By Summer Said and Sarah McFarlane

DUBAI -- Saudi Arabia's state oil giant is reviewing plans to expand at home and abroad in the face of sharply lower oil prices and a heavy dividend burden it assumed as part of its recent initial public offering, according to people familiar with the matter.

Saudi Aramco is now slowing down and reviewing a $6.6 billion plan to add petrochemical output at its Motiva refinery in Texas, these people said. It is also reviewing a big natural-gas project with Sempra Energy in the same state, and pausing investments in refineries in China, India and Pakistan, these people said. At home, Aramco is delaying by a year plans, announced in March, to boost crude production capacity to 13 million barrels a day, from currently about 12 million, these people said.

Aramco didn't immediately return requests for comment.

In its December IPO, Dhahran-based Saudi Arabian Oil Co. promised shareholders $75 billion in annual dividends for the next five years. That pledge helped convince private investors to pay a premium for the thin slice of Aramco shares the government floated on the local stock market.

Other big oil companies, like Royal Dutch Shell PLC and BP PLC, have cut their dividend in recent months to preserve cash, amid sharply falling oil demand and prices thanks to the pandemic.

Aramco's flexibility to do the same is limited since the Saudi Arabian government -- which still owns 98% of the company -- relies on Aramco dividends for much of its funding.

Last month, Aramco said it would maintain its quarterly dividend at $18.75 billion, dwarfing free cash flow of $6.1 billion for the period. That was down from $20.6 billion a year ago, when oil prices were higher.

Aramco also reported a 73% fall in net profit in the second quarter. It said its capital expenditures would fall on the lower end of a range of between $25 billion and $30 billion, down from earlier projections of between $35 billion and $40 billion. The spending will target domestic crude production, it said.

That is a big turnaround from two years ago. At the time, Aramco laid out plans to invest $100 billion in chemical manufacturing, and unveiled a separate ambition to buy up to $160 billion in natural gas assets. The company said it wanted to become a player in the global natural gas market and also balance its giant oil production capacity with the ability to process crude into other products -- a diversification strategy employed by most of the world's biggest oil companies.

As part of this push, Aramco paid $69 billion to buy a controlling stake in Saudi Basic Industries Corp., or Sabic, the kingdom's biggest petrochemicals firm. It also paid $1.2 billion for a stake in South Korean refiner Hyundai Oilbank in December. The Sabic deal pushed Aramco's debt sharply higher after it consolidated the petrochemical company's liabilities.

Net debt as a percentage of total capital, a closely watched industry metric, jumped to 20.1% at Aramco in the just-ended second quarter. The company's target range is between 5% and 15%.

Amid that new financial pressure, billions of dollars worth of planned investment are now being delayed and reviewed and, in some cases, are now unlikely to proceed, according to the people.

Those holdups include a $20 billion refining and petrochemical complex in Yanbu, on Saudi Arabia's west coast, the people said. The project was supposed to get the green light late last year, with the project startup slated for 2025. Now, those plans are being reviewed, according to the people.

Also on pause is the expansion plan for its Motiva refinery in Texas, these people said. It had planned to spend $4.7 billion to build capacity to produce ethylene and another $1.9 billion to produce benzene and paraxylene.

That represents the second delay to the expansion, after Aramco pushed back a final investment decision for the project last year. Aramco is now also weighing whether to go ahead at all with the expansion, according to these people.

A deal with San Diego-based Sempra Energy is on hold, too, according to these people. Aramco agreed to buy 20 years worth of liquefied natural gas from a Sempra-led project planned for Port Arthur, Texas. Aramco also agreed to take a 25% equity stake in the project's first production phase. The deal was characterized as a first step in a much bigger plan to snap up natural gas assets. That first phase is now delayed until at least next year and the entire investment is being reviewed, according to people familiar with the matter.

Sempra said a final investment decision on the project is now expected in 2021, delayed from this year, but that "the agreement remains in effect and we continue to work with Aramco."

Aramco is also delaying plans to invest in refineries in Pakistan and India, these people said, and has also suspended a deal to build a $10-billion refining and petrochemicals complex in China's Northeastern province of Liaoning. The delay was first reported by Bloomberg last month.

At the time it entered that agreement, Aramco also said it planned to acquire a stake in a refining and petrochemical complex in the eastern Chinese city of Zhoushan. This plan remains intact and a priority for Aramco, according to the people.

One other investment still likely to go ahead is Aramco's planned purchase of a big stake in Indian conglomerate Reliance Industries' oil-to-chemicals business, the people said.

Aramco views an investment in India as a long-term strategic move, given it is a market with growing energy demand, said these people. Last month, Aramco Chief Executive Amin Nasser said that a final decision on the investment is pending.

Write to Summer Said at summer.said@wsj.com and Sarah McFarlane at sarah.mcfarlane@wsj.com 



  Corrections and Amplifications


  This article was corrected on Sept. 3, 2020 because it stated that Saudi Aramco was planning capital expenditures of between $20 billion and $25 billion. Saudi Aramco said its capital expenditures will be at the low end of a range of $25 billion to $30 billion.