Saudi Arabia to Sell Stake in Parent of State Oil Giant by 2018 - Bloomberg
Saudi Arabia plans to sell a stake “of less than 5 percent” in the parent of its state-owned oil company, the kingdom’s deputy crown prince said, revealing details of a listing that could make it the world’s biggest publicly traded firm.
In an interview in Riyadh, Prince Mohammed bin Salman said his advisers were working on a plan to offer shares in all of Saudi Arabian Oil Co. rather than just some of its refining subsidiaries. Saudi Aramco, as the world’s biggest oil exporter is known, would be listed on the domestic stock exchange as early as 2017 and no later than 2018, said the prince, the king’s son and second in line to the throne.
“The mother company will be offered to the public as well as a number of its subsidiaries,” the prince, who heads Aramco’s supreme council, told Bloomberg in a five-hour conversation.
By committing to sell shares in the parent bin Salman will give investors a stake in the world’s biggest oil fields and expose the assets that underpin the kingdom’s entire economy to unprecedented scrutiny. Aramco controls about 10 times the oil reserves held by Exxon Mobil Corp. and based on a conservative valuation of $10 a barrel, the company could be worth more than $2.5 trillion.
Saudi Aramco’s listing is the centerpiece of a broader economic transformation that the kingdom is planning in response to a global oil glut that has driven down crude prices and slashed revenue from its most valuable export. Aramco pumps more than 10 million barrels a day of crude, exceeding the domestic output of all U.S. oil companies combined.
The prince’s plans also call for Aramco to become the world’s largest oil refiner, overtaking Exxon, mainly by adding capacity in Asia, as well as pushing further into petrochemical production.
“We will also announce Aramco’s new strategy and will transform it from an oil and gas company to an energy-industrial company,” he said.
Bourse Listing
The plan calls for listing a small stake on the Tadawul, as the Arab world’s largest bourse is known, the prince said. The size of the stake hasn’t yet been decided, but he said: “We’re talking about less than 5 percent.”
The rest of Aramco would still be owned by the government but controlled through a sovereign wealth fund, which as a result of the share sale would become the world’s richest.
The Public Investment Fund, which holds stakes in local companies including petrochemical giant Saudi Basic Industries Corp., would eclipse sovereign wealth funds in Norway and Abu Dhabi.
“Undoubtedly, it will be larger than the largest fund on earth. We will surpass $2 trillion,” the prince said.
IPO Options
In January, Aramco said officials were studying two main routes for an initial public offering: an IPO of its parent and the listing of a bundle of its oil-refining subsidiaries. The sale of shares in the parent company -- the route now signaled by the kingdom’s deputy crown prince -- would open the door for private investors to own a piece of the world’s largest oil fields.
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