Aramco bought extra gasoline from Reliance Industries after drone attack
MUMBAI: Saudi Aramco bought 30,000 tonnes of gasoline from Reliance IndustriesNSE -2.05 % (RIL) right after the attacks on the former’s units as part of a contingency plan to deal with likely shortages in committed transport-fuel supplies, sources aware of the purchases told ET.
Aramco’s two major units that process primarily light crude were attacked by drones on September 14. Right after the attacks, Aramco’s trading arm is believed to have purchased cargoes of gasoline, diesel, aviation fuel and even petrochemical feedstock to ensure disruption-free supplies.
“RIL received an order two days after the attack, with a request to supply at the earliest because Aramco wanted to ensure its supplies are not disrupted,” an industry source told ET.
RIL, India’s most valuable company, and Aramco did not respond to ET’s query on the subject.
The attacks curtailed supplies by about 5.7 million barrels per day, amounting to more than half of Saudi Aramco’s production. RIL buys a significant share of its crude oil supplies from Aramco, and has also been selling refined products like gasoline to the company. On Monday, RIL said that Aramco met its commitment of crude oil supplies by providing an alternative grade of fuel while assuring RIL that it will supply the grade and volume required in October.
Gasoline spreads remained high in September, bucking the seasonal trend, after the drone attacks on Saudi Aramco facilities. Sector experts believe disruptions would have benefited companies such as RIL.
Morgan Stanley said in a report dated September 23 that RIL's earnings growth is starting to be de-risked, with headwinds of the first half of 2019 likely becoming eventual tailwinds in 2020.
Refining margins could rise with improved demand and slower capacity growth, margins could also improve from a slowdown in petrochemical capacity growth in 2020, and telecom subscriber additions should remain steady at RIL’s mega consumerfacing business.
“We are incorporating the impact of lower tax rates as well as lower core business operating costs and better-than-expected gasoline margins in our estimates. Overall, our FY20 earnings per share estimate rises by 7% and FY21 EPS estimate rises by12%,” Morgan Stanley said.
While Aramco has not yet confirmed the latest operational details, media reports indicate the company restored its oil production capacity to the pre-attack levels of 11.3 million barrels per day, ahead of the expected schedule.
Aramco is in talks with RIL to finalise a deal that involves acquiring a stake in the latter’s oil-to-chemicals business for an enterprise value of $75 billion. Brokerages await details of the contours of the deal to take a further call on RIL.
The Economic Times 02-10-19