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Saudi Aramco CEO, Amin Al-Nbader, announced that the company's acquisition of a strategic stake in SABIC is still at a preliminary stage and very early in the discussions. Great.
Al-Nbader said in an interview that if the potential agreement is reached, taking into account related regulations, it will certainly have an impact on the timing of Saudi Aramco's IPO. "When Saudi Aramco was ready, the moment to offer a part of Aramco to subscribe will remain a decision of the state."
The following is an excerpt from CEO of Aramco:
Strategic Share
Why does Saudi Aramco plan to acquire a strategic stake in SABIC?
First, I would like to emphasize that we are at a very early stage of discussions with the Public Investment Fund on the acquisition of a strategic stake in SABIC.At this initial stage, it is not certain that the agreement will take place. Other.
Energy and Chemicals
The engineer Al-Nbader said: "It is important to answer that the strategic transformation program of Aramco launched by the company in 2011 had to transform the company into a leading global energy company. World's leading company in the field of energy and chemicals, and with respect to chemicals, there are two options through the introduction of new projects such as the project of advance or through the acquisition.
Expansion
Al-Nbader added that Saudi Aramco's strategy was to rebalance its group of activities that, in recent decades, focused on oil and gas develop significantly in refining, processing, marketing and chemistry. And chemicals, noting that this transformation includes many benefits of integration and opportunities for growth and value-added and diversification of revenue sources.
The highest growth rate
Nbader notes that the chemical sector is growing by about 3%, faster than the rate of growth of the global economy or total demand fuel.
and stressed that investing in chemicals is a way to support our refining and marketing business, which is also growing.
2-3 million barrels of oil to chemicals
Al-Nbader continues: "We have a very ambitious ambition in the long-term strategy of the company: to convert 2 to 3 million barrels of our oil production in chemicals This objective has several advantages: to increase the added value of each barrel, to diversify the sources of income and to badure a source of marketing of our enormous long-term oil production outside the transport sector. the majority of global oil consumption is in the transport sector.In terms of climate change, because the end use of oil in the field of chemicals And not in the field of hydrocarbons, helps to reduce carbon emissions
New Projects and Acquisitions
In order to realize its strategic plans and aspirations, the company will Is striving to expand in the chemicals sector through two new projects such as Sedra and Petro Rabigh,% From the German company Lanxis, which was established two years ago.
Investment Opportunities
Al Nbader said that Aramco is studying all the investment opportunities available at the national and international levels to develop its chemical business in accordance with its strategies, and in this context It is possible to acquire a strategic stake in SABIC, C is the third company in the world that has had excellent relations with Saudi Aramco since its inception.
Aramco
* What is the impact of the operation on the supply? [Traduction] In response to this question, Engineer Nbader said: "As I mentioned earlier, we are still in the early stages of discussions, as there is no doubt that the procedures of Acquisition takes time, especially if the transaction is important.
He adds that the discussions of the transaction must take steps and steps, that capital market regulations for acquisitions must be taken into account and that if the potential transaction is completed, this will inevitably have an impact on the market. As part of Saudi Aramco's offer to subscribe, as I indicated at previous meetings, when Aramco will be ready, the time to offer a portion of Aramco to underwriting will remain a decision of the state.
Axial element
* Why now?
The engineer Nbader commented on this aspect, noting that Aramco's strategic transformation program since 2011 aimed to make the company the world's leading energy company and the world's largest energy company. first global company in the field of energy and chemicals. In the company's strategy He adds that the company has made several major achievements in the last five years to develop the chemical sector, including giant projects such as Sadaa and Petro Rabigh, including strategic projects, as Lanxis, renowned for its excellence in the industrial rubber industry.
About a year and a half ago, a joint venture with SABIC with a capacity of 400,000 barrels per day to convert oil into chemicals was announced and announced its investment in a technical project that would a leap forward of 70%. 80%.
Conversion of Crude Oil into Chemicals
Nbader pointed out that all of Saudi Aramco's global refining projects include an important goal of converting a high percentage of crude oil into chemicals, such as joint venture in India and Malaysia. In the United States of America.
Local, Regional and Global Options
The potential agreement to acquire a strategic stake in SABIC is part of a plan that the company has launched for several years and examines all local options , regional and global.
Competitive Position
What is the impact of the agreement on Saudi Aramco's competitive position?
Saudi Aramco thanks God in an excellent competitive position in the energy markets. The transaction with SABIC or others will strengthen the competitive position of Saudi Aramco as it supports several strategic objectives for the company. business, primarily fluctuations in the performance of the exploration and production sector. . Yields in the exploration and production sector are negatively affected by the decline in international oil prices, while refinery and chemical revenues are performing well with lower world oil prices gross. This is what we are looking for when we talk about rebalancing Saudi Aramco's business portfolio between oil and gas production, refining and chemicals.
Improved Competitive Position
In addition, the potential agreement with SABIC or other appropriate chemical companies strengthens Saudi Aramco's competitive position by increasing innovation, deepening the chain from manufacturing to high value specialty products, value added per barrel of oil and every cubic foot of gas produced by the company.
Risks
Saudi Aramco's approach to the development of the chemical sector reduces the following risks: Long-term demand evolution in the transportation sector. The transport sector in small cars depends on refined petroleum products. However, the growth of electric vehicles requires securing oil markets in new sectors that do not consume oil as hydrocarbons but consume it as resources such as chemical and non-ferrous industries.
Reduce Carbon Footprint Growth Associated with the Challenges of Climate Change The proportion of carbon emissions is lower when oil is consumed as a value in the chemical and non-mineral industries than in the oil and fuel.
Opportunities for Integration
Nbader also saw the potential agreement as offering great opportunities for integration based on the parties' strengths to the agreement. Saudi Aramco is the world's most powerful energy producer and one of the world's most skilled human resources, research and development, innovation and low production costs. It is well known that oil and gas companies have strong and complementary links with chemical companies.
Delay
What is the timing of the transaction?
– As we are still in the early stages of discussions, the timing of the agreement will be determined after an agreement has been reached, and it will be later, God willing, subject to progress in the discussions.
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