Saudi Aramco is considering selling a stake in its sulphur operations as part of a broader plan to raise tens of billions of dollars from its infrastructure assets.
Three sources familiar with the discussions said the potential transaction could help the Saudi energy giant attract additional outside capital.
Aramco Expands Its Asset Sale Strategy
Aramco plays a central role in Saudi Arabia’s economy and remains the kingdom’s most important source of revenue through dividends and royalties.
However, Saudi Arabia is facing growing fiscal pressure as it funds an ambitious programme to diversify its economy beyond oil.
Aramco has therefore been reviewing potential asset sales, reducing costs and searching for ways to improve operational efficiency.
According to one source and calculations based on the assets under consideration, the company could eventually raise around $50 billion from its infrastructure portfolio.
Sulphur Deal Could Raise Up to $7 Billion
Aramco invited banks in May to submit proposals for a possible sulphur transaction, according to the sources.
The proposed deal is reportedly known internally as Project Yellowstone and could generate as much as $7 billion.
Aramco declined to comment on the discussions.
Sulphur is produced as a byproduct when hydrogen sulphide is removed from raw natural gas, making the gas suitable for further processing and export.
Aramco sells the commodity through its trading division and describes itself as one of the largest sulphur exporters in the Gulf and Red Sea region.
Storage and Export Terminals Under Review
The assets under consideration mainly include sulphur storage facilities and export terminals.
However, Aramco has not yet decided exactly which assets would be included in a potential transaction.
One source said the company was still reviewing the structure of the deal and was unlikely to launch the process before next year.
Saudi Arabia Relies Heavily on Aramco Revenue
More than 97% of Saudi Aramco is owned by the Saudi government, the kingdom’s sovereign wealth fund and related organisations.
The company remains the largest individual contributor to Saudi government revenue.
Raising capital from infrastructure assets could allow Aramco to unlock value without giving up control of its core oil and gas production operations.
Aramco Targets Global Natural Gas Growth
Aramco is also seeking to become a major international natural gas producer.
Its $100 billion Jafurah development is at the centre of that strategy and represents one of the world’s largest unconventional gas projects.
Last year, Aramco signed an $11 billion lease-and-leaseback agreement involving Jafurah’s gas processing facilities.
The deal was completed with a consortium led by BlackRock’s Global Infrastructure Partners.
Oil Export Terminals Could Be Worth $25 Billion
Aramco is also considering a potential transaction involving its oil export terminals, according to two sources.
One source estimated that the relevant assets could be worth as much as $25 billion.
The company is reportedly waiting for tensions in the region to ease before beginning the sale process. A transaction could be launched during the second half of the year.
Headquarters and Property Assets Considered
Aramco’s extensive real estate portfolio is also being examined as a possible source of funding.
The assets under review reportedly include the company’s headquarters campus.
One source estimated that the real estate portfolio involved could carry a valuation of approximately $10 billion.
Project Hydro Could Raise $500 Million
Aramco could also raise around $500 million by selling water infrastructure connected to its crude oil operations.
The potential transaction is reportedly known as Project Hydro.
Saudi water and wastewater infrastructure company Miahona and UAE-based Metito Utilities are among the parties said to be interested.
Metito declined to comment specifically on the Aramco assets but said it regularly assesses investment opportunities across the markets in which it operates.
Miahona did not immediately respond to a request for comment.
More Aramco Assets Could Be Sold
Aramco has already explored transactions involving several other parts of its infrastructure network.
Previous reports indicated that the company was working on the possible sale of gas-fired power plants valued at at least $4 billion.
The latest discussions suggest Aramco is continuing to expand its asset monetisation strategy as Saudi Arabia seeks more funding for its economic transformation plans.
