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Wednesday, January 25, 2017

More Evidence That Saudi Is Experiencing A Huge Cash Crunch -- January 25, 2017

Two data points or recurring themes regarding Saudi Arabia:
  • the Prince Salman plan is to jump-start huge petrochemical plants
  • Saudi Arabia is burning through cash reserves
Back on September 6, 2016, it was noted that Saudi Arabia was considering canceling $20 billion worth of projects. 

More evidence today that Saudi is running short of cash: Reuters is reporting that Saudi Aramco shelves plans for venture with Malaysia's PETRONAS. Data points:
  • would have been a joint venture
  • would have been a $27 billion refining and petrochemical project in Malaysia
  • lots of excuses at the linked article
  • decision comes at a time when PETRONAS is struggling with the slump in oil prices
  • PETRONAS has cut back elsewhere
  • PETRONAS has yet to make a final investment decision (FID) on a controversial $27 billion LNG project in Canada
Note: this is a two-fer of bad news for Saudi. A petrochemical plant, if successful would generate cash. A refinery would provide a "customer" for Saudi oil. Saudi, canceling this joint venture, loses both.

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