Saudi Aramco needs cash with oil prices at a 17-year low - and now it may reportedly sell a piece of its pipeline unit

• Saudi Aramco may sell a stake in its pipeline business to shore up cash amid the oil market downturn, Bloomberg reported.
• The world's largest oil producer is looking to raise capital ahead of its distribution of $75 billion in dividends through 2020 and payments for its $70 billion acquisition of chemicals producer Saudi Basic Industries, according to Bloomberg.
• Selling the unit would bring in up to $10 billion.
• The firm is mired in an oil-price conflict between Saudi Arabia and Russia that has seen the market flooded with unwanted inventory. Oil's price slipped to a 17-year low on Monday as the bout escalated and coronavirus fears pushed demand even lower.
• Watch Saudi Aramco trade live here.

Saudi Aramco is stuck in an unprecedented price war and may need to sell a stake in its pipeline business to raise capital, Bloomberg reported Monday.

The precipitous drop in oil prices through the month has the world's largest producer strapped for cash ahead of some massive payments. The company still plans to dole out $75 billion in dividends this year despite the market turmoil and broad economic slump. Aramco also faces a payment deadline for its $70 billion purchase of chemicals producer Saudi Basic Industries, according to Bloomberg.

Selling the portion of the firm's pipeline unit could raise up to $10 billion, people familiar with the matter told Bloomberg, and Aramco has already held some discussions with potential buyers. Talks are in early stages and the company could pivot away from selling the business, according to Bloomberg.

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The company is rapidly boosting its production levels as the coronavirus tanks global oil demand through travel bans and stay-at-home orders. The move is in response to Russia's refusal to curb production and lower supply in the key commodity market. Tit-for-tat measures between Saudi Arabia and Russia have since driven oil prices to roughly $20 per barrel as the two countries flood the market with new inventory.

The oil market downturn and coronavirus fallout are already hitting Aramco's future spending plans. Capital expenditures are projected to land between $25 billion and $30 billion in 2020, Bloomberg reported, well below the $35 billion to $40 billion range projected in the firm's initial public offering documents.

Aramco has indicated it will maintain its production pace through May. The US has pressured Saudi Arabia to slow production and avoid pulling the market even lower, but the OPEC leader hasn't changed course.

Saudi Aramco traded at 29.95 riyals ($7.97) per share as of 1 p.m. ET Monday, down about 15% year-to-date. The state-owned firm is the world's most valuable publicly traded company.

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