Aramco weighs sulphur stake sale to raise cash

Saudi Aramco is considering the sale of a stake in its sulphur business as the state-controlled energy group expands a wider drive to unlock cash from infrastructure assets and support Saudi Arabia’s investment-heavy economic transformation.

The potential transaction, known internally as Project Yellowstone, could raise as much as $7 billion and would cover assets linked to sulphur storage and export terminals. Aramco invited banks last month to pitch for advisory roles on the deal, three people familiar with the matter said, though deliberations remain at an early stage and no final decision has been taken.

The plan marks another step in Aramco’s shift towards monetising parts of its vast asset base while retaining operational control over core oil and gas activities. The company is examining a broader package of possible disposals that could raise about $50 billion, including oil export terminals, real estate, water infrastructure and power assets. The strategy reflects pressure on the kingdom’s finances as Riyadh pursues large-scale projects under Vision 2030 while managing fluctuating oil revenue and heavy spending commitments.

Sulphur is produced as a by-product of oil refining and natural gas processing. It is used mainly in the production of sulphuric acid, a key input for fertilisers, metals processing, chemicals and industrial applications. Aramco’s large upstream, refining and gas-processing network gives it a significant position in the regional sulphur market, where Middle East producers play an important role in seaborne supply.

The timing is notable because sulphur markets have tightened sharply over the past two years. Demand from fertiliser producers and metals processors has expanded, while logistics disruption and geopolitical risk across the Gulf have increased the strategic value of storage and export facilities. Prices in several import markets have risen steeply, with demand from nickel processing in Indonesia and fertiliser production in Asia adding pressure to supply chains.

Aramco’s sulphur business is not a standalone consumer brand but a logistics-heavy operation tied closely to production, processing and export infrastructure. That makes it attractive to infrastructure funds seeking long-duration assets with predictable cash flows. The model would likely mirror previous Aramco transactions in which investors acquired economic interests in infrastructure while the company continued to operate the underlying assets.

Aramco has already used that approach in major pipeline and gas deals. A consortium led by Global Infrastructure Partners, now part of BlackRock, agreed last year to invest $11 billion in infrastructure linked to the Jafurah gas development. Earlier transactions involving oil and gas pipeline networks brought in tens of billions of dollars from global investors, while leaving Aramco in charge of operations.

The company’s latest asset-sale push comes as Saudi Arabia balances ambitious spending with a more cautious fiscal backdrop. The 2026 budget projects expenditure of about 1.31 trillion riyals and revenue of about 1.15 trillion riyals, implying a deficit of 165 billion riyals, or roughly $44 billion. Riyadh has signalled that deficits may continue for several years as it prioritises projects in logistics, tourism, technology, industry and energy transition-linked sectors.

Aramco remains central to those plans. The government is the dominant shareholder and relies heavily on dividends, taxes and royalties from the company. Aramco declared a first-quarter base dividend of $21.9 billion for 2026, up 3.5 per cent year on year, while capital expenditure reached $12.1 billion as the company continued to fund upstream, gas and downstream expansion.

The company is also managing a changing oil-market environment. Crude prices have been supported by geopolitical risk, but long-term forecasts point to rising non-Opec supply, uncertain demand growth and pressure from the global energy transition. Asset monetisation allows Aramco to raise capital without issuing large amounts of new equity or cutting deeply into operational spending.

The sulphur transaction could test investor appetite for assets linked to a commodity that is both industrially important and exposed to cyclical demand. Fertiliser consumption, mining activity and refinery output all influence sulphur flows. A stake sale may therefore require careful structuring, with buyers seeking clarity on long-term volumes, tariff arrangements, export access and regulatory treatment.

Potential bidders are expected to include infrastructure funds, sovereign-backed investors and specialist energy-infrastructure vehicles already active in the Gulf. The kingdom has sought to draw deeper foreign capital into strategic sectors while giving investors access to assets connected to one of the world’s largest energy systems.