Saudi Aramco’s chief executive has outlined the state oil company’s expansion goals and ambitions to help create half a million jobs for the kingdom, as it seeks to transform the economy away from oil dependence over the next 15 years.
In a rare briefing for reporters at Aramco’s headquarters in Dhahran, Amin Nasser, who took over as the head of Aramco last autumn, said the company plans to grow both domestically and abroad as it seeks to become a more balanced and integrated organisation ahead of plans to offer some shares publicly to investors.
“By 2020, we intend to be the world-leading integrated energy and chemicals company, focused on maximising value creation across the hydrocarbon chain, facilitating the sustainable expansion of the kingdom’s economy and enabling a vibrant Saudi energy sector,” Mr Nasser said.
He reiterated that Aramco plans to double gas production over the next decade, confirming previously announced targets to raise domestic output to 23 billion standard cubic feet (scf) per day from the current level of about 12 billion scf a day.
Aramco has also said it plans to nearly double oil refining capacity from a current level of 5.4 million barrels per day.
The company this year bought out its North American refining partner, Royal Dutch Shell, and said it plans to expand operations there.
Mr Nasser also said Aramco is looking at further downstream expansion in Asia, including in China, Indonesia and Vietnam.
“Even though it is challenging it is still an opportunity for us to grow,” he said. “We are seeing a global increase in demand” for oil, which he estimated would be about 1.2 million bpd this year. “We are capitalising on this opportunity.”
There has been speculation that the kingdom might raise its production this year, especially after the powerful deputy crown prince, Mohammed bin Salman, who is now seen as firmly in control of Saudi oil policy, last month pointedly noted Saudi Arabia’s ability to immediately add 1 million bpd of production, and another 1 million bpd within six months.
His observation came amid talks to agree on an output freeze, which arch-rival Iran had declined to join until after it has increased its own output level by 1 million bpd, to the 4 million bpd it enjoyed before nuclear-related sanctions were imposed in 2012.
The talks were abandoned when Saudi Arabia ultimately declined to proceed without Iran’s acquiescence.
“Whatever the call on Saudi Aramco we will meet it,” is all Mr Nasser would say about plans to boost output.
Prince Mohammed, in a number of interviews this year, has set out a new policy – Vision 2030 – to transform the Saudi Arabian economy so that it depends less on oil, which is still the dominant source of government revenue and GDP.
Government coffers have been sharply depleted by the oil price crash of the past 18 months, making the transformation more urgent.
At the heart of the plans is the transformation of Aramco, which Prince Mohammed has said he plans to partially privatise in coming years.
The plans so far have been vague, with talk of selling up to 5 per cent of Aramco’s economic value through a public listing in Riyadh and foreign exchanges such as New York and London, with the sale taking place some time next year or the year after.
The big unanswered question, however, is what the corporate structure of Aramco will be when it comes to the public listing. Mr Nasser’s former boss, Khaled Al Falih, who was chairman of Aramco before being appointed oil minister last week, has repeatedly said that any sale of the company will not include Saudi Arabia’s vast domestic oil reserves, which are and will remain constitutionally the property of the kingdom.
Although Prince Mohammed has said that a share sale will include the parent company in some form, that company’s entitlement to Aramco’s oil output and how it is structured – particularly in relation to the tax level that is imposed by the government – will be crucial to any valuation that will be put on the company.
Mr Nasser’s press conference might be a small step towards providing some of the transparency that Prince Mohammed has also said will be a necessary part of Aramco’s transformation into a public company. But he did not provide any further details on these big questions.
Follow The National's Business section on Twitter