Saudi state oil giant Aramco has delayed a petrochemicals project and a stake purchase in an LNG facility to conserve cash, Bloomberg reported, citing sources in the know who wished to remain anonymous.
The Yanbu crude-to-petrochemicals project is worth an estimated $20 billion, but the decision to go ahead with it has been reconsidered in light of the impact the company suffered from the combination of low oil prices and demand hit by the pandemic. Instead of the large-scale project, according to the Bloomberg sources, Aramco is now mulling over adding petrochemical facilities to already existing refineries in eastern Saudi Arabia.
The second project that Aramco may shelve is its acquisition of a 25 percent stake in Sempra Energy’s LNG terminal in Port Arthur, Texas. Sempra and Aramco announced a preliminary partnership agreement for the facility in January this year, with Aramco agreeing to also buy some 5 million tons of liquefied gas from the LNG terminal when it gets built.
The Saudi major reported a profit for the second quarter, when many other large oil companies slipped into losses, but the profit was just $6.6 billion versus $24.7 billion a year earlier. Despite the drop, Aramco stuck to its dividend plans to distribute $18.75 billion to its shareholders and is now apparently looking for ways to make this happen without stripping itself of cash. The company said its free cash flow stood at $6.1 billion at the end of June this year.
“We will continue to pursue our long-term growth and diversification strategy to capture unrealized and additional value from every hydrocarbon molecule we produce – driving global commerce and enhancing people’s lives,” Aramco’s chief executive Amin Nasser said in comments on the second-quarter report.
Expansion plans, however, are being revised. Last month, Aramco suspended another major investment, in a refining and petrochemicals project in China that was estimated to require total investments of $10 billion.
By Irina Slav for Oilprice.com
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