DUBAI – Saudi Arabia’s oil giant Aramco 2222.SE secured a one-year extension of a $ 10 billion loan raised last year, while agreeing to improve terms, three sources told Reuters.
Over the past few years, Aramco has borrowed tens of billions of dollars to meet Saudi Arabia’s funding needs in an era of low oil prices.
This is in addition to the public sale of a minority stake in the company and the recent lease of some of its pipeline assets for $ 12.4 billion.
Over the past few months, it has renegotiated terms and made a $ 10 billion annual loan raised in May last year, three sources with direct knowledge of the matter said.
The loan had a one-year renewal option, sources said, but instead of paying a higher interest rate to renew the deal – as agreed under this line of credit – it asked for better terms to reflect improved market conditions.
Prices are lower than the original loan, according to one source, due to the “COVID premium” that arose from poor market conditions last year.
Two sources said the extended facility is paying 30-40% less than it would have paid under the original agreement.
“They are very good at negotiating,” another source said.
Aramco did not immediately respond to a request for comment.
The banks continue to lend to Aramco and are meeting what one banker called “aggressive” price requests, in part because of the new business they are expected to create, the two sources said.
Saudi Arabia’s Crown Prince Mohammed bin Salman said in April that the kingdom is in talks to sell a 1% stake in Aramco to the global energy company and may sell additional shares over the next years or two, including to international investors.
Sources said Aramco is also trying to replicate the pipeline deal by selling a stake in its pipelines.
The $ 12.4 billion deal was backed by nearly $ 11 billion in debt signed by eight banks and subsequently syndicated to another 10 banks, two sources said.