DAMMAM, Saudi Arabia (Reuters) - Oil giant Saudi Aramco (IPO-ARMO.SE) expects to increase its capital spending budget by almost 10 percent in its next financial year, a top official at the state-owned company said.
The plans to increase investment come as Aramco prepares for an international initial public offering (IPO) as part of Saudi Arabia’s Crown Prince Mohammed bin Salman reforms to make the kingdom less reliant on oil.
Aramco’s senior vice president of technical services, Ahmad al-Sa’adi, told a business conference on Thursday that the company’s allocation for capital spending in its current financial year is almost 350 billion riyals ($93 billion) and would rise by about 10 percent the following year.
Al-Sa’adi added that the rise in spending will provide big opportunities for Saudi contractors looking to increase their involvement with Aramco.
Earlier, Britain said it will provide $2 billion in credit guarantees to Saudi Aramco so it can buy British goods and services more easily, but denied this was part of efforts to persuade it to list in London.
Saudi Aramco continued spending on its energy projects despite falling oil prices.
On Thursday it signed agreements worth $4.5 billion with international engineering and construction firms; of which the biggest will boost gas production.
At the signing, Sa’adi said the six oil and gas agreements reflect the strong commitment of Aramco to boost gas production and maintain crude production capacity.
“Saudi Arabia still remains one of the most attractive markets for everybody, I think next year will offer a lot of opportunities as the market is improving,” Daniele Quintarelli, the CEO of the Saudi unit of Saipem (SPMI.MI), said after the signing in Saudi of an agreement with Saudi Aramco to expand the Hawiyah gas plant.
In the Saudi construction sector, non-energy related projects were hit hard last year as the government, its finances strained by low oil prices, delayed paying contractors.
However, Saudi state finances have strengthened this year because of moderately higher oil prices and cost-cutting.
The contracting sector represents around six percent of Saudi GDP with a business volume worth 300-350 billion riyals, Sa’adi said in a statement.
According to forecasts, the sector is approaching steady growth to keep pace with the kingdom’s industrial, service and housing expansion projects, the statement added.
(This version corrects title of Saipem official in 7th paragraph)
Reporting by Reem Shamseddine; Editing by David Goodman and Alexander Smith