Recent developments in Aramco's international dealings involve further Far East developments with supply deals and contract renewals, as well as both Russian and Korean joint ventures making concerted efforts to fortify their standings.

No 1 supplier to Japan
Saudi Arabia is likely to become the top crude oil supplier to Japan, overtaking the United Arab Emirates, as Showa Shell Sekiyu KK is expected to double its volume of term purchases from the kingdom,  a senior Japanese industry official said.
Showa Shell may boost its term crude purchase to 300,000 barrels per day (bpd) when state-run oil firm Saudi Aramco takes a 9.96 per cent stake in it, said Fumiaki Watari, chairman of the Petroleum Association of Japan (PAJ), at a regular news conference.
That volume would be the same as Japan’s biggest refiner, Nippon Oil Corp, Watari said, adding that Showa Shell takes about 150,000 bpd of crude oil from Saudi Arabia now.
“Nippon Oil is Saudi Aramco’s biggest term lifter in Japan for a single user now,” Watari said. “If Aramco finds two 300,000 bpd level customers in Japan, Saudi Arabia would become the top crude provider to Japan.”
Watari is also Nippon Oil president.
Royal Dutch/Shell Group said this month it would sell the stake in Showa Shell to Saudi Aramco. The partners are expect to complete the deal in August.
Contracts to be renewed
Also in the Far East, the firm has started issuing notifications to its term contract customers accepting their 2005 nominated volumes for liquified petroleum gas, industry sources said.
The Saudi Arabian producer was heard to have been issuing “clean acceptances” to almost all of its Asian term contract holders, agreeing to deliver all requested LPG volumes in 2005.
“It seems that almost all term lifters have been given clean acceptances from Aramco, meaning that next year they should receive exactly the volumes they nominated for,” a Japanese importer said.
At least one Western trader was heard to have been asked by Aramco to increase its nominated quantities for propane. “Not everyone received clean acceptances from Aramco, as one company has already been asked to adjust its propane quantities to suit Aramco’s butane to propane supply ratio,” a trader said.
By the end of June every year, term lifters are required to submit annual supply requirements to Aramco.
Petchem plan
Also Aramco and Sumitomo Chemical Co  are aiming to export petrochemicals produced in Saudi Arabia under a planned joint venture project, mainly to Asia and Europe, a senior executive from the Saudi oil company said.
Saudi Aramco and Sumitomo recently signed an agreement to conduct a feasibility study for a $4.3 billion integrated refining and petrochemical complex in the Red Sea town of Rabigh.
The feasibility study is expected to be completed by the end of 2005, and the complex is targeted for completion in early 2008, the executive said.
“Asia is a natural choice of export target for us, considering growing demand for petrochemicals in China and attractive freight,” the executive said Tuesday at the sidelines of an industry gathering.
He added that Europe’s proximity to the Red Sea also makes it economically viable to export petrochemical products there from Rabigh.
The new complex will comprise an olefins plant with an ethylene production capacity of 1.3 million tonnes per year and will use mainly ethane as feedstock. The plant is also expected to produce propylene, gasoline and other oil products.
Under the 50-50 joint venture, Saudi Aramco will focus on selling oil products from the complex, while Sumitomo is expected to focus on sales of petrochemical products.
Russian manoeuvres
The newly formed Luksar joint-venture between Russia’s Lukoil Overseas and Saudi Aramco has met for the first time and appointed Lukoil executives to lead the exploration venture, Lukoil Overseas said in a statement.
Lukoil Overseas’ senior vice-president Azat Shamsuarov will serve as chairman of Luksar. Sergei Korovin, former head of international business development, has been named Luksar’s Chief Executive Officer. Lukoil Overseas won a tender for Block A in the northern part of the Rub al-Khali desert in Saudi Arabia early this year. Luksar has been set up since then with 80 per cent of shares owned by the Russian company and 20 per cent by Aramco.
Exploration on Block A will begin shortly but there will be no drilling until 2005. Terms of the tender entitle Lukoil Overseas to produce natural gas and condensate at Block A. Crude oil is out of bounds.
S-Oil transparency
South Korea’s third largest refiner S-Oil Corp said it had increased the number of outside directors in its 18-member board to ten from eight in an effort to increase the board’s transparency and independence.
At the company’s annual general meeting, shareholders elected two South Korean professors to the board. “The number of outside directors has been boosted to enhance transparency,” said Lee Dong-hoon, a company spokesman.
S-Oil, which is 35 per cent owned by Saudi Aramco, was involved in an accounting irregularity which led to the imprisonment of its chairman Kim Sun-dong a few years back on charges of accounting fraud and stock manipulation. S-Oil’s employees hold 28 per cent, with the remaining held by minority shareholders.
S-Oil’s move follows a decision by South Korea’s largest refiner SK Corp last month to increase the number of outside directors to seven from five in its 10-member board in an effort to closely monitor and improve its corporate governance as it emerged from multi-billion dollar accounting scandal. S-Oil operates a 545,000 bpd refinery in Onsan.