Drone Strike may Impact Aramco’s Output
Saudi chemicals giant Sabic has quantified the impact of September’s drone attack on oil facilities of its now almost-parent company Saudi Aramco last month at 400,000-500,000 t of product.
In presenting Sabic’s third quarter financial results, CEO Youself Al-Benyan answered questions that journalists and financial analysts had been asking recently. Speculation has focused on the refinery damage as one of several possible reasons for the latest postponement of Aramco’s long planned and long delayed initial public offering (ipo).
Speaking to journalists, Al-Benyan said the financial impact of the attack on Aramco is not expected to be significant. If there was any impairment, it would come in the fourth quarter.
Aramco is acquiring Sabic in a $69.1 billion deal sealed earlier this year at the urging of the Saudi government, which wants to see its flagship oil producer move downstream into refining and petrochemical production.
The economic environment for petrochemicals as well as oil was “challenging” in the third quarter, the Sabic CEO conceded. Slower global growth coupled with additional new capacities coming on stream had a negative impact on business as falling oil prices simultaneously put downward pressure on petrochemical prices.
Sabic said it took a 1.5 billion riyal impairment charge on its 25% investment in Swiss specialty chemicals producer Clariant.
With economic growth projected to be lower this year than last, Sabic management expects the challenges to earnings in the third quarter to persist for the rest of the year, Reuters reported. Al-Benyan said the company continues to review the value of all its assets as part of its annual planning.
“We think the next quarter could be worse,” Pritish Devassy, head of equity research at Al Rajhi Capital, told Reuters. “Next quarter could be the bottom for earnings for the petrochemicals sector.”