Saudi Aramco Expands While Oil Retreats - Bloomberg

Saudi Aramco Expands While Oil Retreats - Bloomberg:

According to Khalid Al-Falih, Saudi Arabia’s energy and industry minister and chairman of Saudi Arabian Oil Co., “the world is going to be Saudi Aramco’s playground.” If it is, then that will be partly because some others have ceded ground.

In an interview with the Financial Times published this week, Al-Falih sketched out plans for Saudi Aramco to build an international exploration and production business for the first time. Traditionally, Aramco refrained from making direct investments in upstream projects elsewhere (as opposed to downstream projects such as refineries, where it remains quite active). 

The timing is interesting, as Aramco plans to take flight just as many of the listed oil majors have had their wings clipped. Oil investors demand more in the way of payouts these days. That’s partly because returns on the mega-projects built during the oil boom have been poor. It also reflects creeping concern about whether large-scale projects now risk being stranded to some degree by political or economic effects related to climate change. Shorter-cycle assets, such as U.S. shale, are in vogue, and Exxon Mobil Corp.’s higher spending – predicated in part on developing a major