Saudi King Salman bin Abdulaziz Al-Saud
Saudi King Salman's lavish tour of Asia, arriving in each country on a golden escalator with 400 tonnes of luggage, had a hardnosed marketing mission - to cement the kingdom's place as leading oil supplier to the world's biggest consumer region. The string of deals inked on his three-week tour to Malaysia, Indonesia, Japan and China also point to a fresh strategy, one to increase Saudi leverage over refined product and petrochemical markets, known as the downstream sector.
"Our strategy is about growth in the downstream," said Amin Nasser, chief executive officer of state oil company Aramco, told Reuters on Sunday. "The growth in that sector is very important, and anything integrated between refining, petrochemical, with marketing and distribution, is of interest to us."
Saudi Arabia's main influence on oil markets has been via the Organization of the Petroleum Exporting Countries (OPEC), of which it is the de-facto leader. But OPEC's ability to control prices by turning the oil pumping spigots on and off has waned as non-OPEC producers like Russia and, more recently, U.S. shale drillers, have ramped up output and eroded its grip on market share.
One indication of a shift in Saudi strategy came on the first leg of the tour in Kuala Lumpur. Aramco signed a deal to take a $7 billion investment, in a joint venture with Malaysia's state oil company Petronas in a refinery and petrochemical project known as RAPID (Refinery and Petrochemical Integrated Development).
Under construction in Malaysia's southern Johor state, RAPID is just across a narrow strait from Singapore, Asia's oil trading hub. Some 70 percent of the oil for the project, set to start in 2019, will come from Saudi Arabia, giving the kingdom a key outlet for its crude in Asia.