Saudi Aramco - which is the largest oil producer in the world - is reconsidering its plans to expand internally and externally in light of the sharp decline in oil prices and the burden of dividend distribution that weighs on it as part of its recent IPO.
The Wall Street Journal, citing informed sources, reported that Aramco is now working to slow down and review a $ 6.6 billion plan to add petrochemical production at its Motivia refinery in Texas.
It is also reviewing a large natural gas project with the US company Sempra Energy in the same state, and it will suspend its investments as well in refineries in China, India and Pakistan.
Aramco will postpone for a year, plans it announced last March to increase crude production capacity in Saudi Arabia from about 12 million barrels per day currently to 13 million barrels per day.
The company - which is based in the eastern city of Dhahran, Saudi Arabia - had promised shareholders in its initial public offering last December to distribute an annual dividend of $ 75 billion for the next five years.
That promise helped convince investors to pay off a installment of the few Aramco shares that the Saudi government has offered on the local bourse.
Earlier last month, Aramco announced that it would maintain its quarterly profits at $ 18.75 billion, and revealed a decline in its net profit by 73% in the second quarter of the year, announcing that it would reduce capital expenditures by nearly half by between $ 20 billion and $ 25 billion. Net debt as a percentage of total capital jumped to 20% in the second quarter that just ended.
In the midst of these new financial pressures, Aramco is now working to postpone and reconsider billions of dollars in investments that it had planned, and it may not even likely go ahead with some investment projects, according to sources quoted by the Wall Street Journal in its report.