Saudi Aramco will become more sensitive to fluctuations in the oil price with spending expected to be sharply affected, according to analysts at Jadwa Investment.
Aramco’s increased vulnerability to lower oil prices is closely linked to its recent plans to restructure.
In May 2015, it was announced that the state oil giant is to separate from the Ministry of Petroleum and Mineral Resources in a move to give it more autonomy. However, this is expected to drive a number of changes within the organisation, warn experts.
“We view Saudi Aramco’s restructuring as a step towards making it a more commercially-driven organisation with increased independence in financial matters.
“As a result, we see Saudi Aramco becoming more sensitive to movements in international oil prices, with prolonged periods of lower oil prices, as forecasted, affecting spending more sharply, much like other international oil companies (IOCs),” Jadwa said in a research note.
In the last five years, Saudi Aramco has invested heavily in developing infrastructure, especially in the downstream sector, including investing in three new refineries, it notes.
Between 2010 and 2014 it spent a total of $143bn on procuring services and materials from local companies, while its 2014 crude exports totaled 2.5 billion barrels (6.85 million bopd).
