ARAMCO TO ISSUE $10BN BOND, ENERGY MINISTER ANNOUNCES
Amount raised will partly finance the company’s acquisition of 70% stake in petchems Sabic
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
Khalid Al Falih speaks at the Atlantic Council Global Energy Forum in Abu Dhabi yesterday