ARAMCO TO IS­SUE $10BN BOND, EN­ERGY MIN­IS­TER AN­NOUNCES

Amount raised will partly fi­nance the com­pany’s ac­qui­si­tion of 70% stake in petchems Sabic

The National - News - - BUSINESS - JEN­NIFER GNANA

Saudi Aramco will likely is­sue a $10 bil­lion (Dh36.73bn) bond in the next few weeks to help fi­nance its ac­qui­si­tion of petro­chem­i­cals com­pany Sabic, the king­dom’s En­ergy Min­is­ter Khalid Al Falih said.

The world’s big­gest oil pro­duc­ing com­pany is in talks to buy a 70 per cent stake in Sabic, the largest listed com­pany in the Mid­dle East.

“It will prob­a­bly be in the $10bn range,” Mr Al Falih said yes­ter­day. “We’ll de­cide in the next few weeks.”

Saudi Ara­bia, the world’s big­gest oil ex­porter, is beef­ing up the petchems port­fo­lio of Aramco as it pre­pares the com­pany for an ini­tial pub­lic of­fer­ing by 2021.

The king­dom con­ducted an in­de­pen­dent au­dit of its hy­dro­car­bon re­serves that slightly in­creased the es­ti­mates of coun­try’s and Aramco’s oil and gas de­posits, a re­sult that will help the bond is­suance, said an­a­lysts.

Aramco’s con­ces­sion area oil re­serves were 2.2 bil­lion bar­rels (bbl) higher or 263.2 bil­lion bbl of oil and 319.5 tril­lion stan­dard cu­bic feet of gas out of the to­tal.

The king­dom’s to­tal oil re­serves were up 0.8 per cent to 268.5 bil­lion bbl for the fig­ures recorded at the end of De­cem­ber 2017, while to­tal gas re­serves were re­vised up 5.6 per cent to 325.1 tril­lion stan­dard cu­bic feet.

Mr Al Falih said the in­crease was an in­di­ca­tion that the pro­ducer has been able to suc­cess­fully re­place the nat­u­ral de­cline in fields through in­creased pro­duc­tion over decades.

“No rea­son to think we can’t con­tinue to do that. We’ve done it suc­cess­fully for so many decades,” Mr Al Falih told the At­lantic Coun­cil Global En­ergy Fo­rum in Abu Dhabi.

Saudi Ara­bia, the big­gest crude pro­ducer in the oil ex­porters group Opec, is trim­ming its pro­duc­tion to com­ply with a global oil pact agreed be­tween Opec and coun­tries led by Rus­sia.

Opec+, as the al­liance is called, this month started cut­ting its out­put by 1.2 mil­lion bar­rels of oil per day for a pe­riod of six months, and will re­view the deal in April.

Opec wants to lower oil in­ven­to­ries to their five-year av­er­age, a level deemed ad­e­quate to bal­ance a mar­ket awash with US shale oil.

“I am con­cerned about re­cent volatil­ity [in the oil price] and pre­vail­ing neg­a­tive sen­ti­ment but the present fun­da­men­tals are clearly trend­ing in the right di­rec­tion,” Mr Al Falih said. “De­mand growth re­mains healthy two weeks into the new year, and the fore­cast not only for 2019 and also be­yond is for 1.3 to 1.5 mil­lion bpd,” he added.

Record pro­duc­tion in the United States thanks to its ris­ing shale out­put has con­trib­uted to the volatil­ity in the price of Brent, which hit a four-year high of $86 a bar­rel in early Oc­to­ber only to shed 30 per cent of its value in Novem­ber then it dipped below $60 in De­cem­ber.

Brent was trad­ing down around 2 per cent to $60.5 in yes­ter­day’s morn­ing trade in Lon­don.

“We got the sig­nal from the mar­ket that below $60 per bar­rel … to get your act to­gether, do some­thing,” said Mr Al Falih.

“When we hit $86, peo­ple were pre­dict­ing $100 plus and the sig­nals we were get­ting was that we need to cool the mar­kets, which we did. This range of volatil­ity is what I’m hap­pier with,” he added.

I am con­cerned about re­cent volatil­ity [in the oil price] but the present fun­da­men­tals are clearly trend­ing in the right di­rec­tion

Vic­tor Besa / The Na­tional

Khalid Al Falih speaks at the At­lantic Coun­cil Global En­ergy Fo­rum in Abu Dhabi yes­ter­day

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