Saudi Aramco weighs raising billions of dollars from its biggest disposals yet

[RIYADH] Saudi Aramco is considering plans to raise billions of dollars by selling a range of assets, people familiar with the matter said, deals that could rank as its most significant disposals ever.

The firm is weighing the sale of a stake in its oil export and storage terminals as part of the plans, the people said, declining to be identified as the information is confidential. Banks have been asked to pitch for roles on feasibility studies for the disposals, which could fetch more than US$10 billion, they said. 

Aramco is eyeing options including raising fresh equity from the deal, the people said. It could also pursue a structure similar to the recent US$11 billion lease transaction with a group led by BlackRock’s Global Infrastructure Partners for assets linked to the Jafurah gas project, they said.

That sale drew interest from firms around the world and bankers have since pitched several asset disposal plans given increasing demand from investors, one of the people said. Aramco’s terminals business is seen as a lucrative asset and the company could kick off a formal sales process as soon as early next year, the person said.

At the same time, the oil giant is considering selling part of its real estate portfolio, some of the people said. Those assets will also likely be worth billions of dollars and will be seen as attractive at a time when the kingdom is advancing plans to allow foreign ownership.

Discussions are at an early stage and no final decisions have been made. Representatives for Aramco didn’t immediately respond to a request for comment.

Aramco’s main oil storage and export infrastructure is located at Ras Tanura on the Persian Gulf and the company has similar terminals on the Red Sea. Internationally, the firm owns stakes in product terminals in the Netherlands and leases crude as well as product storage at main trade hubs in Egypt and at Okinawa in Japan.

Oil prices have dropped by roughly a fifth this year and while that decline has somewhat been tempered by higher output, Aramco has delayed some projects and looked to sell assets to free up cash for investments. 

The deals now being considered would mark a step up from previous transactions that were focused on stakes in pipeline infrastructure.

The world’s biggest oil exporter is a lynchpin of the Saudi economy. Revenue from energy sales and the firm’s hefty dividend payouts help support the kingdom’s expensive economic revamp, some elements of which have been hamstrung by growing costs.

Meanwhile, Aramco is continuing to invest in big-ticket projects like Jafurah, which is set to start production this year and reach full capacity in 2030. BLOOMBERG