Saudi Aramco starts selling power plant assets, or raises $4 billion

The Zhitong Finance App learned that according to three people familiar with the matter, Saudi oil giant Aramco is planning to sell four to five of its gas power plants. This is part of the company's strategy to unlock capital potential, which could generate tens of billions of dollars.

Two of these sources said that the sale of the four to five gas power plants that supply electricity to the refinery alone could raise about 4 billion US dollars. Currently, the Saudi government is urging Aramco to increase profitability in order to increase the country's revenue.

As the most profitable enterprise in the world and the main source of Saudi revenue, Aramco recently continued to promote asset sales, efficiency improvements, and cost reduction plans. Earlier reports from Reuters showed that the company will cut dividend payments by nearly one-third this year due to falling oil prices impacting revenue.

The Saudi government directly holds 81.5% of Aramco's shares, and its finances are highly dependent on revenue such as mining site usage fees and taxes paid by the company. In addition to gas power plants, two sources revealed that Aramco may divest assets such as residential areas and pipelines.

Another source and third party sources said that port infrastructure assets may also be listed for sale. Aramco declined to comment on the sale of potential assets, nor did it immediately respond to the possible scale of this funding plan.

One of the sources pointed out that local businesses such as Saudi utilities could be potential buyers.

According to Aramco's 2024 financial report, the company wholly or partially owns 18 power plants and related infrastructure in Saudi Arabia to provide energy for its gas plants and refineries. Another new power plant will soon be put into operation. Among them, the Tanajib gas power plant project is expected to be put into operation this year.

Aramco's current asset sale plan comes at a time when Saudi Crown Prince Mohammed bin Salman is promoting a strategy of economic diversification.

Under pressure from the continued drop in crude oil prices, Saudi Arabia is spending hundreds of billions of dollars to advance iconic projects including the 2030 World Expo and the 2034 Soccer World Cup.

Last year, oil revenue still accounted for 62% of Saudi Arabia's total fiscal revenue. Despite receiving special dividends of 1990 billion US dollars from Aramco, the 2024 national budget still had a deficit of more than 30 billion US dollars.

In May of this year, Aramco issued $5 billion in bonds and released more funding signals. The company also plans to raise capital for infrastructure projects by bringing in investors, according to a Reuters report in May.