RIYADH: Saudi Aramco can issue longer-term bonds up to 50 years and may offer the financial instruments in 2024 as markets improve, according to a senior executive.
During a panel session at the third Saudi Capital Market Forum, Ziad Al-Murshed, executive director of new business development at Saudi Aramco, prioritized long-term goals and plans over short-term ones, hinting at a not-too-distant timeframe.
“We’re always prioritizing longer term over short term. The timeframe I don’t want to give you exactly but it’s not very far away. Likely in 2024,” Al-Murshed said.
He added: “We’re looking at many objectives for that program, not least of which is flattening our debt maturity schedule, which is why we’re prioritizing kind of mid to long-term bonds.”
When asked about the outlook for dividends, the executive noted that the company aims for sustainability and progression, demonstrated by a 4 percent increase in dividends last year from $75 billion to $78 billion.
“We’ll decide on this year’s base dividend after board discussions. Our consistent delivery, even during the pandemic, offers investors comfort. Last year, we increased dividends to $78 billion,” Al-Murshed said.
He added: “We also introduced a component, which is a performance-linked dividend. The board decided to combine the performance of years 2022 and 2023 because of the stellar performance in 2022 that resulted in additional payments in 2023, Q3 and Q4 of about less than $20 billion.”
He noted that the company has completed assessing the performance for the years 2022-2023, and they will announce the results in early March.
The performance-linked dividends will be distributed over the four quarters of 2024, providing investors with comfort during downturns and sharing the benefits of strong performance, along with the significant increase in dividends.
“We would consider selling bonds but not to support the dividends,” he said.
During a session at the forum, Manar Al-Moneef, chief investment officer at NEOM, discussed her company’s significant role as a major customer for various industries over the next three decades.
“In logistics, we’re going to be moving 375 million tonnes of earthwork by 2030 and by 2055 this is going to go to 2.2 billion tonnes, that’s 5 percent of the global demand per year,” she said.
The executive added: “Our demand is around more than 3.6 million tonnes till 2030. That is 25 percent of the global traded capacity. If you’re going to be the largest customer for the next three decades, our approach is not just to focus on the normal purchasing plan, completely the opposite.”
Furthermore, she outlined the strategic focus on utilizing NEOM’s influence to develop new and profitable industries in Saudi Arabia. These efforts will be centered around five key pillars including creating a profitable industry, focusing on attracting foreign direct investment, creating jobs, reducing costs, and driving innovation.
Al-Moneef also noted that NEOM will be 100 percent powered by renewable energy, as the company has the “best wind speed among the three top destinations globally in wind speed in NEOM.”
“We’re (also) desalinating water using zero liquid discharge. We will use the water of the sea to desalinate and use the brine to produce other minerals that is required,” she said.
The executive added: “We will use NEOM platform as a new destination to be able to create together ESG taxonomy, ESG standard, ESG ranking, and evaluation. By implementing energy-efficient infrastructure, you will be able to save a minimum of 15 to 20 percent in apex, which actually implies a lot of saving.”
The sessions concluded with a discussion with the CEO of King Abdullah Financial District, Gautam Sashital, who laid emphasis on enhancing the quality of life which involves sustainability, smart technology, and accessibility 24/7.
He also stated that sustainability also includes creating a “10-minute city” effect, aiming for convenience and efficiency.
Having the advantage of a relatively new infrastructure allows for the integration of technology to enable smarter living and working environments.
“Saudi Arabia is at the cusp of massive transformation, and KAFD will be a small part of that, creating these jobs, adding to the non-oil sector growth,” Sashital stressed.
