Saudi Aramco plans asset sales to expand with falling oil prices
Saudi Aramco is considering asset sales to facilitate expansion in the context of declining oil prices. Saudi state oil giant Aramco is considering potential asset sales to generate capital, according to two individuals familiar with the situation, as it aims for international expansion while navigating lower crude prices. Aramco stands as the largest oil-producing entity globally and serves as the primary revenue source for the Saudi state. The company is set to reduce its dividend distributions by almost one-third this year, as declining oil prices adversely affect its revenue.
The company has engaged investment bankers to propose strategies for capitalizing on its assets, according to sources. Their response did not specify which assets might be divested or identify the banks participating in the transaction. Aramco refrained from providing any commentary. Aramco is seeking to enhance efficiency and reduce expenses, as indicated by two individuals familiar with the situation, with asset sales being one potential strategy under evaluation, according to one of them. The four sources chose to remain anonymous due to their lack of authorization to engage with the media.
Aramco serves as the driving force behind the Saudi economy, with its extensive operations encompassing sectors such as aviation, construction, and sports. It has maintained majority stakes in prior asset sales, including transactions related to its pipeline infrastructure. The Saudi government is exerting pressure on its industries to enhance profitability in the context of low crude prices, while simultaneously allocating its hydrocarbon wealth towards new sectors to reduce dependence on oil.
The kingdom is confronting an expanding budget deficit, with the International Monetary Fund indicating that Riyadh requires an oil price exceeding $90 per barrel to achieve fiscal equilibrium, in contrast to the approximately $60 per barrel observed in recent weeks. In recent years, Aramco has sought to expand its global presence by investing in Chinese refineries, the Chilean fuel retailer Esmax, and the U.S.-based LNG firm MidOcean. Last week, the Saudi company announced the signing of 34 preliminary agreements that could be valued at as much as $90 billion with U.S. firms, a development that followed President Donald Trump’s visit to the kingdom.
