Saudi Aramco is reportedly exploring asset sales as a means of increasing the availability of funds to fuel its international expansion and existing operations, according to unnamed sources who spoke to Reuters.
The sources told the publication that the Saudi state major had asked investment banks to come up with ideas on how best to make its assets generate some cash. Another two sources told Reuters the asset sales could help Aramco in its efforts to boost the efficiency of its operations and reduce costs.
Aramco on Tuesday reported a drop in 2024 profits and guided for a 30% lower total dividend for this year, which would further strain the finances of the Kingdom of Saudi Arabia.
In March, Aramco, which is the world’s single biggest crude producer and exporter, reported a net profit of $106.2 billion for 2024, down from $121.3 billion for 2023 as average oil prices fell last year compared to 2023 levels and as Saudi Arabia continues to curb production as part of the OPEC+ agreement.
For the fourth quarter, Aramco’s board declared a base dividend of $21.1 billion, up by 4.2% year-over-year. However, the so-called performance-linked dividend was slashed to just $200 million for Q4, in a sign that low oil prices are starting to bite.
Aramco is the biggest contributor to Saudi Arabia’s budget revenues and a vital source of funding for government projects. Because the Saudi government is quite ambitious with such projects, the budget breakeven price of oil has gone up to over $90 per barrel—even though Aramco has some of the lowest production costs in the world at its conventional oilfie.ds
Because of this high breakeven, Saudi Arabia’s budget deficit hit $15.6 billion in the first quarter of this year—more than half of what the finance ministry has forecast for the full year.
By Irina Slav for Oilprice.com
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