FT: Falling oil prices force Saudi Aramco, Adnoc to curtail global expansion

Two major Middle Eastern oil giants, Saudi Aramco and Abu Dhabi National Oil Company (Adnoc), are slowing their $60 billion acquisition spree amid falling crude prices and uncertain market conditions.

After aggressive expansion into gas, chemicals, and lubricants over the past three years, both companies are reassessing their M&A strategies as oil prices have dropped from over $80 a barrel in January to $67 recently, with analysts, cited by the Financial Times, predicting further declines due to oversupply.

Saudi Arabia has signalled a review of spending as prices fall below break-even levels for some Gulf states. Both companies have reportedly been directed by their governments to prioritise dividends over growth, though some gas-related deals may continue at a slower pace. Neither is currently pursuing BP’s lubricants business, Castrol.

Saudi Aramco’s recent acquisitions include stakes in China’s Rongsheng, the LNG business MidOcean, US lubricants brand Valvoline, and Horse Powertrain. It is exploring involvement in Woodside Energy’s Louisiana LNG project and increasing LNG supply to India. CEO Amin Nasser emphasizes efficiency and the company’s ability to invest counter-cyclically despite market challenges.

Adnoc has been even more active, with over $52 billion in deals including an $18.7 billion bid for Australian producer Santos, a $15.5 billion acquisition of German chemicals group Covestro, and plans to create a $60 billion chemicals company, Borouge Group International.

Adnoc has established an internal investment bank and launched XRG, a platform targeting top global rankings in chemicals and gas, with a focus on US investments under Donald Trump’s second term.

Insiders say Adnoc needs time to integrate its acquisitions amid oil price uncertainty. Analysts compare this current pause to China’s state-owned companies’ acquisition wave from 2009 to 2013, noting both Saudi Aramco and Adnoc want to avoid appearing as "dumb money" by rushing deals in a volatile market.

By Tamilla Hasanova