Page 5 - MEOG Week 28 2021

MEOG COMMENTARY MEOG

for its second deal. respectively.
Perhaps unsurprisingly, he was not drawn Gudaimi noted that the asset review was
into specifically mentioning the gas infrastruc- planned before the 2020 oil price crash. “All the
ture; however, he did say that deals would be major international oil companies have gone
made “irrespective of any market conditions” through a process of portfolio optimisation, so
as the company seeks to generate “double-digit we can learn from all of them,” he added.
billions of dollars”. One source told MEOG: “This is true; how-
“It’s a strategy meant to create value and cre- ever, it was heavily influenced by the success
ate efficiency; it’s not about a specific capital tar- Aramco saw that ADNOC was enjoying from
get or financing the dividends of the company,” its own asset monetisation moves. Effectively,
he added. these pipeline lease-out-and-lease-back deals are
Speaking to MEOG, a company source said carbon copies of ADNOC’s deals, but Aramco
that the moves will certainly generate value, being Aramco, they have to be valued just a little
but with Aramco holding complete liability for bit higher.”
the operation and maintenance of the pipelines He added: “Admitting that it is copying
under the terms of the first deal, he questioned ADNOC or any other Gulf NOC would under-
how such agreements could improve efficiency. mine Aramco’s assumed position as the industry
Gudaimi noted that the proceeds from the leader in innovation and the guardian of global
oil pipelines and subsequent deals would be hydrocarbons.”
directed towards “future growth projects”, noting Even more sensitive is speaking of the
that the company will “continue unlocking value potential for foreign involvement in the Saudi
from our assets.” upstream, with Gudaimi again declining to
Of primary relevance to this is the directive comment. Bloomberg, however, quoted sources
received from the Ministry of Energy (MoE) last close to Aramco as saying that a separate review
year to increase maximum sustainable capacity is ongoing which may bring external involve-
(MSC) from 12mn barrels per day to 13mn bpd. ment in some of its oil and gas fields.
According to the prospectus for the compa- The source told MEOG: “Comments like
ny’s recent dollar-denominated sukuk which this will obviously get the pulse racing, but it is
raised $6bn, “Aramco is proceeding with engi- important to be clear that it is highly unlikely that
neering evaluations and assessing its options major oilfields, details about which are highly
for implementing the government’s directive to sensitive given their bearing on the Kingdom’s
increase MSC.” national security, will almost certainly remain
ringfenced under the sole control of Aramco.”
Pipeline promise He added: “Gas fields – particularly uncon-
While talks are understood to be preliminary ventional – however, could be another matter.
at the moment, the sources said that the com- Conventional hydrocarbons are Aramco’s bread
pany is keen to emulate or improve upon the and butter, but the Kingdom has significant
results achieved by Abu Dhabi National Oil Co. potential in unconventionals and bringing in
(ADNOC), which leased 49% stakes in ADNOC external help could help realise this potential,
Oil Pipelines and ADNOC Gas Pipelines over while Aramco also benefits from knowledge
the past two years for $4.9bn and $10.1bn transfer.”™

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