Saudi Aramco plans to grow production and expand operations
Saudi Arabia’s state-run oil company said that production will increase slightly this year. It has also detailed plans on becoming the world’s leading energy and chemicals company by 2020.
The president of Aramco, or the Saudi Arabian Oil Company, said that despite the current oil market environment remaining “challenging,” the company is still looking for growth opportunities and joint ventures.
President and Chief Executive Amin Hassan Nassersaid that the company was still looking to expand its oil operations and was also looking at new joint ventures in the U.S., India, China and Indonesia. The company also announced that it has plans to sell a 5% stake. Over the next decade, the company expects to add 500,000 jobs to the kingdom’s economy, according to al-Nasser. The company currently employs 66,000 people.
The company presented its strategy at a press conference and said that “by 2020, we intend to be the world leading integrated energy and chemicals company, focused on maximizing value creation across the hydrocarbon chain, facilitating the sustainable expansion of the Kingdom’s economy and enabling a vibrant Saudi energy sector.”
He also told reporters that demand for Saudi Aramco’s oil is increasing and the company was ramping up production to meet that demand.”We are seeing demand growth in different places. We are seeing increases in India, in the U.S., and we are meeting that call on us.”He added that he expected total oil demand to climb by 1.2 million barrels per day this year.
Nasser’s comments come after Saudi Aramco’s ChairmanKhalid al-Falih was made Saudi Arabia’s new energy minister at the weekend, replacing Ali al-Naimi who had held the post since 1995.
Nasser said that the company was looking at the logistics of an Initial Public Offering (IPO) but would not comment on speculation over targeted buyers.”Right now we are just looking at how much to list and where to list at this stage and until now there is no discussion about stakes by this company or that and now we are just looking at where to list.”
The sale of Aramco is planned as soon as 2017 or 2018 and would in theory be five times larger than any initial public offering (IPO) in history. It is expected to be valued at more than US$2 trillion. Deputy Crown Prince Mohammed bin Salman first announced the decision to sell in April as Saudi Arabia’s government unveiled a long-term economic blueprint for life in a low-oil-price world.
However, Nasser did not talk about valuation as it is still too early according to him. He added that a time frame for the sale would soon be made public.
As the world’s largest oil exporter, the bulk of Riyadh’s state revenues come from energy exports. But with crude prices extending their declines — the per-barrel price of global benchmark Brent is down 60 percent since the rout first started in June 2014. The country logged a record US$98 billion budget deficit for 2015.
Source: CNBC