Saudi Arabia revealed more details about its planned initial public offering of the state-owned oil company Saudi Aramco. As part of Deputy Crown Prince Mohammed bin Salman’s vision to diversify the Saudi economy over the next decade and a half, the IPO of Aramco could raise cash while also making the company more transparent.
The Telegraph reported that Saudi Aramco plans a three-way listing, with shares listed in London, New York, and Hong Kong. Also, Aramco hopes to convince some of the oil majors, including ExxonMobil, BP and China’s Sinopec, into taking “strategic stakes” in Aramco, “offering them long-term access to upstream operations in return for cutting-edge technology or refinery deals,” a Saudi source told The Telegraph. Related: Crisis In Venezuela – A Lesson From Saudi Arabia
The IPO is slated for 2017 or 2018, and the Deputy Crown Prince previously said that he believes Aramco is worth somewhere around $2.5 trillion. If true, that would mean the proposed privatization of 5 percent of the company would be worth roughly $100 to $150 billion. The IPO would be worth five times more than any other offering in London’s history. However, many analysts question the Prince’s figure. Robin Mills of Qamar Energy, for example, says Aramco is probably only worth $250 to $400 billion.
The money that is raised from the IPO could be invested in non-oil sectors of the economy, a key plank of the Prince’s “Vision 2030,” a major economic transformation strategy initially outlined in April. Related: World’s Largest Shipping Company Preparing For Another Oil Price Crash
In another sign that the 31-year old Deputy Crown Prince is shaking up the Saudi government, over the weekend the long-time oil minister Ali al-Naimi was unceremoniously replaced by Khalid al-Falih, the head of Aramco. To be sure, the 80-year old al-Naimi was not expected to remain in his post for too much longer, but the reshuffling further cements the young Prince’s grip on oil policy. Mr. Naimi was overruled in Doha a few weeks ago by the Deputy Crown Prince, a sign that he was no longer the country’s most powerful voice on oil. Khalid al-Falih is a supporter of the Prince’s strategy to pursue oil market share and push out high-cost producers.
By Charles Kennedy of Oilprice.com
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