Aramco Trading is a new SA unit set up earlier this year to begin

by end-2011 to trade in refined products, maximise downstream

integration and generate value by leveraging its growing global system.

Named Saudi Aramco Product Trading Co. and based in the kingdom, this

will enhance the system of balancing refined petroleum products and back

SA's expanding local and overseas downstream investment portfolio.

Addressing customers and industry participants at annual IP Week

gathering in London, SA Senior VP for the Downstream Khaled G.

al-Bu'ainain in February said: "Through the establishment of

this new subsidiary, Aramco Trading, we hope to better capture

integration opportunities in our global system, and additionally create

more value for our expanding downstream business in Saudi Arabia and

overseas". He said with energy demand forecast to rise in the long

term, SA continued to demonstrate its commitment to meeting future

demand by under-taking a significant downstream capital programme via

investments through its subsidiaries, affiliates and JV in Saudi Arabia

and abroad.

Aramco Trading President/CEO Sa'id A. al-Hadrami told the

gathering: "The shift in trade patterns will bring both challenges

and opportunities that can be leveraged by the company in balancing its

system and create value through the continuous market participation. We

also want to emphasise that the new subsidiary will only engage in

products trading".

Aramco Trading will begin operations with about 100 professionals,

mostly being current SA employees. All employees will be based in

Dhahran. The company is also interviewing external candidates for some

trading positions, with offices to be located in the main American,

Asian, European and other markets.

Two SA fuel oil cargoes, both for October loading, were recently

sold at strong price levels for a second time in a week, amid severely

tight supplies of on-specification grades. Both the East Asian and

Middle Eastern markets were tight, as they have been for nearly a month,

mainly due to large exports of high-density, high-viscosity cargoes from

the Caribbean resulting in severe quality imbalances.

SA sold the 90,000-ton parcel of 180-centistoke (cst) and 0.96-0.97

density, for Oct. 17-19 loading from Ras Tanura, to Vitol at a premium

of $13-$14/ton to Singapore spot quotes on fob basis, up from $10-$11

previously and the highest price level in more than six years. Vitol,

which also bought the previous offering for Oct. 8-10 lifting, was seen

booking the 80,000-ton Messai'eed to lift and deliver the Qatari

cargo to Singapore.

ExxonMobil sold the second high-viscosity 700-cst parcel of about

the same size, for Oct. 29-31 loading from its JV Samref refinery in

Yanbu', to the Bakri group of Indonesia at a discount of

$13-$15/ton to spot quotes, fob, steady to its previous deal.

Since September, only a single 90,000-ton parcel has landed in East

Asia for each month, with the Vitol parcel expected for November

arrival, down from monthly average volumes of 350,000-360,000 tons until


The tight market has also led to cargoes from India being sold at

high levels, including the latest Indian Oil Corp (IOC) parcel, for Oct.

26-28 loading from Chennai, which was sold to Westport at parity to a

discount of $1/ton to spot quotes, fob, its highest in more than six


The last three low-density 380-cst parcels from Mangalore Refinery

& Petrochemicals, all for October and November lifting, were

transacted at seven-month high premia of $5.50-$7.50/ton to spot quotes,


India's Reliance Industries (RIL) bought an extra 600,000

barrels of crude oil from SA for October, soaking up some barrels Shell

did not lift because of a fire at its Singapore refinery. RIL, owner of

the world's biggest refining complex in the western Indian state of

Gujarat, bought additional volumes of Arab Light (AL) for lifting on

Oct. 26. It buys about 230,000-240,000 b/d of Saudi crude oil. Shell

Singapore cancelled the lifting of 4m barrels of AL for October loading

after a fire forced the company to shut down its largest refinery.

The move to take in extra supplies for October may help RIL cut

crude oil processing costs as SA has raised AL's export price for

November to a record high. Reuters last week quoted an un-named

South-East Asian refiner as saying of SA's new formula: "Their

official selling price is so high, it's not economical to request

for more barrels for November".

The US is still regarded as the most important market for Saudi

crude oil. This is mainly for political reasons, although Asia now takes

almost 63% of SA's exports. Riyadh always wants to see US

dependence on Saudi oil strong and increasing. Saudi Arabia is

occasionally the number one crude oil supplier to the US.


Crude Oil API deg. % Residue>650oF % S in Residue

Arab Super Light* 50 15 0.2

Arab Berri 39 39 2.1

Arab Light 34 45 3.1

Arab Medium 31 50 3.9

Arab Heavy 27 54 4.3

Kuwait 31 45 2.5

Brent 37 37 0.6

WTI 40 31 0.6

Dubai 32 45 3.0

Oman 34 42 1.4