Saudi bond sale bullish for oil price

April 9, 2019

Saudi Aramco’s plans to raise $10 billion in bonds to finance the acquisition of Saudi petrochemicals group Sabic indicates a major shift in the Kingdom of Saudi Arabia, according to Rystad Energy’s Head of Analysis Per Magnus Nysveen.

Saudi Aramco will pay $69.1 billion to acquire a 70% majority stake in Sabic from the Public Investment Fund of Saudi Arabia in a private transaction. The deal will almost double Aramco’s refining capacity to 8-10 million barrels per day by 2030, according to the official announcement of the transaction, issued on 27 March 2019.

"We see this as a sign that the Kingdom finds it more important to secure the demand side rather than further increasing spare capacity on the production side," Nysveen said.

Rystad Energy, the independent energy research and consulting firm headquartered in Norway with offices across the globe, provides an annual review of recoverable oil resources on a field-by-field basis. It has previously forecasted more aggressive exploration and development drilling by Saudi Aramco, in order to demonstrate growth potential ahead of the now mothballed IPO. Several large offshore expansion projects are however still expected, including raising output from Marjan, Berry, Zuluf and Safaniya.

"With this announcement we find it more likely that the Kingdom of Saudi Arabia will continue to prefer price over volume in the foreseeable future. And KSA is the player in the oil market with the longest perspective of all players, so we see this as an important bullish indicator in the very long term for oil," Nysveen remarked.

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Contacts

Per Magnus Nysveen
Head of Analysis
Telephone: +47 24 00 42 00
per@rystadenergy.com


Morten Bertelsen
Media Relations
Phone: +47 951 98 742
morten.bertelsen@rystadenergy.com

 

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