For Saudi Aramco, a Pivot to Asia

At the heart of Korea’s Onsan refinery lies a street called A.I. Naimi Road, an homage to Saudi Arabia’s oil minister. State-owned Saudi Arabian Oil Co. holds a 65 percent stake in the complex. The investment in Korea’s third-largest refinery highlights the changes in the oil business as prices have plunged by more than half over the past two years. Saudi Arabia and other oil-rich countries are fighting to lock in customers for their crude, and Asia—which accounts for 70 percent of Saudi oil exports—is the primary battleground.

For Saudi Aramco, as the company is widely known, that means purchasing stakes in refineries, with contracts that include clauses guaranteeing most of the oil the facilities process will come from the kingdom. Aramco has invested in three processing facilities in Asia and is on the cusp of a dramatic increase in its commitments to the region, in countries from Indonesia to Vietnam. Owning refineries “in Asia is part of a long-term strategy to consolidate” the Saudi market share in a key region, says Mustafa Ansari, an analyst at Arab Petroleum Investments, a state-controlled development bank in Dammam, the city at the heart of Saudi oil country.