JEDDAH: Saudi Arabia and international oil companies have discussed gas venture opportunities inside the Kingdom and abroad as part of the top crude-exporting country’s drive to diversify investments before the listing of Saudi Aramco. Saudi officials explored investment opportunities with firms including BP and Chevron to help develop its gas reserves, the world’s sixth largest, at a time of booming energy demand at home, said four industry sources. Saudi Aramco has also looked into investing in gas ventures abroad, including with Italy’s Eni, the sources said.
Saudi Aramco is gearing up for a share listing next year, aiming to get a valuation of up to $2 trillion in what could be the world’s biggest initial public offering (IPO). Chevron, BP, Aramco and Eni declined to comment on talks. “We have a long-standing relationship with Saudi Arabia, so it is not uncommon for us to talk to them. We are always having discussions about business development. I do not have anything particular to say about Saudi Arabia,” Chevron CEO John Watson told Reuters last week. British Petroleum (BP) Chief Executive Bob Dudley, who traveled to Saudi Arabia at the end of last year, said this year he wouldn’t rule out “creative partnerships” with Aramco but that an outright investment by BP in the IPO was unlikely.
The Kingdom has a long-term goal of increasing the use of gas for domestic power generation, thus reducing oil burning at home and freeing up more crude for export. This could help increase Aramco’s valuation as it generates more revenue from exports than selling oil at lower domestic prices — Saudi Arabia is the world’s fifth-biggest oil consumer despite being only the 20th-biggest economy. Energy Minister Khalid Al-Falih, who is also Saudi Aramco’s chairman, said last year that Aramco was interested in investing in international upstream ventures, particularly gas, and could invest in importing gas into the Kingdom. Diversifying gas assets abroad would help Saudi Aramco achieve a better valuation and is attractive for investors, industry sources said. Riyadh also plans to raise domestic gas prices, a move seen as an incentive for foreign companies.
