New York Times' Romero and Mouawd: Saudis in Strategy to Export More Oil to India and China

Saudis in Strategy to Export More Oil to India and China
By SIMON ROMERO and JAD MOUAWAD
New York Times

HOUSTON, Feb. 17 - Saudi Aramco, the world's largest producer of crude oil, is seeking to strengthen relations with energy companies in India and China as part of a strategy to increase Saudi oil exports there. Together, the two countries are expected to account for much of the increase in global oil demand over the next decade.

At the same time, Abdallah S. Jumah, the president and chief executive at Aramco, the energy company controlled by the Saudi kingdom, said on Wednesday that the company was hoping to maintain its position as a leading supplier of petroleum to the United States, the largest consumer of Saudi oil.

Last year, for the first time since 1997, Saudi Arabia was eclipsed as the top supplier of crude oil to the United States, falling behind Canada.

That shift occurred as Saudi Aramco made several efforts to increase its reach in Asia's two largest countries. In India, Aramco was disappointed last year when an effort to acquire a stake in Hindustan Petroleum was thwarted after the Parliament suspended plans to allow foreign investments in the government-run oil marketing company.

"Since then, we have been in contact with our Indian friends to find other opportunities," Mr. Jumah said in an interview at Aramco's office in Houston. "So far we have not found the opportunity that would entice us or entice them but we continue to look because this is a very important market."

Aramco, which is based in Dhahran, Saudi Arabia, exports about 450,000 barrels of crude oil a day to India; it sends 500,000 barrels daily to China. Mr. Jumah said Aramco was pressing ahead with an expansion of a refinery venture in Fujian Province in China, where with Exxon Mobil and Sinopec, a Chinese energy company, it processes about 80,000 barrels a day.

The expansion would elevate the complex's capacity to about 240,000 barrels a day, giving Aramco an opportunity to increase oil exports to China. Mr. Jumah said Aramco would like to sell more oil to China, but the company was limited in its ability to do so by the "diet of their refining capacity." Aramco, he said, was considering other opportunities in China in cooperation with Sinopec.

Aramco's forays in India and China, together with the awarding of Saudi gas exploration contracts last year to Chinese and Russian companies, has generated concern that Saudi Arabia's traditionally strong relations with the United States, long the country's largest trading partner, might be fraying. Mr. Jumah was careful to point out that he expected oil exports to the United States to remain strong.

Saudi Arabia supplied the United States with 1.494 million barrels of oil a day in 2004, about 232,000 barrels a day less than the previous year. Still, Mr. Jumah said, "The U.S. needs us, and we need the U.S."

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