Low oil prices not quenching Aramco's thirst for expansion
Low oil prices not quenching Aramco's thirst for expansion
Saudi Aramco looks set to fork out $5.5 billion to purchase an Indian refinery company, despite talk of the Riyadh-owned giant being a step closer to privatisation.
3 min read
Saudi Arabia appears perched to purchase one of India's largest oil companies [AFP]
One of the world's oil giants is set to grow even bigger, after Saudi Aramco officials held talks with India's Essar Group about buying up the refinery business for a reported $5.5 billion.
Essar is said to be interested in selling up after months of pain caused by low oil prices.
This has been in part due to Saudi Arabia's policy of maintaining stable oil supply levels despite a global glut and slowdown in demand.
Talks between Aramco and Essar officials reportedly took place at the World Economic Forum in Davos last week, according to Gulf Times.
However, the Saudi company also faces competition from rivals in Iran and Russia who are understood to be keen to snap the group up.
Essar had planned selling 49 percent of its shares - amounting to $3 billion - to Russian oil company Rosneft OAO.
Despite the recent talk of a Saudi buy-out, and with talks stalled since last July, the Kremlin-owned company insists the sale will go ahead.
"Rosneft has not changed its plans and continues work in accordance with the signed agreement on terms for the company's possible entry into shareholding structure of Essar Oil," a Rosneft statement read.
"Talks on this project continue on the working group level in accordance with the existing agreement on exclusivity."
The delay has heightened speculation that the Saudi-owned company would take over Essar instead.
"Our investments in capacity of oil and gas have not slowed down. We have been able to do a lot of cuts in spending by simply driving down costs," Aramco Chairman Khaled al-Falih told Oil Review Middle East.
Aramco insists that low oil prices have not stopped its hunger for expansion. The company is looking to invest in other hydrocarbon companies abroad, particularly in emerging superpowers China and India.
This is despite the cash-strapped Saudi government considering a sale of its shares in Aramco to shore up its flagging economy.
It was reported on Tuesday that Saudi Aramco - widely viewed as one of the biggest companies in the world - is considering issuing Islamic bonds for the first time.
Aramco officials have held talks with banks about the sharia-compliant sales, according to Bloomberg.
The company remains tight-lipped on the subject, but the reports come amid projections of heavy losses for Saudi Arabia in 2016, which is heavily reliant on profits from oil sales.
Essar is said to be interested in selling up after months of pain caused by low oil prices.
This has been in part due to Saudi Arabia's policy of maintaining stable oil supply levels despite a global glut and slowdown in demand.
Talks between Aramco and Essar officials reportedly took place at the World Economic Forum in Davos last week, according to Gulf Times.
However, the Saudi company also faces competition from rivals in Iran and Russia who are understood to be keen to snap the group up.
Essar had planned selling 49 percent of its shares - amounting to $3 billion - to Russian oil company Rosneft OAO.
Despite the recent talk of a Saudi buy-out, and with talks stalled since last July, the Kremlin-owned company insists the sale will go ahead.
"Rosneft has not changed its plans and continues work in accordance with the signed agreement on terms for the company's possible entry into shareholding structure of Essar Oil," a Rosneft statement read.
"Talks on this project continue on the working group level in accordance with the existing agreement on exclusivity."
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Our investments in capacity of oil and gas have not slowed down - Khaled al-Falih, Saudi Aramco chairman |
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The delay has heightened speculation that the Saudi-owned company would take over Essar instead.
"Our investments in capacity of oil and gas have not slowed down. We have been able to do a lot of cuts in spending by simply driving down costs," Aramco Chairman Khaled al-Falih told Oil Review Middle East.
Aramco insists that low oil prices have not stopped its hunger for expansion. The company is looking to invest in other hydrocarbon companies abroad, particularly in emerging superpowers China and India.
This is despite the cash-strapped Saudi government considering a sale of its shares in Aramco to shore up its flagging economy.
It was reported on Tuesday that Saudi Aramco - widely viewed as one of the biggest companies in the world - is considering issuing Islamic bonds for the first time.
Aramco officials have held talks with banks about the sharia-compliant sales, according to Bloomberg.
The company remains tight-lipped on the subject, but the reports come amid projections of heavy losses for Saudi Arabia in 2016, which is heavily reliant on profits from oil sales.
Follow the Middle East's top stories in English at The New Arab on Google News
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