The government of Saudi Arabia is negotiating the sale of a 1-percent stake in Aramco to a "leading global energy company", according to Crown Prince Mohammed, as quoted by Bloomberg.
The deal, according to the Crown Prince, could fetch up to $19 billion and would help Aramco to secure future demand for its crude.
"I don't want to give any promises about deals finalizing, but there are discussions happening right now about a 1 per cent acquisition by one of the leading energy companies in the world," Mohammed said. "This deal could be very important in strengthening Aramco's sales in the country where this company resides."
The news comes days after another Bloomberg report, that one quoting unnamed sources, who said Aramco was also mulling over the potential sale of stakes in some non-strategic oil fields to external investors.
It also comes soon after Aramco finalized a deal for the sale of 49 percent in its pipeline operations to a consortium led by EIG Global Energy Partners, which fetched $12.4 billion.
These deals highlight the struggle Aramco is locked in against persistently low oil prices and still hesitant oil demand recovery. The Kingdom needs the billions these deals are bringing in to finance its ambitious Vision 2030 that aims to reduce its dependence on oil revenues.
At the same time, Aramco is working on boosting its oil production capacity, which goes counter to its plans to reduce its overwhelming reliance on oil. According to an Argus report from earlier this month, the company had resumed tendering and development work on major offshore oil expansion projects that would give Saudi Arabia another 1.15 million barrels per day (bpd) of production capacity by 2024.
The expansion will come from three offshore fields, whose capacity will be boosted by between 250,000 bpd and 600,000 by 2024, clearly anticipating a return to growth for oil demand.
By Irina Slav for Oilprice.com
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If the proposed deal relates to the sale of visible assets like refineries, petrochemical plants and pipelines, then it could go through but not at $19 bn.
Dr Mamdouh G Salameh
International Oil Economist
Visiting Professor of Energy Economics at ESCP Europe Business School, London