The Arabian Gulf's national oil companies (NOCs) will see an opportunity to increase global asset portfolios as super-majors look to shave off poorly performing downstream assets.
This year's round of earnings results from some of the world's largest oil companies have rejuvenated talks about how the NOCs can capitalise on what may be another wave of downstream divestments. Year-on-year earnings results for some of the world's largest oil companies continued to suffer heavy blows as the global economy struggled to recover in 2013. Shell saw earnings fall 38%;
Earnings were brought down by refining operations in
This may be good news for the GCC's NOCs and sovereign funds. As the IOCs look to replenish existing reserves while navigating the end of easy-oil by investing in more expensive oil plays, they will look to raise cash through asset sales.
"The quest to finance expensive upstream projects will continue to put pressure on the downstream portfolios of IOCs, with likely further divestments of assets that are sub-scale, low complexity and not integrated within their global systems," said
Earlier this year, Shell announced that it would increase the pace of asset sales to
"The European thirst for diesel is enormous but if you look at the refineries, not many of them are middle distillate focused," added Sam. "Five or six years back, the US refined product supply-demand was in favour of European refiners - the gasoline length that of Europian refiners could be used to produce could be shipped to the US, while diesel could be back-hauled to
This downward trend will only accelerate as demand for gasoline imports into
Increased competition in
"On the other side, entire segments of IOCs could still be relevant because of capabilities, and, opportunistically because of the very low multiples at which certain assets are offered," said Rubeis.
"Companies that are virtually not capital constrained and have a long term investment horizon may find certain downstream assets divested by IOCs attractive, after all, over a 5-year cycle, the downstream segments of
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