Saudi Aramco is pressing ahead with plans to become the world’s biggest oil refiner and a top chemicals maker to secure future demand for its crude and bolster growth, reported Bloomberg.
The energy giant is looking to invest in projects that are already built or under construction in markets with the fastest-growing demand such as India and China, said Abdulaziz Al-Judaimi, Saudi Aramco’s senior vice president for downstream. Expanding in chemicals will boost profitability in this business, which processes crude into fuels like gasoline or products like plastics, said Al-Judaimi.
The initial public offering, projected as the world’s largest, has suffered repeated delays. The share sale was rescheduled last year, to give Saudi Aramco time to acquire state chemical maker SABIC. The IPO was pushed back again last week, just days before it was set to be formally announced.
“We have massive reserves” of oil, our first objective is to monetise those reserves,” said Al-Judaimi.
Using Saudi Arabia’s nearly 300 billion barrels of oil in the ground—the worlds’ biggest conventional reserves—to attract cash into government coffers is a cornerstone of Crown Prince Mohammed Bin Salman’s push to diversify Saudi Arabia economy.
Additionally, part of that plan rests on Saudi Aramco’s ability to create jobs by spurring new manufacturing industries that turn its chemicals into finished consumer goods. Some analysts have questioned whether the oil producer should continue to pursue its downstream ambitions or seek to save cash.
The company has recovered from aerial drone strikes on some of its largest oil facilities last month, which temporarily cut production by more than half. Most domestic refineries, which reduced processing runs after the attacks to make more crude available for export, have returned to full capacity, added Al-Judaimi.
Ibrahim Al-Buainain, the Chief Executive Officer of Saudi Aramco’s Energy Trading Unit, said that Saudi Aramco is processing all of its crude to export quality after restoring capacity at the damaged Abqaiq processing plant and Khurais field. The company restored production at the two facilities to six million barrels a day on 25 September 2019, slightly higher than the level of output at the time of the attacks.
Saudi Aramco’s $69 billion acquisition of a majority stake in the state chemical company, SABIC, is set to close in the first or second quarter of 2020, propelling it to be one of the worlds’ biggest makers of the products that are the building blocks for consumer goods.
Additionally, a separate deal to acquire a stake in Indian refiner, Reliance Industries, could close in 2021. The transaction is expected to boost Saudi Aramco’s gross refining capacity to more than eight million barrels a day.