Saudi Aramco CEO Says China Overtakes U.S. as Largest Customer
January 28, 2010, 02:54 PM EST
By Arif Sharif and Rob Verdonck
Jan. 28 (Bloomberg) -- Saudi Arabian Oil Co., the world’s biggest crude producer, is exporting about 1 million barrels a day to China, more than to the U.S., Chief Executive Officer Khalid al-Falih said.
“We are already exporting more to China than to the U.S.,” he said today in an interview in Davos, Switzerland. “We are prudent and careful about where to invest but our eyes are focused on China and we will continue to look for all opportunities.”
The U.S. imported 1.014 million barrels of oil a day from Saudi Arabia in the nine months through September, according to the Energy Information Administration. China and Saudi Arabia aim to boost trade 50 percent to $60 billion by 2015, the state- owned Saudi Press Agency reported this month, citing Chinese Trade Minister Chen Deming.
Saudi Aramco, as the Dhahran-based company is known, has begun to expand and upgrade its oil and gas production and refining businesses at a cost of $100 billion to tap rising demand in Asia, Oil Minister Ali al-Naimi said in November.
Aramco is investing in refining capacity even given the current poor returns, al-Falih said earlier at a Davos panel. Refiners worldwide have been forced to postpone expansion projects and idle plants in the past year as the global recession eroded fuel demand, squeezing profit margins for oil processors.
Bigger Refineries
The Saudi company, which owns an interest in a refinery in China’s Fujian province, is in talks with China Petroleum & Chemical Corp. to take a stake in a 200,000-barrel-a-day plant in Shandong. It is also expanding its Ras Tanura refinery on Saudi Arabia’s east coast and the Port Arthur plant in Texas, al-Falih said.
“Long term there will be a lot of consolidation and retirement of old and inefficient refineries,” he said in the interview. “We are building refineries that are going to be the most efficient, well-configured and able to deliver the products and we are comfortable that over their life cycle they will be very profitable. We are not designing them for the markets of 2008, 2009 but we are putting them in place for the next three to four decades.”
Aramco has shut in about a third of its 12 million barrels a day of oil output capacity to prevent a price slump. Crude prices rose to a record in July 2008, before tumbling 69 percent by the end of that year as the recession curbed demand. Oil has since rebounded 65 percent, and traded at $73.43 a barrel at 5:04 p.m. London time today
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