Aramco stock: Saudi Arabia wants to sell its assets

Aramco stock: Saudi Arabia wants to sell its assets

Aramco’s stock would weigh heavily on the Saudi oil company to the point that it would seek to sell its assets, including pipelines. This is indeed what the establishment of a 10 billion financing for the sale and operation of pipelines owned by the Saudi national company suggests.

Read on US Saudi Oil Imports at Lowest Level in 35 Years

Aramco’s stock must decrease

10 billion for investors

Aramco’s oil stockpile is starting to grow with no outlet since the fall in oil prices and demand. But in this difficult environment, selling oil-related shares is not attractive to investors. Different strategies are thus put in place.

The Saudi national oil company then proposed a $10 billion financing plan. This money should be used to sell oil assets.

Several investors would seem to be interested. Among them, the Americans BlackRock and KKR, but also the Canadian Brookfield Asset Management. For the moment, none of them wished to comment on this situation.

Oil market disrupted by health crisis

Although the numbers are recovering, oil and gas companies have taken a heavy toll from the health crisis. The demand for oil has fallen sharply, as has the price per barrel. By the end of 2020, Aramco was thus recording a 44.6% drop in profits compared to 2019.

Remember that the situation of Aramco is a key indicator of the health of the entire sector. The Saudi company is indeed the largest oil company in the world.

Read on Oil market: between Covid-19, OPEC+ and RE in 2021

An adaptation strategy for the climate crisis?

Diversifying the Saudi economy

The privatization of some of the national oil company’s assets would not be aimed solely at clearing the oil balance. Indeed, with his Vision 2030 plan for Saudi Arabia, Crown Prince Mohammed Ben Salmane also aims to diversify the country’s economy.

Since 2016 already, he has been offering Aramco shares for sale in this way. The gains obtained then allow the Saudi Sovereign Wealth Fund (SFF) to invest in renewable energy.

A similar strategy in Abu Dhabi

Neighbouring Abu Dhabi and its national oil company ADNOC have also divested oil assets. The objective is much the same as for Saudi Arabia, i.e. to embark on the diversification of their economy. At best, towards renewable energies.

In sum, the health crisis and climate change have largely shaken the oil sector. Countries that are massively dependent on oil must therefore seek to change their energy mix, but also and above all, their revenues.

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