Saudi keeps top China crude spot as Iran plunges

Despite attacks in the Strait of Hormuz and on the Kingdom, tankers continue to supply China with record amounts of Saudi crude. (Shutterstock)
Updated 26 September 2019

Saudi keeps top China crude spot as Iran plunges

  • Despite attacks on Gulf refineries, Riyadh to Beijing oil flows continue to grow

BEIJING: Saudi Arabia held on to its spot as China’s largest supplier of crude in August for the second straight month, official customs data showed on Wednesday, although this month’s attack on Saudi oil processing facilities may end the run. 

Saudi oil arrivals in August in China, the world’s biggest oil importer, reached 7.79 million tons, or 1.83 million barrels per day (bpd), data from the General Administration of Customs showed, compared with 6.99 million tons in July and nearly double the previous year. 

Amid sanctions by the US on Tehran and rising Middle East tensions, China’s oil imports from Iran were 787,657 tons, down from July’s 926,119 tons and far below 3.28 million tons of a year ago. 

Most of the August arrivals were discharged at Jinzhou and Tianjin ports in China’s northeast, where it has state reserve and commercial tanks, indicating volumes continuing to flow into the country’s strategic storage sites, according to Refinitiv Oil Research. 

China said days after the drone attack on Saudi oil facilities that knocked out half the output of the world’s top oil exporter that the nation’s crude reserves, including stocks held at strategic petroleum storage sites and commercial inventories, were sufficient to cover 80 days. 

Imports of US crude oil reached 1.01 million tons last month, versus 1.5 million tons in July, with volumes likely to more than halve in September as Beijing started levying a 5 percent tariff as the trade war with the US escalated.

Imports from Russia, China’s second largest supplier for August, reached 6.02 million tons, up from 5.673 million tons in July and 5.7 million tons in August last year. 

Oil prices fell for a second day on Wednesday amid worries fuel demand could fall after US President Donald Trump doused recent optimism over China-US trade talks.

Brent crude futures were down by more than a dollar in early London trade on Wednesday. Nevertheless, the benchmark remains on track for its first monthly gain since June.

“Focus will return to faltering oil demand concerns as there is unlikely to be any quick resolution to US-China trade differences to positively shift economic expectations,” global oil strategist at BNP Paribas Harry Tchilinguirian told the Reuters Global Oil Forum.

Trump criticized China’s trade practices at the UN General Assembly on Tuesday and said he would not accept a “bad deal” in US-China trade negotiations.


Saudi Aramco sets IPO share price between 30-32 riyals

Updated 17 November 2019

Saudi Aramco sets IPO share price between 30-32 riyals

  • Saudi Aramco intends to buy $1 billion worth of shares for employee

DUBAI: Saudi Aramco’s multibillion-dollar initial public offering (IPO), probably the biggest in history, shifted to full gear as its share price was announced and subscription to the world’s biggest oil company commenced on Sunday.

Saudi Aramco set an indicative share price between 30 and 32 riyals for the 1.5 percent of its shares – or about 3 billion shares of its 20 billion regular shares – that it would offer for  the domestic part of its public offering. The blockbuster IPO could be worth least $24 billion, and values the state-owned oil giant at up to $1.71 trillion.

The offering – or book-building – period for institutional subscribers, which started today, closes on December 4 while the retail offering for individual investors will begin on November 21 and will end on November 28.

The final pricing for the Aramco shares would be announced on December 5.

___

For more of our coverage of the Aramco IPO, click here.

To view key Aramco IPO documents, click here.

___

Samba Capital & Investment Management Company has been designated as issue manager while National Commercial Bank, Saudi British Bank, Samba Financial Group, Saudi Investment Bank, Alawwal Bank, Arab National Bank, Albilad Bank, Aljazira Bank, Riyad Bank, Al Rajhi Bank, Alinma Bank, Banque Saudi Fransi and Gulf International Bank were named as receiving banks.

If there are applications for more than the 0.5 percent on offer — amounting to 1 billion shares — allocations to private investors will be scaled back proportionate to demand; if there are fewer applications than the 0.5 percent when all maximum applications are satisfied, private investors can have the over-payment refunded either in cash via the receiving banks or in the form of extra shares in Aramco.

There is an incentive mechanism in the IPO whereby Saudi investors will receive a bonus one-for-ten allocation of shares, up to a maximum of 100 shares, if they do not sell shares in the market for a period of six months after dealings begin in December, at a date still to be determined.

Saudi Aramco also intends to buy $1 billion worth of shares for employees under a plan to incentivize executives and staff members alongside the IPO next month.

The plan — which was disclosed in the IPO prospectus — will involve Aramco buying the shares from the government and making them available for employees under special terms.