Saudi Arabia considers Aramco public listing

SAUDI ARABIA is considering a limiting listing of Saudi Aramco shares, Deputy Crown Prince Muhammad bin Salman has told The Economist.

If fully privatised, the state-owned oil giant would likely become the world’s most valuable company with an estimated value of more than US$1trn, almost double that of Apple, although the secretive state reveals little about the company’s finances. Saudi Aramco has oil reserves in excess of 260bn bbl, around 16% of global oil reserves. The company produces around 10m bbl/d oil. The next largest oil company, ExxonMobil, produces around 4m bbl/d. Saudi Aramco is likely to be highly attractive to investors.

“Personally I’m enthusiastic about this step. I believe it is in the interest of the Saudi market, and it is in the interest of Aramco, and it is for the interest of more transparency, and to counter corruption, if any, that may be circling around Aramco,” Prince Muhammad said.

Saudi Arabia is the world’s largest oil exporter and the oil industry accounts for around 80% of budget revenues and 45% of GDP. The collapse in the oil price has therefore had a large impact on the country’s finances, and it is seeking ways to raise money to fill the deficit.

Prince Muhammad told The Economist that the move would be part of wider privatisation efforts to help raise revenue for the country, including in healthcare, education and military industries, as well as other state-owned companies. A potential sale is currently being reviewed and the prince said a decision will be made in the next few months.

Diplomats told The Economist that the initial listing of Saudi Aramco is likely to be limited to around 5% of the company, and while this proportion may rise, the government will want to retain control.

Fadel Gheit, an analyst for Oppenheimer & Co told the BBC that floating Saudi Aramco on the stock market would make “a lot of sense”, and that selling just 20% of the company would fund Saudi Arabia’s budget for a year.