Saudi Arabian Oil Co (Aramco) on Thursday signed agreements worth nearly US$4.5 billion with multinational oil and gas contractors, in what the company dubbed as an effort to diversify the economy.
The deals were signed with companies including Spain’s Tecnicas Reunidas SA, Italy’s Saipem SpA, China Petroleum Pipeline Bureau (中國石油天然氣管道局) and Abu Dhabi’s National Petroleum Construction Co.
The investments “reflect our concerted effort ... to diversify our economy, promote local manufacturing, support a sustainable environment and strengthen our business and investment climate,” Aramco’s chief executive officer Amin Nasser said in a statement.
Saudi Arabia last year announced plans to sell less than five percent of Aramco, the kingdom’s crown jewel, in what is expected to be the world’s largest ever initial public offering.
The plan forms the cornerstone of a reform program envisaged by Crown Prince Mohammed bin Salman to wean the economy off its reliance on oil.
It could generate much needed revenue after the country lost hundreds of billions of dollars since crude prices slumped in the middle of 2014, leading to huge budget deficits and withdrawals from strategic reserves.
Meanwhile, Britain is to provide Aramco with a US$2 billion loan guarantee to help it buy British exports, the UK government said on Thursday.
Britain is seen as wooing the company ahead of a stock market flotation next year, which it hopes will be in London, even if the government denied that this was the reason for it guaranteeing bank loans to the kingdom.
The guarantee is to be supplied by UK Export Finance (UKEF), a state credit agency, which seeks to improve the country’s trade balance by providing finance to foreign buyers.
“UKEF’s support is to take the form of a US$2 billion guarantee on bank lending,” the UK government said in a statement.
UKEF had already provided Aramco with nearly ￡500 million in support to UK exports over the past five years, it added.
“This [guarantee] has nothing to do with the potential float, it’s about increasing UK exports,” a Treasury spokesman told reporters.
On a visit to Saudi Arabia with UK business leaders in April, British Prime Minister Theresa May pitched the London bourse as a venue for the expected listing, with Britain facing competition from other key financial centers, including New York.
May reportedly held a private meeting with Saudi Arabian Minister of Energy and Industry Khaled al-Falih, who also heads Aramco, in the presence of London Stock Exchange Group chief executive officer Xavier Rolet.
By offering the loan guarantee, Britain is seen as helping Saudi Arabia to diversify its oil-dependent economy.
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