Aramco Delays Projects to Preserve Dividend

Thursday, 3rd September 2020
by Editorial Team

Attendees walk by a sign for the Saudi Arabian Oil Co. (Aramco) on display inside the King Abdulaziz Center for World Culture during a tour of the project in Dhahran, Saudi Arabia, on Friday, Nov. 25, 2016. When completed, the project designed for the Saudi Arabian Oil Co. (Aramco) will contain diverse cultural facilities, including an auditorium, cinema, library, exhibition hall, museum and archive. Photographer: Simon Dawson/Bloomberg via Getty Images

The world’s largest oil and gas company, Saudi Aramco, has delayed its multi-billion-dollar petrochemical and liquified natural gas (LNG) projects to maintain cash flow for the paying of dividends, according to Bloomberg.

Aramco is scaling back plans to construct a $20 billion crude-to-chemicals plant at Yanbu in eastern Saudi Arabia. Furthermore, the company is currently reviewing initial plans made earlier in the year to buy 25% of Sempra Energy’s Texas LNG terminal.

The hesitation to proceed with these expensive plans comes with the obligation to pay out $75 billion annually in dividends.

This is not the first example of Aramco putting projects on hold, Aramco suspended a deal to build a $10 billion refining and petrochemicals complex in China. Despite this, Aramco said it was still committed to downstream investments in China.