Saudi Aramco Review

Aramco’s Fujian project in China

Aramco’s Fujian project in China

Aramco Asia, a channel for expanded opportunities

As economies in the Far East continue to grow, Aramco has consolidated its offices in China, Japan and Korea under the Aramco Asia mantle to prepare for the firm’s ever-expanding activities, from oil and petrochemicals to material acquisition and recruiting

SAUDI ARAMCO has entered a new phase in its intent to be a major energy and chemicals player in the Far East with the launch of the Aramco Asia organisation.

The organisation was officially inaugurated in November 2012. With offices in China, Japan and South Korea, Aramco Asia consists of three companies, Aramco Far East (Beijing) Business Services (ABS) Co, Aramco Asia Japan (AAJ) and Aramco Asia Korea (AAK), which are all owned by the Saudi Aramco Asia Co, itself wholly owned by Saudi Aramco.

All three companies have been branded “Aramco Asia” to demonstrate Saudi Aramco’s commitment to the Asian region. While legally separate, the three Aramco Asia companies are one functional organisation that serves as a bridge between Saudi Aramco and Asia, and provides a wide range of support services, including marketing of oil and chemical products, investments, career development and PR activities.

As Saudi Aramco continues its growth and expansion into the chemicals business, Aramco Asia will present exciting opportunities for both Saudi Aramco and its Asian partners. Today, the Far East region imports about two-thirds of the crude oil exported by Saudi Aramco.

Ahmed AlKhunaini (right), representative
director of Aramco Asia Japan, signing a
memorandum of understanding with OIST

At the inauguration ceremony in Beijing, Abdulrahman Al Wuhaib, Saudi Aramco’s senior vice president of downstream, and chairman of Aramco Asia’s Board of Directors, said: “Our new Asia office here in Beijing will be a hub for facilitating our joint activities in general and in particular, investment and other business opportunities arising from the capital projects in Saudi Arabia and Asia. The kingdom is ‘open for business’ for Chinese and other Asian companies, as there are abundant opportunities across many sectors.”

South Korea, Japan, and China, in particular, have become vital suppliers of construction materials and services to Saudi Aramco. Such business dealings have contributed to the development of the Saudi economy and have helped fuel the ever-growing economies of the Asian region.

“Aramco Asia will serve as the business and cultural exchange portal between Saudi Arabia and the Far East, as well as a marketing intelligence hub,” said Aramco Asia president Sulaiman Ababtain.

“Establishing Aramco Asia will help to further enhance cooperation in the region. The move also conveys a very clear message that Saudi Aramco is dedicated to pursue a long-term partnership in the region and intends to remain Asia’s most reliable supplier in the future,” added Ababtain.

Saudi Aramco is not only dedicated to establishing offices in the vibrant Far East Market. It has also made significant investments in the region and has situated Aramco Asia to manage its shareholder interest in those investments.

In China, Aramco Asia is tasked to oversee the company’s interests in the Fujian Refining and Petrochemical Company (FREP) and Sinopec Senmei Petroleum Company Ltd (SSPC).

The two other joint ventures, S-Oil in Korea and Showa Shell in Japan are publicly traded companies, and Saudi Aramco’s interests are also managed by Aramco Asia.

Saudi Aramco’s move into the chemicals market is a key component of the company’s Accelerated Transformation Programme.

The proposed new business portfolio brings challenges, but Aramco Asia is strategically positioned to help facilitate the company’s desire to become a fully operational chemical enterprise and global leader in refining by 2020.

Aramco Asia is set to take the lead in this endeavour by marketing a variety of petrochemicals in the region, primarily polyolefin and aromatics.

China is set to be a key market for the polyolefin marketing business, and Aramco Asia already has a footprint in the country via FREP.

And in January 2013, Aramco Asia successfully sold the first batch of polymer products produced by FREP, a joint venture with the Fujian Provincial Government, Sinopec and ExxonMobil.

Responding to the steady growth of this business, Aramco Asia will devise the necessary work plans and strategies to accommodate for such future growth.

Kaist ... Aramco and Korea promote

“Asian business growth will contribute to the realisation of Saudi Aramco’s strategic intent to become the world’s leading integrated energy and chemical company by 2020. In addition, Aramco Asia also plans to market other petrochemical products in Asia, such as aromatics produced in Saudi Arabia, to guarantee stable customer bases in the region,” he added.

The Asia region is fast becoming one of Saudi Aramco’s major procurement destinations, laying down another important role for the new entity. “We are confident in establishing a reliable supply chain for material and services,” said Ababtain.

“We have already identified more than 150 top-tier Chinese suppliers to do business with Saudi Aramco.”

Aramco Asia will purchase materials to support its own offices and Saudi Aramco operations. This will include developing market intelligence reports on commodities, suppliers and a country’s business and supply chain strength.

Aramco Asia will also be able to identify potential suppliers, manufacturers and service providers as well as promote business opportunities for both Saudi and Asian companies. On the engineering and technical services side, Aramco Asia will act as the extended arm of Saudi Aramco’s Engineering Services, Project Management and Information Technology in the Asia region.

This will involve technical analysis and research, leading and participating in benchmark studies and identifying technology for transfer. Despite Aramco Asia being less than a year old, it has witnessed significant growth and expansion.

