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Saudi Arabia plans to invest in gas ventures abroad to limit crude consumption at home, report

Saudi Arabia has been discussing gas venture opportunities with foreign oil companies as a part of its efforts to diversify investments ahead of Saudi Aramco’s expected IPO next year. Saudi officials held discussions with companies including Chevron Corporation (NYSE:CVX) and BP plc (LON:BP) to explore investment opportunities inside the kingdom as well as abroad, according to a recently published report by Reuters citing sources close to the matter.

KSA’s energy giant Saudi Aramco is preparing for a share listing in 2018 and is seeking a valuation of as much as $2 trillion, which could be the biggest initial public offering in the history of the world.

The leading crude-exporting country has a long-term target of boosting the use of gas for local power generation, therefore limiting the use of crude at home and increasing its oil exports. This would help Aramco in boosting its revenues from exports that will ultimately lead to increase in its valuation.

Saudi Arabia’s Energy Minister Khalid al-Falih said in a statement last year that Aramco is interested in making investments in upstream ventures around the globe and importing gas into the country. Khalid al-Falih is also the Chairman of Aramco.

Expanding gas assets internationally would help Aramco in achieving an improved valuation and becoming more attractive for investors, according to the report. Aramco is planning to reveal a new gas strategy in the near future in order to develop resources to meet the increasing domestic demand. It intends to increase its gas production by two folds in the next decade that translates to 23 billion standard cubic feet per day.

The report also stated that Energy Minister Falih wants Aramco to collaborate with other companies in upstream projects. According to BP’s annual energy review, the Saudi company controls more than 8 trillion cubic metres of gas reserves.

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