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Saudi Arabia plans to develop an international energy exploration and production company for the first time, doubling its oil and gas resources as the kingdom seeks to reduce its reliance on hydrocarbons.
Khalid al-Falih, Saudi energy minister and chairman of state oil company Saudi Aramco, told the Financial Times that overseas expansion would be an essential part of the future of the company.
"We will no longer be interested in ourselves and will only focus on monetizing the kingdom's resources," said Falih. "The world will become Saudi Aramco's playground."
Although Saudi Aramco is the largest oil producer in the world, it has never actually extracted overseas to extract resources, relying on its vast national reserves. When asked if Saudi Arabia was considering becoming an international energy player like Royal Dutch Shell or Exxon Mobil, pumping oil and gas overseas, Falih said, "OK."
Despite ambitious reforms by Crown Prince Mohammed bin Salman to divert the kingdom from what he described as "dangerous dependence on oil," Falih described Saudi Arabia's plans to invest more in oil and gas. sector that has nourished its traditional economy.
This decision highlights how Saudi Arabia will likely depend on its oil and gas prowess to generate revenue, while it is striving to diversify into new sectors such as technology, technology, and technology. tourism, health care and mining.
Falih said oil and gas, which have dominated his economy for decades, would still account for at least 40 to 50 percent of the kingdom's revenue, even as ambitious reforms materialize.
While the kingdom has invested abroad in refineries and petrochemicals, Mr. Falih's remarks are the clearest sign of his ambitions to develop oil and gas projects abroad, which could put him in competition with his international rivals.
The minister said efforts would initially focus on creating a "global gas" business. Many of the world's leading energy companies are investing more and more in gas, with growth in demand outstripping that of oil.
Saudi Arabia has considered investments in the Russian liquefied natural gas sector and plans to take a stake in export facilities in the United States. But Mr Falih also mentioned Australia as a possible destination for investment.
He compared Saudi Aramco's exploration and production capabilities vis-à-vis peers around the world, stating, "We can stand in solidarity with and outperform anyone."
Saudi Aramco attracted the attention of the international financial community when Prince Mohammed announced his intention to sell the shares of the national energy company through a stock exchange listing.
People familiar with the release plans stated that it had been postponed indefinitely. But Falih was adamant that his plans for expansion reflected the need to please potential outside shareholders.
"If investors from New York, London or Tokyo invest in Saudi Aramco, they want Saudi Aramco to compete with the best international oil companies in the world," he said.
Among the obstacles to the largest public offering in the world was the inability to carry out Prince Mohammed's $ 2 million valuation, regulatory concerns and concerns about at the legal exhibition.
The powerful sovereign wealth fund of the kingdom was to be the main beneficiary of the $ 100 billion that Riyadh hoped to reap through the IPO. In his absence, Saudi Aramco was given the task of acquiring the fund's 70% stake in Saudi petrochemical producer Sabic. Saudi Aramco will issue a bond to partially pay the $ 70 billion deal struck by Sabic. A roadshow for investors is expected to begin soon, said Falih.
This move allows the FIP to quickly obtain funds at a time when the documents of the Ministry of Finance have decreased. The Saudi economy has been shaken by the aftermath of the 2014 stock market crash, which marked the beginning of years of austerity measures.
As the kingdom struggled against a slowdown, the badbadination of journalist Jamal Khashoggi last year sparked his biggest diplomatic crisis with the West since the attacks of September 11, 2001 in the United States.
"It is obvious that this tragic and unfortunate incident created a cloud," said Falih. "[But] nobody is afraid. . . I would dispel the idea that people avoid investing in Saudi Arabia. "
His comments come in spite of signs that officials are worried about Saudi Arabia's ability to attract foreign capital and skills to push reforms forward.
The kingdom faces short-term challenges, including its relationship with the United States, its oldest and most important ally. President Donald Trump supported Saudi Arabia in the Khashoggi case, but long nurtured an animosity towards the opep oil producer group led by Saudi Arabia.
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Legislation that would allow the US government to sue OPEC member countries for manipulating oil prices is advancing in Congress and should offer one of the best chances of becoming law.
Mr Falih said he trusted the United States to "make the right choice" and warned that the legislation could be "harmful" to the global economy. The world would suffer "irretrievably" from the loss of Saudi Arabia's ability to rapidly increase or decrease oil production to balance the market.
The kingdom and Russia are pushing global producers to cut supply to support oil prices after falling 40 percent by the end of 2018. Crude oil is now around $ 60 a barrel, while the budget is Saudi Arabia requires levels close to $ 80.
Mr Falih said that in March, the kingdom would reduce production to nearly 9.8 million barrels a day, above 11 million barrels a day in November. Exports would also fall to nearly 6.9 million barrels a day, compared with 8.2 million barrels a day three months ago.
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