Breakingviews - Aramco’s downstream diversion solves few problems | Reuters

Breakingviews - Aramco’s downstream diversion solves few problems | Reuters:

Saudi Aramco has a new way to keep corporate financiers busy. The state-owned oil giant has spent more than two years weighing up what would be the world’s largest ever initial public offering. Now it might buy a stake in petrochemical maker Saudi Basic Industries Corporation. Though it’s not unusual for oil producers to diversify into making oil-based products, the deal would do little to help Saudi Arabia achieve a couple of key objectives.

There are scant details about the possible investment, which Aramco confirmed on Thursday following a Reuters report. The oil group says it has been looking at possible acquisitions at home and abroad, and that it is in talks with Saudi’s Public Investment Fund (PIF), which owns 70 percent of SABIC. Yet it’s unclear whether Aramco would buy all the shares or just take a minority stake in the $104 billion company.

There’s some logic to either option. As one of the world’s lowest-cost producers, there’s little point in Aramco buying other oil fields. Moving into refining and selling petroleum-based produc