Saudi Aramco to acquire a stake in Reliance

DUBAI (Reuters) – Saudi Arabian Aramco announced Monday a net profit down 12 percent in the first half, but remains the world's most profitable company, while Reliance Industries, an Indian group, said that Aramco was looking for to acquire an interest in its refining and petrochemical activities.

Reliance said that Aramco had signed a letter of intent to acquire a 20% stake in Reliance's petroleum-to-chemicals business in one of the largest foreign investment operations. never made in India.

Aramco, who declined to comment on the Indian deal, announced a net profit of $ 46.9 billion.

By comparison, Apple, the world's largest publicly traded company in terms of profitability, achieved a business turnover of $ 31.5 billion, while the US oil company, its competitor Exxon Mobil, generated about $ 5.5 billion and Royal Dutch Shell, about $ 8.8 billion.

"Despite the drop in oil prices in the first half of 2019, we continued to generate strong earnings and free cash flow, supported by our ability to maintain our operational performance, expense management and financial discipline," he said. in a statement the general manager of Aramco, Amin Nasser.

The company's total business figure, including other sales-related products, was $ 163.88 billion in the first half, down from $ 167.68 billion a year ago. year earlier. Free cash flow increased 6.7% to $ 38 billion.

Aramco explained that the decrease in profits was mainly due to a 4% drop in the average crude oil sales price from $ 69 to $ 66 per barrel, an increase in purchase, production and manufacturing costs, as well as as depreciation costs.

The oil company said the decline was partially offset by a $ 2.62 billion drop in income taxes.

* Expansion

Aramco is expanding in refining at home and in new markets, particularly in Asia.

The company plans to increase its refining capacity, in Saudi Arabia and abroad, by between 8 and 10 million barrels a day, compared with around 5 million barrels a day.

Aramco Petroleum Products Trading, Aramco's commercial arm, is also expanding abroad to better compete with global trading companies.

"Aramco has strong creditworthiness to continue investing for future growth," said Nasser.

Aramco paid $ 46.4 billion in dividends to the government, including a special offer of $ 20 billion, up from $ 32 billion a year ago.

* Planned public offer

Aramco first announced its financial statements earlier this year, revealing its 2018 results to obtain a rating and start issuing international bonds.

The company aims to launch an IPO by 2020-2021 after postponing the IPO of 2018.

Aramco's initial public offering was the cornerstone of the desire to transform the economy of Saudi Arabia in order to attract foreign investment and diversify its dependence. vis-à-vis oil revenues.

The IPO was halted in 2018 when Aramco transferred its equity stake to acquire a 70% stake in Saudi Basic Industries Corp. (SABIC).

According to Aramco, crude oil production reached 10 million barrels a day in the first six months of the year, virtually unchanged from the same period in 2018.

Saudi Arabia is curtailing production under an OPEC-led agreement aimed at reducing global oil supplies and raising prices.

The kingdom has pumped less than 10 million barrels a day for most of this year.