Saudi King Salman's recent lavish tour of Asia had a hard-nosed marketing mission - to cement the kingdom's place as leading oil supplier to the world's biggest consumer region.
The string of deals inked on his three-week tour to Malaysia, Indonesia, Japan and China also point to a fresh strategy, one to increase Saudi leverage over the refined product and petrochemical markets.
Said state oil company Aramco chief Amin Nasser on Sunday: "The growth in that sector is very important, and anything integrated between refining, petrochemical, with marketing and distribution, is of interest to us."
Saudi Arabia's main influence on oil markets has been via the Organisation of the Petroleum Exporting Countries (Opec), of which it is the de facto leader.
But Opec's ability to control prices has waned as non-Opec producers like Russia and, more recently, United States shale drillers, have ramped up output.
One indication of a shift in Saudi strategy came on the first leg of the tour in Kuala Lumpur. Aramco signed a deal to take a US$7 billion (S$9.8 billion) investment, in a joint venture with Malaysia's Petronas in a refinery and petrochemical project.
It is just across a narrow strait from Singapore, Asia's oil trading hub. Some 70 per cent of the oil for the project, set to start in 2019, will come from Saudi Arabia, giving the kingdom a key outlet for its crude in Asia, the world's fastest growing market.
Aramco also recently made a deal with Indonesia's Pertamina over a US$5 billion expansion of the country's largest oil refinery, for which Armaco will supply the crude. "The investments are intended to enhance Aramco's competitive position in Southeast Asia," said Saudi economist Ihsan Buhulaiga.
The Saudi move deeper into refineries and petrochemical plants would likely help the potential valuation of Aramco in what could be the world's largest initial public offering at US$2 trillion or more. Singapore, Hong Kong and Tokyo have been mentioned as possible exchanges where its shares would be traded.
Aramco's new deals in the region would also greatly increase its participation in the petrochemical sector. But, ultimately, the big prize is China.
REUTERS
