal agreements.

“So far we are in early 2024, demand is stable and growing in China,” Nasser told media after the results were released, which showed a 24.7 percent drop in net profit to $121.3 billion due to more low oil prices.

Nasser said the country’s refineries are among the most fully integrated and have the highest conversion rates, and Aramco is currently looking for additional investment opportunities.

Nasser expected the global oil market to remain healthy in 2024.

“We expect it to be pretty stable, we expect growth of about 1.5 million barrels,” Nasser said.

Nasser put 2024 demand at 104 million bpd, up from an average of 102.4 million bpd in 2023.

The Saudi Arabian government in late January ordered Aramco to cancel its expansion plan to increase production capacity to 13 million barrels per day (mbpd), returning to a previous target of 12 mbpd.

Two projects that were part of the expansion plan – Safaniyah and Manifa – have been put on hold, while three others continue. These are Zuluf, Marjan and Berri, which are expected to add 600,000, 300,000 and 250,000 barrels per day of crude oil production.

Nasser said maximum production capacity would be optimized to keep within the target of 12 million barrels per day despite ongoing projects.

“I will deal with that by mitigating our decline and making up for that decline with the addition that will come from Zuluf, Marjan and Berry.” It shouldn’t affect the number of facilities we have in the field.”

The decision on the capacity target sent shares of US oilfield service providers tumbling as higher international and offshore oil exploration and production, mostly in the Middle East and Africa, largely helped oilfield firms overcome the slowdown in the drilling activity of US shale companies.

GAS, LNG AND LITHIUM

Aramco aims to increase its gas production by 60% by 2030 from 2021 levels.

Aramco could partner with MidOcean Energy, a company owned by US investment firm EIG Partners, to invest in liquefied natural gas (LNG) projects off Australia, Nasser said, after agreeing last year to take a strategic minority stake in MidOcean .

“We are partnering with MidOcean in Australia and may partner with them in other enclaves depending on opportunities,” he said.

Nasser also said Aramco was interested in investing in U.S. LNG opportunities, but said he could not divulge further details.

“We are in discussions with a number of companies.”

The global LNG industry is booming and the US is the world’s largest exporter.

Sources told Reuters last week that Aramco was in talks to invest in phase 2 of Sempra Infrastructure’s Port Arthur liquefied natural gas project in Texas, which is a proposed expansion to the already-producing phase one.

Discussions are still ongoing for a tie-up with the French automaker Renault (EPA:) and China’s Geely for a 15 percent to 20 percent stake in their joint venture for internal combustion engines and hybrid engines, Nasser said.

Nasser also confirmed that Aramco is currently evaluating the lithium concentration in the oil field brine.

Sources told Reuters on Friday that Aramco was in the early stages of work on extracting lithium, considered a critical mineral by many major economies because of its use in battery production.

“It’s a work in progress,” Nasser said.