Regional partners have welcomed the establishment of Aramco Asia and shown a strong willingness to establish or expedite cooperation with Aramco Asia, saying it’s a timely and profound move that will facilitate ever increasing opportunities for Saudi Arabia and the Far East, as well as for Saudi Aramco and local companies.

ABS has its headquarters in the Chinese capital of Beijing, with two supporting branches in Shanghai and Xiamen. Aramco Asia now manages the interests of two joint ventures in China: Fujian Refining Petrochemical Company (FREP) and Sinopec Senmei Petroleum Company Ltd.

The Xiamen Office is located in the Paragon Centre of Xiamen, a beautiful city in the Fujian province of China, known for both business and tourism.

The office serves two main purposes. First, it will provide support to personnel assigned to the Fujian Refining and Petrochemical (FREP) joint venture. Second, its goal is to become a hub in China for the chemicals business.

The office recently expanded its role to include all sales operations for marketing the Aramco Asia share of polyolefins products from FREP. The office’s relatively close proximity to FREP will allow Xiamen office personnel to work closely with FREP over the coming years to optimise chemicals product offerings for improved joint venture returns.

Located in the Shanghai World Financial Centre, the tallest building in China and a landmark of the city, Aramco Asia’s Shanghai Branch Office will expand its function and responsibilities from a sourcing and inspection office to a full-fledged procurement engine, to purchase commodities from 150 top-tier approved Chinese suppliers, including drilling chemicals and equipment, electrical, heat transfer equipment, pipes, pumps and valves.

Within just a few months of the procurement business commencing in the office, the Shanghai Branch has placed purchase orders with a total value of more than 50 million Renminbi with Chinese manufacturers.

The Shanghai office covers the full range of functions in supply chain management, including strategic sourcing, procurement, supplier relations management, quality management, logistics support and business administrations. In addition, the Shanghai branch will be focusing on the marketing of aromatics in the China market.

It was back on July 13, 2012, when Khalid G Al Buainain, senior vice president of engineering, capital and operations support (then senior vice president of downstream), inaugurated Aramco Asia Japan (AAJ).

At the ceremony in Tokyo, Al Buainain told the more than 300 guests that the new office was a sign of Saudi Aramco’s unwavering commitment to the Japanese market. “The newly established entity will build on the long, strong relationship between the two nations.

The scope and focus of the new organisation will extend beyond petroleum trade and procurement to areas such as research and development, leveraging Saudi Aramco’s newly launched Energy Venture Capital initiative and mutual investment in new technologies supporting the energy industry,” Al Buainain explained.

Saudi Aramco’s business in Japan goes back nearly 30 years, with the opening of its representative office in Tokyo in 1984. Six years later, Saudi Petroleum Overseas, a Saudi Aramco affiliate, opened an office in Tokyo.

At the reception, Al Buainain also introduced Ahmed AlKhunaini, as the new representative director of AAJ.

Al Buainain himself has previously headed Saudi Aramco’s presence in Tokyo, and AlKhunaini told those present that he was privileged to be taking up his new role.

“It is a great privilege to be assigned as the first head of AAJ, picking up the baton from prominent pioneers. The launch of Aramco Asia Japan is our way, at Saudi Aramco, to display our commitment as a long-term stable energy supplier to this country, as well as a strategic partner in seeking the highest quality services that Japan can offer to the kingdom of Saudi Arabia.”

AAJ’s office is located on the 26th Floor of the Marunouchi building, overlooking the Imperial Palace. Among its core business functions will be crude oil marketing of approximately 1.3 million barrels per day to Japan and Taiwan, as well as providing support for Saudi Aramco’s Okinawa oil terminal business.

Aramco Asia Korea (AAK) South Korea is Saudi Arabia’s fourth-largest trading partner. During 2006-2010, direct investment in the kingdom by South Korea grew 400 per cent.

For a number of years the kingdom has been the largest supplier of oil to power Korea’s thriving economy and Saudi Aramco recently marked the 20th anniversary of its S-Oil joint venture.

As well as this, Korean engineering and construction firms are engaged in contracts valued at more than $14 billion in major Saudi Aramco projects and joint ventures in the kingdom.

At the Aramco Asia Korea (AAK) inauguration ceremony in November, Abdulrahman Al Wuhaib, senior vice president of downstream, and chairman of Aramco Asia’s Board of Directors, paid tribute to Korean expertise.

“Korea’s skilled and conscientious manpower and its superb, cutting-edge technologies have added tremendous value to many of Saudi Aramco’s largest and most critical projects. Saudi Arabia owes many of its most remarkable and enduring infrastructure projects to the genius and work ethic of the Koreans,” he said.

“The office of Aramco Asia Korea will offer a full range of resources for robust business between Saudi Aramco and Korea, based both on timely, useful information and appreciation for timeless expressions of culture,” said Mohammed Al Madi (was then AAK managing director) at the AAK inauguration ceremony.

Services AAK will provide include marketing intelligence and logistical advice regarding Saudi Aramco’s crude oil, liquefied petroleum gas (LPG) and refined product sales to South Korea. The office will also facilitate research and technology collaboration and will assist Korean firms and financial institutions that are interested in manufacturing opportunities in Saudi Arabia and in working with Saudi Aramco.

The office will also support Saudi Aramco’s renewable energy initiative by sourcing prospects with Korean companies. AAK will serve research professionals and leaders in higher education and facilitate student and cultural exchanges.

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