Shareek Program Will Allow Aramco to Improve Profitability of Energy Projects, Says CEO

A Saudi Aramco employee seen at its oil facility in Abqaiq, Saudi Arabia. (Reuters)
A Saudi Aramco employee seen at its oil facility in Abqaiq, Saudi Arabia. (Reuters)
TT
20

Shareek Program Will Allow Aramco to Improve Profitability of Energy Projects, Says CEO

A Saudi Aramco employee seen at its oil facility in Abqaiq, Saudi Arabia. (Reuters)
A Saudi Aramco employee seen at its oil facility in Abqaiq, Saudi Arabia. (Reuters)

Saudi Aramco will set strict business criteria for ventures it backs under a new private partnership initiative to help diversify the Kingdom’s oil-reliant economy, the CEO said.

His comments in an interview on Wednesday came a day after Saudi Crown Prince Mohammed bin Salman announced the new Shareek (Partner) initiative, in which the state-controlled oil giant and petrochemical firm SABIC would lead private sector investments worth 5 trillion riyals ($1.3 trillion) by 2030.

The new program is part of efforts to mobilize private investment in the world’s biggest oil exporter, helping the Kingdom diversify away from crude sales that still generate more than half the state’s income.

“You can look at Shareek as a catalyst in making Saudi Arabia even more compelling as an investment destination for both local and foreign investors,” Aramco Chief Executive Amin Nasser told Reuters.

Nasser said private companies would seek incentives from the government - whether infrastructure, fiscal or regulatory support - and Aramco would determine whether to back a project as a partner.

“This is a voluntary program. It’s on the private sector to bring these projects, to ask for incentives,” he said.

He promised Aramco’s shareholders, who include a small minority of private investors since the company began trading on the stock exchange in December 2019, that the firm would set prudent capital allocation and cost criteria.

But Nasser said it was too early to say how the new program would affect Aramco’s dividend and investment plans.

Crown Prince Mohammed said the government had asked the biggest firm’s participating in the program to lower their dividends to raise capital spending, although he said dividends for those owning shares in Aramco would remain stable.

Nasser said the government, which still owns 98% of the company since its initial public offering, was not pushing Aramco to take part in specific projects.

“There is nothing about the government asking for this or that,” he said when asked if Aramco was shifting towards becoming more of a conglomerate than an energy-focused business.

He said the program would allow Aramco to improve its supply chains and the profitability of some of its energy projects, which in turn would make it more attractive for Aramco’s international partners to invest in the Kingdom.

“We will bring each project as a unique case, and I’m sure like other companies we will have specific details that will be discussed with the committee in charge of granting these incentives,” he said.



Oil Little Changed after US Crude Inventory Build

An oil pump of IPC Petroleum France is seen during sunset outside Soudron, near Reims, France, February 6, 2023. REUTERS/Pascal Rossignol/File Photo
An oil pump of IPC Petroleum France is seen during sunset outside Soudron, near Reims, France, February 6, 2023. REUTERS/Pascal Rossignol/File Photo
TT
20

Oil Little Changed after US Crude Inventory Build

An oil pump of IPC Petroleum France is seen during sunset outside Soudron, near Reims, France, February 6, 2023. REUTERS/Pascal Rossignol/File Photo
An oil pump of IPC Petroleum France is seen during sunset outside Soudron, near Reims, France, February 6, 2023. REUTERS/Pascal Rossignol/File Photo

Oil prices were little changed on Thursday after rising to a near one-week high in the previous session, as an industry report showing a buildup in US crude stockpiles pressured the market.

Brent futures were up 34 cents, or 0.5%, at $76.38 a barrel by 1407 GMT. US West Texas Intermediate crude rose 26 cents, or 0.4%, to $72.51.

US crude stocks rose by 3.34 million barrels last week, market sources said, citing American Petroleum Institute figures on Wednesday.

Oil prices edged lower on Thursday because of the stock build in the US, said Saxo Bank analyst Ole Hansen.

"The market continues to lack a clear direction, with supply disruptions in Kazakhstan and the OPEC+ production increase delay being offset by global demand worries," Hansen said.

Official oil inventory data from the US Energy Information Administration (EIA) is due on Thursday.

Separately, Russia said Caspian Pipeline Consortium oil flows, a major route for crude exports from Kazakhstan, were reduced by 30%-40% on Tuesday after a Ukraine drone attack on a pumping station.

A 30% cut would equate to the loss of 380,000 barrels per day of market supply, Reuters calculations show.

However, other factors and potential boosts to oil supply added to concerns about prices.

Potential restarts of oil flows from Iraq's Kurdistan region were offsetting supply risks, analysts at ING said in a note.

Türkiye, which hosts the port of Ceyhan that loads the Iraqi oil from the Kurdistan region, did not receive confirmation from Iraq on the resumption as of Thursday, the country's energy minister told Reuters.

A resumption of the Iraqi oil flows would add 300,000 barrels of supply per day onto the market, ING analysts said.

Import tariffs announced by US President Donald Trump's administration could dent oil prices by raising the cost of consumer goods, analysts said, weakening the global economy and reducing fuel demand. Concerns about European and Chinese demand were also helping keep prices in check.

"It is natural to be concerned about the global economic outlook as Donald Trump takes a sledgehammer smashing away at the existing global 'free-trade structure' with signals of 25% tariffs on car imports to the US," said Bjarne Schieldrop, chief commodities analyst at SEB.