Saudi Aramco CEO defends SABIC deal, says listing could come after

Saudi Aramco’s chief executive has defended the firm’s planned acquisition of a majority stake in petrochemicals firm SABIC amid reports the deal has run into difficulties.

Earlier this month, the Wall Street Journal reported that executives at the state oil giant considered the up to $70bn valuation for the Public Investment Fund’s 70 per cent stake in SABIC too expensive.

The publication cited sources as confirming Aramco was seeking a discount exceeding 20 per cent on SABIC’s current share price of around SAR122.

The company later issued a statement dismissing recent media reports as “entirely speculative”.

Read: Saudi Aramco says media reports of SABIC deal troubles “speculative”

In an interview with the Financial Times published on Monday, Aramco CEO Amin Nasser highlighted the benefits of the deal, saying it could help the firm diversify and develop its chemical operations.

“Sabic has a strong market position, [and is] vertically integrated: there’s a lot of synergy with Saudi Aramco,” he was quoted as saying.

“It’s a very strategically [good] fit with what we are aspiring to be, which is [to be] deeper in the downstream sector.”

Nasser said talks were at an “early stage”, with due diligence still taking place and negotiations over price yet to begin.

More broadly the company is expanding into chemicals outside of the acquisition having awarded a contract to US engineering firm KBR to manage preliminary engineering and design work for a $20bn crude oil-to-chemicals project in collaboration with SABIC in April.

The facility would process about 400,000 barrels of Arabian light crude oil per day to produce around 9 million tonnes of chemicals and base oils and 200,000bpd of diesel for domestic consumption.

Read: Saudi Aramco, SABIC award initial contract for $20bn crude-to-chemicals project

The CEO also insisted the firm was still committed to an eventual listing after seemingly scrapping the plans in favour of the SABIC deal earlier this year.

However, he said any IPO would need to wait until after the integration of SABIC, which would “take some time”.

Read: Bruised bankers seek consolation prizes after shelved Saudi Aramco IPO