Amid the furore of the Saudi state’s involvement in the assassination of political dissident Jamal Khashoggi, the Kingdom has threatened and then walked back on the possibility of using its oil wealth as a weapon (again). While the global implications and repercussions of the scandal are still unfolding, this has not deterred the Kingdom’s crown jewel Saudi Arabia from forging ahead with an ambitious slate of projects and investments meant to diversify its business and prepare itself an eventual IPO.
We were supposed to be at the cusp of the IPO already. Planned for Q119, a number of factors have led it to be placed on the backburner. The first is Aramco’s planned acquisition of another Saudi powerhouse, petrochemicals producer SABIC. The second is the complications of the plan, which was to dual list in both Riyadh and an international bourse; the London Stock Exchange went as far as to amend its rules to allow the listing of national oil companies, and New York was reportedly also lobbying hard for the IPO. This leads to the third – with the Khashoggi affair still dominating headlines, it would be politically unsavoury to list anytime soon. The project team overseeing the IPO was disbanded in August, suggesting that the IPO was cancelled, but Crown Prince Mohammad bin Salman – or MBS – has promised that it will eventually occur. But perhaps now only after people’s memories have faded.
Meanwhile, Aramco is forging ahead. After creating a network of major downstream investments linking its key markets – the expansion of Port Arthur in the US, the Maharashtra refinery in India, the RAPID refinery in Malaysia and key refining partnerships in China – the firm announced that it had signed 15 Memoranda of Understanding (MoU) valued at over US$34 billion this month. Covering 15 partner firms across 8 countries, the new projects span the entire gamut of the energy industry – spinning out from the recent Davos in the Desert international investment forum in Riyadh . In the Kingdom itself, it is partnering with Total on a major petrochemical expansion in Jubail, as well as potentially establishing a retail service station network. An MoU with Hyundai Heavy Industries on investments in the King Salman International Maritime Complex for Industries and Services at Ras Al Khair was also announced, as well as one with Sumitomo for the upgrade of the PetroRabigh refinery and one with China’s Norinco for general refining and chemicals investment.
A slew of MoUs with upstream service firms was also announced, with Baker Hughes GE, Schlumberger, Halliburton, Oilfield Supply Center and NOV (USA) – useful, given Aramco’s directive to expand upstream domestically and internationally, especially with Kuwait and Saudi Arabia making motions towards settling the management of oil fields in the neutral zone between the two countries. The other partnerships were more specialised, linked to engineering steel, drilling chemicals, thermoplastic pipes and gasification power.
The wide scale of the projects suggest that Aramco sees no reason to decelerate its diversification and global investment drive. Transforming the company into a strong diversified firm away from a crude focus is necessary, not least because it ensures continued outlets for its crude. But also because it will justify the sky-high valuation estimates for the IPO, if it ever happens. But even if it doesn’t, Aramco’s ambitions are undeterred. Their path is forward, and it is ambitious. Political scandals nonewithstanding.
Saudi Aramco’s 15 announced MoU
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Tyre market in Bangladesh is forecasted to grow at over 9% until 2020 on the back of growth in automobile sales, advancements in public infrastructure, and development-seeking government policies.
The government has emphasized on the road infrastructure of the country, which has been instrumental in driving vehicle sales in the country.
The tyre market reached Tk 4,750 crore last year, up from about Tk 4,000 crore in 2017, according to market insiders.
The commercial vehicle tyre segment dominates this industry with around 80% of the market share. At least 1.5 lakh pieces of tyres in the segment were sold in 2018.
In the commercial vehicle tyre segment, the MRF's market share is 30%. Apollo controls 5% of the segment, Birla 10%, CEAT 3%, and Hankook 1%. The rest 51% is controlled by non-branded Chinese tyres.
However, Bangladesh mostly lacks in tyre manufacturing setups, which leads to tyre imports from other countries as the only feasible option to meet the demand. The company largely imports tyre from China, India, Indonesia, Thailand and Japan.
Automobile and tyre sales in Bangladesh are expected to grow with the rising in purchasing power of people as well as growing investments and joint ventures of foreign market players. The country might become the exporting destination for global tyre manufacturers.
Several global tyre giants have also expressed interest in making significant investments by setting up their manufacturing units in the country.
This reflects an opportunity for local companies to set up an indigenous manufacturing base in Bangladesh and also enables foreign players to set up their localized production facilities to capture a significant market.
It can be said that, the rise in automobile sales, improvement in public infrastructure, and growth in purchasing power to drive the tyre market over the next five years.
Headline crude prices for the week beginning 14 January 2019 – Brent: US$61/b; WTI: US$51/b
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GEO ExPro Vol. 15, No. 6 was published on 10th December 2018 bringing light to the latest science and technology activity in the global geoscience community within the oil, gas and energy sector.
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