Aramco Eyes Asset Divestments Amid Profit Squeeze and Global Expansion Drive

Arabian Post Staff -Dubai

Saudi Aramco is exploring asset sales to bolster its balance sheet as it navigates declining oil revenues and intensifies its international expansion efforts. The state-owned oil giant has engaged investment banks to propose strategies for monetising its assets, according to individuals familiar with the matter. While specific assets and banks involved remain undisclosed, the move underscores Aramco’s proactive approach to financial management amid market challenges.

The company’s net income fell by 12% to $106.2 billion in 2024, down from $121.3 billion the previous year, primarily due to lower oil prices and reduced production volumes. Consequently, Aramco plans to cut its total dividend payout by nearly a third in 2025, distributing $85.4 billion compared to $124 billion in 2024. This reduction is expected to impact Saudi Arabia’s budget, which heavily relies on Aramco’s dividends to fund its Vision 2030 economic diversification initiative.

In response to these financial pressures, Aramco is actively seeking investors for infrastructure assets in its $100 billion Jafurah gas project, aiming to become a major global natural gas player. The company intends to maintain majority ownership and operational control while attracting external investments to support development. This strategy follows previous deals, including nearly $28 billion raised in 2021 through selling 49% stakes in its oil and gas pipeline subsidiaries.

Aramco’s international expansion includes signing preliminary agreements with U.S. companies valued at up to $90 billion, encompassing sectors such as liquefied natural gas, artificial intelligence, and technology. Key deals involve a 20-year LNG purchase agreement with NextDecade’s Rio Grande LNG export project in Texas and collaborations with ExxonMobil to upgrade the Samref refinery in Saudi Arabia. Additionally, Aramco is in discussions to invest in two new refineries in India, seeking stable markets for its crude amidst increased competition from cheaper sources like Russia.

Despite the dividend cut, Aramco plans capital investments between $52 billion and $58 billion in 2025, focusing on expanding its gas capabilities and integrating its upstream and downstream businesses. The company expects potential operating cash flows of $9 billion to $10 billion from growth in its upstream gas business and $8 billion to $10 billion from its downstream business by 2030.

Aramco’s financial adjustments come amid a broader context of declining oil prices, with Brent crude trading around $70 a barrel, down from approximately $100 three years ago. The company’s performance-linked dividend has seen a significant reduction, reflecting broader struggles in the oil industry. Analysts suggest that Aramco may need to tap into debt markets to finance its dividend and capital expenditure commitments if oil prices remain subdued.

Also published on Medium.

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