Saudi Aramco is coming up as the biggest loser of the oil price war

Anyone who was even halfway smart knew that the last Saudis-instigated oil price war would end in grave failure for the Saudis, just like previous efforts in 2014-2016 and for exactly the same reasons. For Crown Prince Mohammed bin Salman (MbS), one of the masterminds of the oil war, the economic and political problems his country is now facing seem far from preserving what he believes is left of its own reputation is the most obvious public manifestation of which is the result of the internationally shunned omni-shambolic IPO of the hydrocarbon giant Saudi Aramco (Aramco). As a result, drastic cuts are now being announced on key projects for Saudi Arabia to add to one of the incentives needed to get everyone to buy the shares - the triple guaranteed dividend payout. Despite Aramco's 50 percent plunge in net income in the first half of this year - a consequence of the Saudis-led oil price war at a time when demand was already stalled by the COVID-19 outbreak - the company is still committed to In this quarter alone, to hand over $ 18.75 billion to those who bought Aramco shares during the IPO. That dividend obligation - and it will total $ 75 billion for the full year - has to be paid for through budget cuts that go beyond the $ 15 billion Aramco spends annually on investments and which Aramco CEO Amin Nasser shortly after alludes to the winning numbers. This will bring the total down from about $ 40 billion to about $ 25 billion. Other reports say that even that $ 25 billion will be cut by another $ 5 billion, bringing total capital expenditures down from $ 25 billion to $ 20 billion this year. Regardless of the cuts, it remains a blatant fact that the two dividends for the first two quarters of this year - $ 37.5 billion - add up to Aramco's total free cash flow of $ 21.1 billion for far surpass the same period. This looks even worse for Aramco - and Saudi Arabia as a whole - when you consider that the latest release of results shows that the "purchase" of a 70% stake in the kingdom's main petrochemical company, Saudi Basic Industries Corporation ( SABIC), by Aramco for the originally planned 69.1 billion US dollars, increasingly looks like a bad decision. SABIC accounted for 91 percent of the combined losses of SAR 2.4 billion ($ 639.89 million), according to results gathered by data firm Mubasher, based on the companies’s financial results disclosed to the Saudi Arabian Tadawul Stock Exchange. that were generated by the petrochemical companies listed in Saudi Arabia in the second quarter of this year alone. Specifically, SABIC lost 2.22 billion SAR in the second quarter alone. Among the numerous projects to be put on hold indefinitely is the once-lauded flagship, the $ 20 billion facility for converting crude oil into chemicals in Yanbu on the Saudi Red Sea coast, according to various reports emerges. The similarly high-profile purchase of a 25 percent multi-billion dollar stake in Sempra Energy's liquefied natural gas (LNG) terminal in Texas is also apparently at risk, although Sempra has stated that it will continue to work with Aramco and others "on our Port Arthur project Advancing LNG ". In the same vein, Aramco has suspended its key business over $ 10 billion to expand into mainland China's refining and petrochemical sectors through a complex in northeast Liaoning province, via the Saudi up to 70 percent, according to various news sources of 300,000 barrels per day of crude oil for the proposed refinery. In conclusion, all of Aramco's major projects aimed at diversifying Saudi Arabia away from the relatively worthless pursuit of just pumping and selling crude oil must now be reviewed and / or suspended altogether.