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Aramco plans to reduce its expenditures on ministers including Al-Falih

June 28, 2019 at 2:16 am

A general view shows the Saudi Aramco oil facility in Riyadh, Saudi Arabia 23 November 2007 [AFP PHOTO/HASSAN AMMAR/Getty]

Saudi Aramco is planning to impose new measures to reduce its annual expenditures on senior Saudi officials and ministers, including current energy minister Khalid Al-Falih.

The measures aim to separate the company from the Saudi Ministry of Energy, Industry and Mineral Resources, protect it legally, prevent global investors’ criticism, and prepare for the possibility of its future listing on the global stock exchanges, according to the Financial Times.

The British newspaper explained that the expenses to be reduced include the expenditures and “high salaries” of some ministers, which the company used to pay and keep confidential.

Al-Falih, who is also the director of Aramco, is using some of the company’s aeroplanes and staying in expensive hotel suites. This has negatively affected the profits of Aramco, the world’s largest oil and gas company by revenue with a net income of $ 111 billion in 2018.

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According to eight sources close to the company and the Saudi Ministry of Energy, Industry and Mineral Resources, the plans of their separation are becoming more important as plans of Aramco’s listing on stock exchanges and global equities have recently been gaining attention.

The sources pointed out that the company’s association with the ministry leaves it vulnerable to legal measures that may be taken in the United States based on a recent Congressional bill allowing the administration of President Donald Trump to sue members of the Organisation of Petroleum Exporting Countries (OPEC) for alleged complicity in oil prices. This may affect the Company’s properties in the United States.

According to previous US reports, Aramco paid in 2018 about $ 160 billion to the government, in the form of dividends, taxes, and intellectual property royalties. Aramco had produced an average of 13.6 million barrels per day in 2018.

Aramco’s headquarters is located in Dhahran, Saudi Arabia, while its offices and businesses are spread throughout the Kingdom, with more than 70,000 employees from around the world.