Saudi Aramco to expand as oil demand grows: president
“Saudi Aramco will continue to expand,” Amin al-Nasser told reporters during a tour of the company’s headquarters on Saudi Arabia’s Gulf coast in Dhahran, where it drilled its first test well in 1935.
Even though the current situation “is challenging, it is an excellent opportunity for growth”, said Nasser, as the industry worldwide reels from the collapse in oil prices.
As part of the Saudi Vision 2030 plan unveiled last month, the OPEC kingpin announced it will sell less than five percent of Aramco in what officials say will be the world’s largest ever initial public offering.
Proceeds from the sale will contribute to creating the biggest government investment fund in the world, with a value of $2 trillion, whose profits can provide an alternative to plunging oil revenues.
“We are still doing a lot of analysis” related to commercial and legal issues and “the options available for us in terms of listing”, whether in the kingdom or internationally, Nasser said, adding that this “will take time”.
A public listing by Saudi Aramco would make it the first flotation of a major state-owned oil firm in the Gulf.
The company is seen as having a key role in Riyadh’s ambitious Vision 2030 plan to diversify its economy, and King Salman on Saturday chose longtime Aramco chairman Khaled al-Falih to head a new super ministry of energy, industry and mineral resources.
Now, with oil demand “increasing”, Nasser said Saudi Aramco “will meet the call”, noting that the company which has a monopoly on the kingdom’s production pumped an average of 10.2 million barrels per day (bpd) last year.
Bloomberg News reported last month that Aramco will complete an expansion of the Shaybah field by the end of May, allowing the world’s largest exporter to maintain total capacity at 12 million bpd. The move will see Shaybah’s capacity rise to one million bpd from 750,000.
Nasser said he expected a balance in supply and demand in world markets “toward the end of the year, (or the) first quarter next year”.
“There will be a requirement for major producers” to increase output in line with “the prospect of additional demand”, he said.
Asked what concern he had about a return of US shale to the market as prices near $50 a barrel, he said that “of course” as the price rises, additional production will come on stream, either conventional or not.”But it will take time,” he said.
Globally, Saudi Aramco is seeking new joint ventures abroad, said Nasser, naming Indonesia, Vietnam, India and China. Asked to elaborate, he said: “Right now we’re looking at refining, integrated petrochemicals.”
Aramco has meanwhile begun work on a “world class” maritime complex which would conservatively create 80,000 direct and indirect jobs and have a $17-billion impact on gross domestic product.
The complex in Ras al-Khair — on the eastern coast — would provide engineering, manufacturing and repair services for offshore rigs, commercial vessels and offshore service vessels. It will be fully operational by 2021, Nasser said.
The company which has its own entrepreneurship centre also wants to create 200 small and medium-sized enterprises as part of the Vision 2030.
“This is a very important programme,” Nasser said. “There will be major expansions in all aspects of Saudi Aramco,” he told reporters.