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Aramco has announced that it will review upstream assets for potential equity sales

(Bloomberg) – Saudi Aramco is conducting a strategic review of its upstream business, to an extent that could potentially see the state-owned company attracting outside investors in some of its oil and gas assets, people familiar with the matter said. The world’s largest energy company is in preliminary talks with advisers to assess its options, the people said, asking not to be identified as the case is private. Aramco could explore options, including selling stakes in certain field operations or forming joint ventures with other major power producers, the people said. It could also form partnerships to develop new gas resources, according to the people. Any deal could bring billions of dollars to Aramco, which is at the center of Saudi Arabia’s economic transformation plan, the people said. people said. Deliberations are at an early stage and the structure of any potential deal has not been decided, the people said. The company, officially known as the Saudi Arabian Oil Co., declined to comment, as did the Energy Ministry. Downstream Partnerships Since Aramco was fully nationalized in 1980, most foreign investment in the Saudi energy industry has been limited to downstream assets such as refineries. and petrochemical plants. In the past, the company has entered into joint venture agreements with companies such as Royal Dutch Shell Plc and Total SE for natural gas exploration and drilling in the kingdom, even before Aramco attracted foreign partners to to drill for natural gas in 2003-2004, it held detailed discussions with the major oil companies in the late 1990s to develop its reserves. Talks collapsed as most companies hesitated on the terms Riyadh was willing to offer.Aramco also held talks with foreign companies to develop the vast Shaybah oil field, but ultimately decided to put the asset into production. on his site. clean. Saudi Arabia’s hydrocarbon reserves are state-owned and operated by Aramco under a decades-long concession agreement. Aramco Profit Center Chairman Yasir Al-Rumayyan began to sell stakes in non-core assets to help maintain the company’s $ 75 billion dividend, much of which goes to the Saudi government. The first deal was sealed earlier this month, when Aramco announced it would raise more than $ 12 billion by selling lease rights to its pipelines to investors, including EIG Global Energy Partners. optimization ”, which“ will assess existing assets ”and improve access to growth markets. It is headed by Abdulaziz Al Gudaimi, who reports to CEO Amin Nasser. Crown Prince Mohammed bin Salman, the kingdom’s de facto head, told business leaders last month that Aramco and the energy ministry were working on an “ambitious upstream and downstream agenda”, which is more important than the previously announced plans. This surge could involve additional spending of 500 billion riyals to 1 trillion riyals ($ 133 billion to $ 266 billion) over the next ten years, he said. Last year, the company saw a 40% drop in profits before interest, taxes and zakat – a local charitable contribution – to around $ 110 billion. It pumped approximately 9.2 million barrels per day of crude in 2020. Record IPO Aramco has broadened its search for gas to meet rapidly growing local demand. Currently, Saudi Arabia burns huge amounts of crude directly at power plants during the summer to meet increased demand for electricity for air conditioning. It also wants to use the gas for the production of petrochemicals, an industry that is a high priority for the government in its strategy to diversify the economy. Saudi Arabia plans to invest around $ 110 billion to develop non-gas reserves. conventional in eastern Jafurah field, the official Saudi government. The news agency reported last year. The field is expected to start production in 2024, and Aramco has its roots in concessions granted to US oil companies nearly 90 years ago. The Saudi government first bought a stake in the company in 1973. More recently, Aramco began an opening process that culminated in a record IPO on the Saudi stock exchange in 2019. a 2% stake in from outside investors, raised about $ 29.4 billion. Prior to listing, Aramco wooed some of the world’s largest oil companies to act as top investors, though it ultimately failed to come to a deal to buy shares in the offer. For more items like this, please visit us at Bloomberg. Subscribe now to stay ahead with the most trusted source of business news. © 2021 Bloomberg LP

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