Saudi Aramco assesses sale of pipeline stake to raise funds

Saudi Aramco, the world’s largest oil producer, is considering selling a stake in its pipeline unit to raise funds amid falling crude prices, people familiar with the matter say.

Aramco may need to raise funds this year as it faces a historic rout in oil prices and a growing list of spending obligations. The company reaffirmed its commitment to pay $ 75 billion in dividends this year and is also due to make the first installment of its $ 70 billion acquisition of a stake in chemicals producer Saudi Basic Industries Corp.

Aramco, the world’s most valuable listed company after selling shares on the Riyadh Stock Exchange last year, could raise more than $ 10 billion from the sale, the people said, asking not to be identified. because the information is private. Aramco has already had preliminary discussions with potential advisers over the deal, but talks are still in their infancy and Aramco could vote against a sale, people said.

Saudi Aramco declined to comment.

Aramco is increasing oil supply at a time when demand falls off a cliff as travel restrictions are imposed on people around the world to stop the spread of the coronavirus. The company said it will continue to flood the market with historic oil levels until at least May, but the additional volume is not enough to offset the 67% drop in prices this year.

The crash has already prompted Aramco to cut its planned spending. Capital spending is estimated to be between $ 25 billion and $ 30 billion in 2020, and spending plans for next year and beyond are under review. The oil giant is reducing this range from the $ 35 billion forecast to $ 40 billion announced in its IPO prospectus.

Neighboring Abu Dhabi has already raised $ 4 billion from investors including KKR & Co. and BlackRock Inc. in a deal similar to the one Aramco is currently considering.

Aramco chairman Yasir Al-Rumayyan said last month that he was looking for ways to raise funds from the company. “We have a lot of assets that could be monetized because they are non-core assets, which can improve business performance,” he said in an interview with David Rubenstein, without giving further details.

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