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MEOG Commentary MEOG

gas to generate electricity and make chemicals. that it would mobilize cash and debt to fulfil the
Cutting back on field development could be a $18.75 billion payouts for the first quarter of this
way “to save money in the current situation,” said year despite taking a hit from the coronavirus
Robin Mills, founder of Dubai-based consulting pandemic and lower oil prices.
firm Qamar Energy. “There’s no point spending “It will be a combination of both,” Aramco
on production where it’s not needed.” CEO Amin Nasser told press during a call, refer-
Aramco has already slashed capital expendi- ring to both using the firm’s cash and tapping
ture for this year to between $25 billion and $30 debt markets.
billion from an initial target of $40 billion and “We would like to use our free cash definitely
put 2021 spending under review. most of time, but other debt instruments from
The Saudi Arabia-based producer still has banks or bonds are also available for us as we
high spending commitments. It completed a have a strong balance sheet.”
$69.1 billion acquisition of 70% of chemicals The shares of Aramco, which listed in Riyadh
maker Saudi Basic Industries Corp. (SABIC) in December, have fallen 14% since their peak to
this week. While it extended the payments to the 32.80 riyals. Its market valuation of almost $1.75
seller, the Saudi sovereign wealth fund, over the trillion is still the world
next eight years, it still needs to pay $7 billion on Oil producers worldwide are slashing spend-
August 2. ing and putting projects on hold as the plunge in
It also committed to giving shareholders a $75 prices since last year imperils profits. Major sup-
billion dividend this year, although it has said it pliers, including the Saudis, are curbing output
could cut the amount allocated to the Saudi gov- in response to the pandemic. Although prices for
ernment, which owns around 98% of the stock. benchmark Brent crude have more than doubled
Saudi Aramco maintained its pledge to make since late April, demand is returning only slowly
good on its dividend payments, saying Thursday and risks of a second wave of infections persist.™

Week 25 24•June•2020 www. NEWSBASE .com P5