By Matthew Martin and Stefania Bianchi
(Bloomberg) — Saudi Arabian Oil Co., the world’s largest oil exporter, is planning to spend between $70 billion and $80 billion on overseas acquisitions and investments during the next five years, three people with knowledge of the matter said.
The investment is part of the state-owned company’s target of spending $150 billion at home and internationally through 2019, the people said, asking not to be identified as the information is private. Saudi Aramco, as the company is known, will focus on Asia, particularly China and Korea, they said.
Saudi Aramco is expanding in refining and petrochemicals and seeking to boost ties with Asia as part of its ambition to become both the world’s largest oil and chemicals producer by the end of the decade. Last year, it bought a $2 billion stake in S-Oil Corp., South Korea’s third-largest oil refiner.
The company has joint-venture plants in China, owns stakes in refining businesses in South Korea, Japan and the U.S. and markets its crude and refined products globally.
Aramco secured a $10 billion loan in March that could be used to fund potential acquisitions, people with knowledge of the matter told Bloomberg at the time. The company didn’t respond to requests for comment.
The Saudi state-owned oil company reduced its borrowing costs when it used the new $10 billion facility to replace a $4 billion facility, the company said in a later statement confirming the deal. That was despite the drop in oil prices.
Falling energy prices and low borrowing costs have sparked a wave of consolidation in the oil and gas sector. Mergers and acquisitions activity in the energy industry rose 58 percent to $355 billion in 2014, according to data compiled by Bloomberg.
The fall in oil prices has made some upstream assets more attractive to buy, Saif Al Falasi, chief executive officer at Emirates National Oil Co., said in April. The company is bidding to buy the 46 percent of London-traded producer Dragon Oil that it doesn’t already own, the company said in March.
Kuwait Foreign Petroleum Exploration Co., known as Kufpec, may increase the size of a $1 billion loan to $2.5 billion, three people with knowledge of the matter said in March.
Brent crude, a pricing benchmark for more than half of the world’s oil, has rebounded 13.7 percent this year to $65.21 a barrel as of 2:26 p.m. Dubai time, after falling almost 50 percent last year.
–With assistance from Anthony DiPaola in Dubai.