Aramco Cash Explains Surge in Saudi Oil Revenue That Puzzled Analysts

(Bloomberg) -- Payments from oil giant Saudi Aramco were behind the surge in the kingdom’s oil revenue in the first quarter, Finance Minister Mohammed Al-Jadaan said, explaining an increase that puzzled economists.

“We received royalties, tax, dividends and special dividends in the first quarter, like we did last year” from Aramco, Al-Jadaan told Bloomberg Television in an interview in Riyadh on Thursday. He also said the kingdom plans to tap international bond markets again this year.

The minister spoke one day after data showed oil revenue climbed to about 169 billion riyals ($45 billion) from 114 billion riyals in the first quarter of 2018. Overall, the biggest Arab economy started the year with a budget surplus for the first time since 2014 as non-oil revenue also increased.

“We implemented significant reform, we implemented significant discipline on budget, efficiency, non-oil revenue and obviously oil revenue,” Al-Jadaan said. “A combination of all of this resulted in the revenue that we have announced.”

But economists said the rise in income from oil couldn’t be explained by price or production movements, fueling speculation that it was due increased transfers from state entities.

Al-Jadaan also said the government will return to global bond markets in the third quarter or “may be earlier.” He said the issuance currency could be in euros or dollars.

Read: Saudis Plan Smaller Global Bond Sales as Local Debt Takes Off

Global banking chiefs descended on Riyadh this week to attend an investment conference six months after shunning a similar event following the murder of U.S.-based columnist Jamal Khashoggi by Saudi government agents in Istanbul.

Excutives including HSBC Holdings Plc Chief Executive Officer John Flint and BlackRock Inc. CEO Larry Fink participated in panel discussions, praising Saudi economic reforms and business opportunities in the latest sign that it’s back to business as usual for Saudi Crown Prince Mohammed bin Salman. Two weeks ago, Aramco raised $12 billion in its first bond sale, after receiving bids more than eight times that amount.

Al-Jadaan said he’s seeing more foreign investments into the biggest Arab economy.

“We are seeing money coming back to Saudi,” he said. “We are seeing money from local investors coming back to investments. We are seeing a lot of confidence in our debt instruments.”

©2019 Bloomberg L.P.