* Saudi Aramco unit to trade non-Saudi crude
* Iraq creates trading venture with Russian firm
* Kuwait and Abu Dhabi study trading operations
SINGAPORE, Sept 29 (Reuters) - Middle East oil producers are venturing into trading crude as three years of weak oil prices has encouraged them to find new sources of income beyond the business of exporting their output.
OPEC kingpin Saudi Arabia, the world's biggest oil exporter, is among those making the shift. A subsidiary of state-owned Saudi Aramco plans to start trading non-Saudi crude, according to sources familiar with the issue.
Other members of the Organization of the Petroleum Exporting Countries are joining in as oil prices remain at roughly half their levels of mid-2014.
Iraq has teamed up with a Russian firm to set up a trading venture, while Abu Dhabi and Kuwait are studying trading plans.
"They are trying to become more flexible and to capture extra margin within the market," David Fyfe, chief economist of commodities trading firm Gunvor, told Reuters on the sidelines of the Asia Pacific Petroleum Conference (APPEC) in Singapore.
Till now, the oil trade has been dominated by international traders, such as Vitol, Gunvor, Trafigura and Glencore, as well as energy majors, like BP and Shell.
"It is all about optimisation," said a senior oil source familiar with developments at Saudi Aramco, which is planning to launch an initial public offer (IPO) next year.
Aramco set up a unit, Aramco Trading Company (ATC), in 2012 to market refined products, base oils and bulk petrochemicals.
Crude trading was not initially in its mandate, but ATC now plans to trade non-Saudi crude mainly to feed Aramco's international joint ventures, such as its U.S. Motiva refinery and S-Oil in South Korea, industry sources said.
The initiative fits into Saudi Aramco's stated aim of becoming the worlds largest integrated energy firm, with plans to expand its refining operations and petrochemical output.
"Moving into trading is a logical progression to Aramco's strategy to capture value across the entire oil and products chain," said Sadad al-Husseini, a former Aramco executive.
"It is a very competitive sector and Aramco's entry is bound to be prudent and strategic," he said. "It will focus on the products and markets that suit its interests and this means it must inevitably handle non-Aramco oil and product barrels as well as its own."
A trading source said ATC's crude trading would be handled mainly through its Singapore office, where ATC aims to have 10 to 15 staff by the end of the year.
Oman was the first Middle East producer to shift into trading, setting up a 50:50 venture with Vitol last decade.
OTI, which trades Omani crude, products and liquefied natural gas (LNG), was then bought out by the government and is now fully owned by state-run Oman Oil.
Other Middle East producers are now catching up. State-owned Abu Dhabi National Oil Company (ADNOC) is considering setting up a trading unit.
"In line with ADNOC's strategy to stretch the commercial value of every barrel that we produce, we are in the early stages of exploring non-speculative, asset-backed trading and are in discussion with various potential industry partners," an ADNOC spokesman said.
Iraq's state oil marketer SOMO has teamed up with Russia's Lukoil in a venture in Dubai to trade crude, industry sources said in May. The venture might expand later into refined products and petrochemical trading, the sources said.
Kuwait is studying establishing a new firm to market refined products. The firm would help Kuwait sell products mainly from its refining venture at Duqm in Oman, an official from Kuwait Petroleum Corporation (KPC) told Reuters. (Reporting by Rania El Gamal; Editing by Edmund Blair)