Page 9 - MEOG Week 08

MEOG FinanCe & inVestment MEOG
Aramco-SABIC deal set for EU approval
saudi arabia
SAUDI oil giant Saudi Aramco is reportedly set to gain unconditional clearance from EU regula- tors to proceed with its $69bn takeover of petro- chemical producer Saudi Basic Industries Corp. (SABIC).
Aramco struck a deal to buy 70% in SABIC from the Saudi Public Investment Fund in March last year. The takeover is aimed at con- solidating the country’s petrochemical sector in order to cut costs and unlock synergies.
Sources told Reuters last week that the Euro- pean Commission would be signing off on the deal without demanding concessions, such as asset divestments. EU antitrust regulators are set to announce their decision by February 27. Competition watchdogs in India and a number of other countries have similarly given uncondi- tional support already.
SABIC operates in more than 50 countries and over 34,000 employees, and it’s the world’s biggest petrochemicals group by sales. It is the largest producer of ethylene in Europe, with plants in Germany, the Netherlands and Ireland.
At its Saudi facilities, SABIC uses natural gas sup- plied from Aramco at prices well below market rates as feedstock, giving it a competitive edge.
By acquiring the firm, Saudi Aramco will expand its annual petrochemicals production capacity from a mere 17mn tonnes at present to 89mn tonnes. Fresh from raising a record $29.4bn from an initial public offering (IPO) late last year, Aramco wants to invest in expanding its refining and petrochemical operations, helping to reduce dependency on crude oil sales. As part of this plan it has also increased exploration for gas, with the aim of eventually producing a sur- plus that could be exported.
Aramco has not disclosed when it expects to close the acquisition of SABIC, beyond at some point this year.
The takeover comes at a time when the global market for petrochemicals is reeling from over- supply and a rut in economic growth. SABIC notably posted its first quarterly loss in more than a decade in October through December, on weak prices and write-downs.™
Saudi forces foil Houthis attack on oil sites
saudi arabia
YEMEN’S Houthis rebels claim to have launched another strike on oil facilities belong- ing to Saudi oil giant Saudi Aramco at the Red Sea port of Yanbu.
Some 12 drones and three rockets “targeted Aramco and other sensitive targets in Yanbu and hitthemwithhighprecision,”aHouthimilitary spokesman said in a statement on the Houthis’ al-Masirah television channel on February 21.
The Houthis, backed by Iran, are at war with Yemen’s internationally-recognised govern- ment, supported by a Saudi-led coalition which has launched a military campaign against the rebels.
Aramco has not commented on the attack. But a spokesman for the Saudi alliance said hours prior to the Houthi announcement that air defences had intercepted ballistic missiles fired by the rebels towards Saudi cities.
“They were launched in a systematic, delib- erate manner to target cities and civilians, which is a flagrant defiance of international humani- tarian law,” the spokesman said in a statement
to Saudi state news agency SPA.
“The capital (Sanaa) has become a Houthi
militia assembly, installation and launching-hub for ballistic missiles that target the kingdom.”
The coalition then told SPA on February 23 that its naval forces had destroyed an unmanned boat laden with explosives that had been dis- patched from Yemen’s Hodeidah province. It did not disclose the boat’s targets.
The Houthi attack comes four months after a squad of drones carried out coordinated attacks on two major Saudi oil sites, temporarily knock- ing out more than half of the country’s oil pro- duction capacity and causing oil prices to spike.
Saudi Arabia has repeatedly accused Iran of supplying sophisticated weapons to the Houthis – a charge that Tehran denies. Iran has said it had no involvement in the latest attack.
Brent crude was down 1.4% on February 21 at $58.46 per barrel amid renewed concerns about the environmental impact of the corona- virus outbreak, while West Texas Intermediate (WTI) fell 0.9% to $53.38.™
PoLiCy
Week 08 26•February•2020 w w w. N E W S B A S E . c o m P9