Saudi Aramco’s planned acquisition of a majority stake in Sabic, the Saudi state-controlled chemicals and materials group, is central to its plans to diversify its revenues and prepare for tighter constraints on greenhouse gas emissions, its chief executive says. Amin Nasser, who has been chief executive of the Saudi national energy company since 2015, told the Financial Times that talks were at an “early stage”, but that the Sabic deal would help accelerate Saudi Aramco’s plans to develop its chemicals operations. “Sabic has a strong market position, [and is] vertically integrated: there’s a lot of synergy with Saudi Aramco,” Mr Nasser said. Though some senior executives at the group have questioned how it adds value, he said: “It’s a very strategically [good] fit with what we are aspiring to be, which is [to be] deeper in the downstream sector.”
Mr Nasser said the Saudi government was still committed to a stock market flotation for Saudi Aramco, but that any initial public offering would have to wait until after the acquisition and integration of Sabic, which would “take some time”. The Saudi Royal Court has instructed Saudi Aramco to acquire the 70 per cent stake in Sabic owned by the kingdom’s sovereign wealth fund, potentially raising $70bn – the value of the stake at the company’s current share price – for the fund at a time when it is scrambling to boost its coffers.
The Public Investment Fund was due to receive proceeds from the IPO of Saudi Aramco, which has been indefinitely delayed. Selling its Sabic stake would allow the PIF to raise cash quickly, with its handouts from the government having fallen and its big-ticket investments yet to yield returns. But some executives at Saudi Aramco and advisers to the energy ministry have said the deal would mean a change from Saudi Aramco’s plans to invest in speciality chemicals and expand abroad, and suggested it was unclear how its operations would be integrated.