Saudi Arabian sovereign wealth fund has raised approximately $ 1 billion in stakes in four major European oil companies, say sources, buying assets it sees as undervalued in a market depressed by the coronavirus pandemic and low oil prices.
The stakes in Equinor ASA, Royal Dutch Shell PLC, Total SA and Eni SpA have all been bought by the Public Investment Fund on the open market in recent weeks, said the people, who added that the fund could continue to buy stocks.
Investments Mark Significant Tactical Change For About $ 300 Billion Public Investment Fund, Charged By Crown Prince Mohammed Bin Salman To Diversify The Country’s Economy Away From Oil By Investing Largely In Non-Businesses And Industries related to hydrocarbons.
Purchases also occur at a precarious financial moment. Saudi Arabia’s budget deficit is expected to widen this year as oil revenues fall and the kingdom increases spending to finance a stimulus package to tackle economic damage caused by a nationwide blockade of coronaviruses.
Last week, PIF bought an estimated $ 200 million stake in the Norwegian state-owned oil giant Equinor. A Saudi Arabia-nominated account with JPMorgan Chase & Co. accumulated approximately 14.5 million shares – or 0.43% of total shares – between March 30 and April 6, according to Oslo data Market Solutions. The move made the account the 12th largest shareholder in Equinor.
It was not possible to determine the size of the units that PIF had purchased in Royal Dutch Shell, Total and Eni, but people familiar with the investments said the combined units were worth about $ 1 billion.
Spokesmen for Equinor, Royal Dutch Shell, Eni and J.P. Morgan declined to comment while the Saudi Arabian Public Investment Fund and Total did not respond to a request for comment.
The purchases took place during a tumultuous few weeks on the oil markets. Oil prices have dropped nearly 30% since the start of March, when Saudi Arabia launched a price war with Russia but staged historic rallies last week.
US crude oil posted its biggest percentage gain on Thursday after President Trump and the Saudi regime expressed optimism about the possibility of a deal between the Organization of Petroleum Exporting Countries and other oil exporting countries to remedy a global oil glut.
The Saudi $ 300 billion sovereign wealth fund is controlled by Prince Mohammed and led by Yasir al-Rumayyan – who is also president of Saudi Aramco, a majority-owned company. The fund unveiled an 8.2% stake in Carnival Corp., the world’s largest cruise operator, whose shares fell more than 75% this year on Monday.
This investment came after large-scale transactions in recent years, including a $ 3.5 billion stake in Uber Technologies Inc. and a $ 45 billion commitment to the Vision fund of SoftBank Group Corp.
Stocks in the travel and energy sectors were among those hammered by government restrictions and travel bans prompted by the coronavirus pandemic. Equinor shares have reduced some of their heavy losses so far this year last week, but remain down 23% for 2020. Shares closed 0.3% lower at 135.80 Norwegian kroner Wednesday.
Shell, Total and Eni lost 35%, 31% and 33% of their value in 2020, respectively, while Brent crude, the global benchmark, is down 52%.
OPEC and other oil-producing countries, including Russia, are scheduled to call a teleconference on Thursday before the Group of 20 Nations hosts a meeting of energy ministers on Friday to discuss the conclusions of the OPEC meeting. +.