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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)
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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.

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US Economy Grew at Solid 3% Rate Last Quarter, Government Says in Final Estimate

FILE - The New York Stock Exchange, at rear, is shown on Sept. 24, 2024, in New York. (AP Photo/Peter Morgan, File)
FILE - The New York Stock Exchange, at rear, is shown on Sept. 24, 2024, in New York. (AP Photo/Peter Morgan, File)
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US Economy Grew at Solid 3% Rate Last Quarter, Government Says in Final Estimate

FILE - The New York Stock Exchange, at rear, is shown on Sept. 24, 2024, in New York. (AP Photo/Peter Morgan, File)
FILE - The New York Stock Exchange, at rear, is shown on Sept. 24, 2024, in New York. (AP Photo/Peter Morgan, File)

The American economy expanded at a healthy 3% annual pace from April through June, boosted by strong consumer spending and business investment, the government said Thursday, leaving its previous estimate unchanged.
The Commerce Department reported that the nation's gross domestic product — the nation's total output of goods and services — picked up sharply in the second quarter from the tepid 1.6% annual rate in the first three months of the year, The Associated Press reported.
Consumer spending, the primary driver of the economy, grew last quarter at a 2.8% pace, down slightly from the 2.9% rate the government had previously estimated. Business investment was also solid: It increased at a vigorous 8.3% annual pace last quarter, led by a 9.8% rise in investment in equipment.
The final GDP estimate for the April-June quarter included figures showing that inflation continues to ease, to just above the Federal Reserve’s 2% target. The central bank’s favored inflation gauge — the personal consumption expenditures index, or PCE — rose at a 2.5% annual rate last quarter, down from 3% in the first quarter of the year. Excluding volatile food and energy prices, so-called core PCE inflation grew at a 2.8% pace, down from 3.7% from January through March.
The US economy, the world's biggest, displayed remarkable resilience in the face of the 11 interest rate hikes the Fed carried out in 2022 and 2023 to fight the worst bout of inflation in four decades. Since peaking at 9.1% in mid-2022, annual inflation as measured by the consumer price index has tumbled to 2.5%.
Despite the surge in borrowing rates, the economy kept growing and employers kept hiring. Still, the job market has shown signs of weakness in recent months. From June through August, America's employers added an average of just 116,000 jobs a month, the lowest three-month average since mid-2020, when the COVID pandemic had paralyzed the economy. The unemployment rate has ticked up from a half-century low 3.4% last year to 4.2%, still relatively low.
Last week, responding to the steady drop in inflation and growing evidence of a more sluggish job market, the Fed cut its benchmark interest rate by an unusually large half-point. The rate cut, the Fed’s first in more than four years, reflected its new focus on shoring up the job market now that inflation has largely been tamed.
Some other barometers of the economy still look healthy. Americans last month increased their spending at retailers, for example, suggesting that consumers are still able and willing to spend more despite the cumulative impact of three years of excess inflation and high borrowing rates. The nation’s industrial production rebounded. The pace of single-family-home construction rose sharply from the pace a year earlier.
And this month, consumer sentiment rose for a third straight month, according to preliminary figures from the University of Michigan. The brighter outlook was driven by “more favorable prices as perceived by consumers” for cars, appliances, furniture and other long-lasting goods.
A category within GDP that measures the economy’s underlying strength rose at a healthy 2.7% annual rate, though that was down from 2.9% in the first quarter. This category includes consumer spending and private investment but excludes volatile items like exports, inventories and government spending.
Though the Fed now believes inflation is largely defeated, many Americans remain upset with still-high prices for groceries, gas, rent and other necessities. Former President Donald Trump blames the Biden-Harris administration for sparking an inflationary surge. Vice President Kamala Harris, in turn, has charged that Trump’s promise to slap tariffs on all imports would raise prices for consumers even further.
On Thursday, the Commerce Department also issued revisions to previous GDP estimates. From 2018 through 2023, growth was mostly higher — an average annual rate of 2.3%, up from a previously reported 2.1% — largely because of upward revisions to consumer spending. The revisions showed that GDP grew 2.9% last year, up from the 2.5% previously reported.
Thursday’s report was the government’s third and final estimate of GDP growth for the April-June quarter. It will release its initial estimate of July-September GDP growth on Oct. 30.