Sources familiar with the matter indicate that Aramco has engaged investment bankers to solicit ideas for generating funds from its extensive portfolio of assets. While the specific assets under consideration for divestment and the banks involved remain undisclosed, this move signals Aramco's proactive approach to optimizing its financial position.
The exploration of asset sales aligns with a broader push by Aramco to enhance efficiency and reduce costs, according to additional sources close to the company. This internal drive for fiscal prudence is critical as Aramco faces the prospect of significant cuts to its dividend payouts this year, a direct consequence of diminished income stemming from lower oil prices.
Aramco is not just an oil company; it's the engine of the Saudi economy, with a vast business footprint that encompasses diverse sectors including aviation, construction, and sports. In past asset divestitures, such as deals involving its pipeline infrastructure, Aramco has typically maintained majority stakes, a pattern that could offer insight into its current considerations.
This internal financial recalibration within Aramco mirrors a broader governmental directive in Saudi Arabia. The kingdom is actively pressuring its industries to improve profitability amidst prevailing low crude prices. This push is part of a larger national strategy to diversify its economy and reduce its long-standing reliance on hydrocarbon wealth, with significant investments being channeled into new sectors.
The urgency for such measures is underscored by the kingdom's widening budget deficit. The International Monetary Fund (IMF) has estimated that Saudi Arabia requires an oil price exceeding $90 per barrel to balance its budget. This stands in stark contrast to recent weeks, where crude prices have hovered around $60 per barrel, highlighting the fiscal gap the government aims to address.
In recent years, Aramco has actively pursued a global expansion, evidenced by its investments in Chinese refineries, the Chilean fuel retailer Esmax, and the U.S.-headquartered LNG firm MidOcean. The company also recently announced preliminary deals potentially worth up to $90 billion with U.S. firms following a visit by then-President Donald Trump to the kingdom, signaling its intent to continue its international growth trajectory. The potential asset sales, therefore, could serve as a means to unlock capital for these strategic investments and future endeavors, ensuring Aramco's continued dominance in the global energy landscape while adapting to evolving market realities.