By: AGBI

Saudi oil giant Aramco has reportedly hired Citigroup Inc to advise on a potential stake sale in its oil export and storage terminals business.

The US investment bank was selected following pitches from several Wall Street lenders, Bloomberg reported, citing unidentified sources.

A formal sale process could begin as early as next year and is likely to draw interest from large infrastructure funds, the report added.  

Asset sales could allow Aramco to maintain its capital expenditure plans and keep its government shareholders happy with dividends, analysts told AGBI in May.

Aramco has “a lot of big ambitions”, said Robin Mills, CEO of consultancy Qamar Energy and an AGBI columnist, “and they’re under pressure to keep up dividend payouts” – perhaps more than other large oil companies.

Analysts including Mills said they expect US investors to lead the queue for any asset sale.

Aramco is evaluating various options, including selling an equity stake in its terminals business, as part of a broader strategy to monetise assets, including parts of its real estate portfolio.

The company, which is listed on the Saudi stock exchange, operates its main oil storage and export facilities at Ras Tanura in the Eastern Province, with additional terminals on the Red Sea.

In August Aramco signed an $11 billion lease-and-leaseback deal involving its Jafurah gas processing facilities with a consortium led by Global Infrastructure Partners, part of BlackRock.

Saudi Crown Prince Mohammed bin Salman met US President Donald Trump earlier this month in Washington, followed by multibillion-dollar announcements ranging from artificial intelligence to mining.

Aramco signed 17 agreements with US companies for $30 billion. They bring the total to 34 clinched since May, for a combined value of $120 billion. 

The company’s net profit for the July-September quarter fell 2.3 percent year on year to SAR101 billion ($26.9 billion). Revenue dropped 7 percent to SAR386 billion in the quarter versus a year earlier, driven by lower prices of crude and chemical products, as well as a decline in sales volumes.

Aramco stock closed 0.2 percent lower at SAR24.53 on Wednesday, but is up 28 percent so far this year.

The Saudi government owns 81.5 percent of the oil company.