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Saudi Aramco signs preliminary gas deal with Shell

Reuters  |  LONDON/DUBAI 

LONDON/(Reuters) - State giant signed a preliminary deal to pursue international with on Thursday as part of top crude exporter Saudi Arabia's diversification drive before the listing of

The memorandum of understanding (MoU) signed in between the two companies was during the official visit of Saudi Crown to Britain, and would include gas upstream and liquefaction projects.

"It is a discussion that began some time ago and now we have signed a memorandum to work on from upstream to downstream across the world and in Concrete projects would be announced in due course," told after the signing ceremony.

Last year, industry sources told and international companies had discussed inside the kingdom and abroad.

is gearing up for a share listing later this year, aiming to get a valuation of up to $2 trillion in what could be the world's biggest initial public offering (IPO).

The kingdom has a long-term goal of increasing the use of gas for domestic power generation, thus reducing burning at home and freeing up more crude for export.

Expanding its gas portfolio inside the kingdom as well as abroad could help increase Aramco's valuation as it generates more revenue from exports than selling at lower domestic prices - is the world's fifth-biggest consumer despite being only the 20th-biggest economy.

Saudi Khalid al-Falih, who is also Aramco's chairman, had said was interested in investing in international upstream ventures, particularly gas, and could invest in importing gas into the kingdom.

Diversifying abroad would help achieve a better valuation and is attractive for investors, industry sources has said. also plans to raise domestic gas prices, a move seen as an incentive for foreign companies.

in excess of 8 trillion cubic metres, according to BP's The has said it wants to explore for gas in the shallow waters of the as well as

Aramco's is part of the kingdom's push to diversify its economy away from oil, a strategy known as "Vision 2030" championed by Mohammed, amid a global drive to phase out the most polluting fossil fuels.

(Reporting by and Rania El Gamal; Editing by Mark Potter and David Evans)

(This story has not been edited by Business Standard staff and is auto-generated from a syndicated feed.)

First Published: Thu, March 08 2018. 22:43 IST