[RIYADH] The world's largest oil company, Saudi Aramco, is planning to raise tens of billions of dollars by selling more stakes in its businesses.
The Saudi Arabian state-controlled firm created a new team to review its assets last year, soon after the coronavirus pandemic triggered a plunge in energy prices and strained its balance sheet. Aramco raised US$12.4 billion by selling leasing rights over oil pipelines to a US-led group of investors in April.
The sales will continue in the next few years, according to Abdulaziz Al Gudaimi, senior vice president for corporate development.
They will happen "irrespective of any market conditions" and Aramco aims to generate "double-digit billions of dollars," Mr Al Gudaimi said in an interview. "It's a strategy meant to create value and create efficiency, it's not about a specific capital target or financing the dividends of the company."
The comments are the first from Mr Gudaimi since he was appointed last August to lead a new team that focuses on "portfolio optimisation" and reports to chief executive officer Amin Nasser. The company is reviewing what other infrastructure can be monetised and will start seeking investors for a second deal soon, Mr Al Gudaimi said, without commenting further.
After being almost entirely closed off to foreign portfolio and private-equity investors since it was fully nationalised in the 1980s, Aramco is increasingly courting outside capital. It sold a debut international bond in 2019 to help fund a US$70 billion acquisition of Saudi Basic Industries, a chemicals maker.
That was followed later the same year by an initial public offering in Riyadh, which raised almost US$30 billion but failed to attract as much interest from international money managers as Crown Prince Mohammed Salman was hoping.
Aramco is planning to sell a stake linked to its natural-gas pipelines, Bloomberg has reported. It has subsidiaries and units involved in several other industries. They include power plants, an aviation company, a real-estate arm and an insurance firm.
Proceeds from the oil-pipelines deal and others will be used for "future growth projects," he said. "We will continue unlocking value from our assets." The asset review was planned before oil's drop in 2020, Mr Al-Gudaimi said.
Aramco has substantial spending plans, even as it tries to cut its debts and ensure it can keep paying US$75 billion in annual dividends, almost all of which go to the Saudi government.
Capital expenditure will probably rise by a quarter this year to US$35 billion. Over the longer term, it plans to spend US$110 billion developing the Jafurah gas field and an additional amount to boost its daily oil-production capacity to 13 million barrels from 12 million.
Gearing, a measure of debt to equity, has risen to 23 per cent, above the company's target of between 5 per cent and 15 per cent, after the company borrowed to pay for the Sabic acquisition and following last year's collapse in earnings.
The transaction for the oil pipelines brought in investors from the United Arab Emirates, South Korea and China as well as the US. It was more than twice the value of all the foreign direct investment in the kingdom in 2020.