Saudi Aramco sets up corporate development body

In July, the oil giant said it would reorganise the downstream segment of its energy arm into four commercial business units

The organisation, headed by serious vice president Abdulaziz Al Gudaimi will begin operation on September 13, 2020..​​​​ EPA

Saudi Aramco is setting up a corporate development arm to optimise various assets in its portfolio and secure access to growth markets.

The organisation, headed by senior vice president Abdulaziz Al Gudaimi, will begin operations on September 13, 2020.

The new division will support “rapid and effective decision-making” and its response to changing market dynamics, the oil giant said in a statement on Sunday.

“We continue to leverage our capabilities in assessing our existing portfolio, identifying new opportunities and adapting to a rapidly evolving global landscape,” Amin Nasser, Aramco’s president and chief executive, said.

"The corporate development organisation will focus on growth opportunities as we further sharpen and strengthen our strategic focus to optimise our portfolio and, in doing so, maximise value for our shareholders.”

In July, Saudi Aramco, the world’s largest oil-exporting company, announced that it is reorganising the downstream segment of its business into four commercial units.

The downstream business, which refers to refining and petrochemicals, will operate through four units – fuels, chemicals, power and a pipelines, distribution and terminals division.

Aramco’s reorganisation of its downstream division, which is also headed by Mr Al Gudaimi, will complete by the end of this year.

Saudi Aramco saw its second quarter net profit drop 73.4 per cent due to lower oil prices and declining refining and chemicals margins during the coronavirus crisis. Net profit for the second quarter fell to 24.62bn Saudi riyals (Dh24bn) from the year-earlier period, as the Covid-19 pandemic tipped the global economy into its deepest recession since the Great Depression.

Despite Aramco’s fall in revenue, the company plans to maintain dividend payments of $75bn this year. A quarterly dividend of $18.75bn will be paid out to investors on August 31, which is higher than the $13.4bn the company offered for the same period last year.

Khalid Al Dabbagh, Saudi Aramco’s senior vice president of finance, strategy and development, told investors that the company’s public shareholders were entitled to receive their share of the $75bn dividend payout “irrespective of market conditions”.

Saudi Aramco, which revised its capital expenditure programme to the “lower end” of a $25bn to $30bn range, is currently reviewing its capex budget for 2021 and beyond.

“Our 2021 capital spending is expected to be significantly lower than our previously provided guidance of $40 to $45bn,” said Mr Al Dabbagh. The company’s upstream capital expenditure of $4.70 per barrel of oil equivalent produced is “the lowest in the industry”, he added.

The state-owned Saudi oil major is expected to continue to work towards raising its production capacity to 13m bpd by 2021. However, the company will not allocate additional capital expenditure to boost capacity by an additional 1m bpd, Mr Nasser said.

Aramco’s total production reached 12.7 million barrels of oil equivalent per day in the second quarter, as the company raised its output in April after the collapse of Opec+ talks.