Saudi Aramco is considering asset sales as a way to raise funds, according to sources
Two people familiar with the matter have confirmed that Aramco, Saudi Arabia's state-owned oil company, is looking at selling assets to raise funds as it continues its international expansion while coping with lower crude prices.
Aramco, the largest oil company in the world and the primary source of Saudi revenue, is the biggest oil producer on the planet. As oil prices fall, the firm will cut dividends by almost a third.
People said that the company had asked investment banks to come up with ideas on how it could raise money from its assets.
The banks refused to name any assets or names of the banks that could be sold.
Aramco has declined to comment.
Two other sources with knowledge on the subject said that Aramco was looking to increase efficiency and reduce costs. Asset sales are an option being considered, according to one of these people. Four sources refused to be identified because they were not authorized to speak with media.
Aramco, the Saudi engine of economic growth, has a wide range of businesses including aviation and construction. It has retained majorities in previous asset sales, such as those involving its pipeline infrastructure.
Saudi Arabia is increasing pressure on its industry to increase profitability in the face of low crude oil prices, and it's spending its hydrocarbon wealth to diversify its economy away from oil.
Riyadh faces an increasing budget deficit. The International Monetary Fund says that Riyadh requires oil prices above $90 per barrel for its books to be balanced. Prices of $60 per barrel were the norm in recent weeks.
Aramco made an effort to expand its global footprint in recent years, investing in Chinese refineries and Chilean fuel retailer Esmax, as well as U.S. LNG company MidOcean.
Saudi Arabian company announced last week that it had signed 34 preliminary agreements with U.S. companies, potentially worth $90 billion. This was following the visit of President Trump to the Kingdom. Yousef SABA, Federico Maccioni and David French, reporting from Dubai, New York and Louise Heavens, Tomasz J. Janowski, Maha El Dahan.
(source: Reuters)
