Saudi Arabia is looking to plug budget gaps by having its state-run oil giant, Saudi Aramco, sell some stakes in its subsidiaries, according to anonymous Bloomberg sources.
The Kingdom’s oil company has hired Moelis & Co. to come up with a plan to sell stakes in Aramco’s pipelines for the purpose of coming up with nearly $10 billion, OilPrice.com reported.
The move comes after Saudi Arabia’s neighbor, Abu Dhabi, engaged in a similar cash-raising activity as it, too, looks to bring in billions to prop itself up during what has become a major recession due to the low oil prices as a result of the pandemic.
Saudi Arabia’s budget has been struggling with the low oil prices and its burden of oil production cuts as a result of its OPEC agreement. Aramco reported a 44.6% decrease in its profits for the third quarter this year, to $11.9 billion, from $21.29 billion in the third quarter last year.
As a major contributor to the government of Saudi Arabia, and with Saudi Arabia holding a 98% stake in Saudi Aramco, Aramco’s financial well-being directly determines the well-being of Saudi Arabia in general.
Aramco’s perusal of pipeline deals to raise cash serve as a grim warning to the oil market, whose fate is tied to the pandemic and the resulting low oil demand, a fact that remains outside of both Saudi Arabia’s and OPEC+’s control.
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