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Saudi Aramco's ATC eyes trading non-Saudi crude

22 Sep 2017, 6.43 am GMT

Saudi Aramco's ATC eyes trading non-Saudi crude

Singapore, 20 September (Argus) — State-owned Saudi Aramco's trading arm ATC plans to start buying and selling non-Saudi crude, marking the partial entry of the world's biggest state-oil company into global trading.

ATC was established in 2012 as a wholly-owned subsidiary of Aramco to sell all hydrocarbons belonging to its parent company except for crude and LPG. It is expanding its presence in Asia-Pacific and plans to establish an office in Singapore this year.

ATC is already a major trader of oil products and sells Saudi Khuff condensate. But as it enters the crude trading field it will not have access to crude produced inside Saudi Arabia, the marketing of which will continue to be done by Aramco. ATC will have to buy and sell crude available on the spot market.

Aramco sets the monthly official formula prices for its exports based on the value of benchmark spot-traded crude. It uses the Argus Sour Crude Index (ASCI) — made up of Mars, Poseidon and Southern Green Canyon (SGC) crudes — for pricing its exports to the US, and uses a monthly average of Oman Blend and Dubai prices assessed by price reporting agency Platts for pricing its exports to Asia-Pacific.

Other Mideast Gulf producers have entered into or have considered crude trading. Oman's state-owned trading firm OTI trades some Oman Blend crude, as well as oil products. Earlier this year Iraq's state-owned marketer Somo created Lima, in a joint venture with Russia's private-sector Lukoil, to trade part of its oil exports. Somo has also explored setting up a crude marketing venture with Chinese state-controlled refiner Sinopec. Kuwait's state-owned KPC has recently studied the possibility of an oil products trading arm.

Some former state-owned oil companies, such Norway's Statoil and Brazil's Petrobras, have transitioned into part-privatised companies that have become active in trading. But many state-owned oil firms in the Mideast Gulf are politically limited by the amount of financial risk to which they can be exposed, as often they are the most important revenue generators for the state.

Saudi Arabia is on a path to overhaul its economy and plans an initial public offering (IPO) of up to 5pc of Aramco by the end of next year.

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