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(Reuters) – Saudi Arabia is seeking to allocate between 2 and 3 million bpd of its crude oil production to the petrochemical sector, said the company's managing director, Amine al-Nasser, in a sign indicating that the national energy company was facing a potential slowdown in demand. Three months to reach a maximum oil production capacity of 12 million barrels per day, if necessary.
Aramco is strengthening its refining and petrochemical investments to secure new markets for its crude oil. The growth of the petrochemical sector is at the heart of its development strategy.
Al-Nasser said Tuesday at the investment conference in Riyadh that the company was working to acquire a stake in Saudi Basic Industries Corporation (SABIC) as part of its plan to take a leading position in the chemicals sector.
But he added that the antitrust rules abroad would make it difficult to take control of a majority stake in SABIC, noting that it was present in 50 countries around the world.
Aramco commissioned JPMorgan and Morgan Stanley to comment on the potential acquisition of more than 70 percent of SABIC, Reuters sources reported in July.
Al-Nasser said the Saudi government was still engaged in Aramco's initial public offering, but that the timing would depend on market conditions and other factors. Aramco could not be indexed until the conclusion of the agreement with SABIC, he said.
He added that the bankers had not expressed any concern about the recent increase in financing costs in Saudi Arabia before the company took control of SABIC.
The cost of Saudi sovereign debt insurance over the next five years reached 100 basis points last week for the first time since June, which shows that Jamal Khashoggi's death has hurt the kingdom's morale .
When asked if the bankers had expressed concerns about the killing of Khashoggi or if it would increase the cost of financing the transaction, Nasser replied, "None of this."
"Aramco is in a good financial situation (…) so far, we have no problem financing our projects, I do not expect any funding problems", a- he told the press on the sidelines of a conference on investment in Riyadh.
He also noted that Aramco would need three months to reach a maximum oil production capacity of 12 million barrels per day, if necessary.
Aramco plans to increase its refining capacity from 8 million to 10 million barrels a day and to double its petrochemical production by 2030. Aramco currently pumps approximately 10.7 million barrels of crude oil.
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