Page 6 - MEOG Week 18 2021

MEOG COMMENTARY MEOG

Flurry of activity keeps

Aramco in the news

Aramco continues to make headlines as it plots a complex asset divestment path where more
shares could be sold, and the company remains on course for a major Indian investment.

SAUDI ARABIA NOW that Saudi Aramco has completed the Meanwhile, a gas-focused venture may hold
lease-out and lease-back of a stake in its newly appeal, particularly with the Kingdom home
formed oil pipelines subsidiary, attention has to 9.4 trillion cubic metres of gas reserves, the
WHAT: begun to turn to other options the state oil giant eighth-largest in the world. Oil and condensate
The company is reported may have for raising cash to cover its dividend reserves covered by Aramco’s concession are
to be considering selling obligations. estimated by the company at 198.8bn barrels.
or leasing stakes in Meanwhile, revelations came this week that Given this scale, there are unlikely to be many
upstream assets, though the Kingdom is planning to sell more shares in E&P firms not interested in taking part, but even
this is likely to be far the company, with talks ongoing with a major with assets like Ghawar, Khurais, Safaniyah, etc.
more complex than the energy player to acquire 1%, a move that could strictly off-limits, with Aramco’s insistence on
recent pipeline deal. net Riyadh $15-20bn while retaining near com- ‘pre-eminence’ throughout its operations the
pleted control. And this cash is likely to come in price of participation in any such offering may
WHY: useful with Aramco set to continue spending be prohibitive.
Meanwhile, a gas as part of its major deal to acquire an Indian Earlier this month, the company successfully
pipeline monetisation oil-to-chemicals business. closed a $12.4bn deal for a ‘consortium’ led by
appears more likely as EIG Global Partners to acquire a 49% stake in
the company pursues Asset moves Aramco Oil Pipelines Co. (AOPC) for a dura-
a strategy akin to that While Bloomberg last week quoted anonymous tion of 25 years. Under the deal, the Saudi firm
of regional competitor sources as saying that Aramco could look to con- will be liable for all maintenance and for making
ADNOC. tinue its asset monetisation strategy by bringing rate payments for crude transferred through the
partners in for the development of oil and gas extensive pipeline network.
WHAT NEXT: fields, such a move would be far more complex However, while the UAE’s Mubadala Invest-
Chinese wealth funds and sensitive than the midstream one completed ment Co. is believed to be joining the consor-
and NOCs are reported a week earlier. tium, MEOG understands from sources close
to be in talks to acquire The sources told Bloomberg that the com- to proceedings that prospective bidders Apollo
a 1% stake in the pany was now carrying out a strategic review of Global Management, BlackRock, Brookfield
company, while Aramco its upstream business that could see it bring in Asset Management and Global Infrastructure
remains on track to buy outsiders to finance or develop less sensitive oil Partners (GIP) all declined to make final offers
into Reliance’s oil-to- and gas fields. Middle East Oil & Gas (MEOG) because of Aramco’s asking price.
chemicals business. understands, however, that this is likely to be far Meanwhile, as MEOG recently reported, Ara-
more complicated than just Aramco choosing mco could consider selling minority shares in
to bring in foreign help. Any such move would mid- and downstream infrastructure including
need the express approval of the Ministry of its terminals and refineries, with the company
Note: This article Energy (MoE), through which Aramco received having already invested in four domestic refin-
updates coverage its concession to develop the Kingdom’s oil and ing joint ventures (JVs) with foreign companies
included in last week’s gas reserves for an initial 40-year period (extend- as well as a handful of overseas facilities.
issue - Aramco’s asset able by a further 80 years). A subsequent Bloomberg report cited sources
strategy plots a complex As should be expected from the world’s larg- as saying that Aramco would continue to follow
path est oil exporter, control over production and in regional rival Abu Dhabi National Oil Co.
even the related data is incredibly sensitive, and (ADNOC’s) footsteps by repeating the AOPC
it is a stretch to assume that any of the company’s deal with a gas-focused version.
existing oilfields may be considered for external Aramco’s Master Gas System network has a
participation. total current capacity of 9.6bn cubic feet (272mn
With that in mind and Aramco’s unconven- cubic metres) per day following an expansion in
tionals division already operating as a separate 2017 and 2018.
sub-division of the upstream business, enlist- An additional expansion phase was due to be
ing shale specialists from the US, for example, completed in 2019 taking total capacity to 12.5
could present an interesting prospect that ring- bcf (354 mcm) per day through an additional
fences the most valuable conventional assets. 1,600 km of pipelines to increase gas supplies to

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