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Aramco chairman: IPO likely in 2021, SABIC acquisition to take 18 months

October 24, 2018
Energy & Chemical Value Chain

Saudi energy minister and Saudi Aramco chairman Khalid al-Falih says the initial public offering (IPO) of Aramco is likely to take place in 2021 after the company “re-balances” its portfolio by building up its downstream segment through M&A and organic growth.

Speaking to the Russian news agency TASS on a wide range of topics, including the OPEC views on the price of crude oil, Falih said, “Aramco is overly weighted on the upstream and it has to be re-balanced by building its downstream, which is less developed. By far Aramco is the world’s largest upstream company with the production of around 14 million barrel/day (b/d) oil equivalent, in oil and gas. And also the reserves of Aramco are by far the largest of any company in the world: 260 billion barrels of low cost high quality conventional oil. And we have over 300 trillion cubic feet of gas reserves,” Falih said.

The upstream portfolio of reserves is huge and will last at a very high level until the next century, he said. But in the downstream sector, although significant, it is not at the same level as upstream. “Our petrochemical portfolio also is not so large, and is not so strong in terms of technology and global reach. So the decision was made that Aramco needs to balance its portfolio in such a way that it also gives us more revenues from the downstream,” Falih said. This will help create a very healthy return from the downstream segment if in the next oil cycle the prices for the upstream go down. “As a result, we are looking at opportunities globally and domestically. One has been announced–the acquisition of 70% of SABIC, owned now by the Public Investment Fund, and this deal will take at least 18 months to close with regulatory approvals from antitrust agencies globally.”

Aramco is looking at various M&A deals to strengthen its petrochemicals portfolio, Falih said. “We have talked with Novatek (Moscow) and Leonid Mikhelson, CEO of Novatek and the largest shareholder in Sibur (Moscow). There is a potential project in Jubail for Sibur. Aramco has a target of 3 million b/d to convert into chemicals and part of it could be Russian oil, it does not necessarily have to be all Saudi oil, so a JV between Sibur and Aramco is one possibility, as well as buying equity in Russian companies, especially in the companies with technologies. SABIC will not be the last deal that Aramco does in chemicals. Aramco continues to look for the right companies. We are doing a lot of projects in many countries—Malaysia, China and recently in India. But in addition to the mega projects we are looking for large, medium and small companies to acquire.”

By Natasha Alperowicz

Source: Chemical Week

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