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Saudi Arabia is working to have its state oil giant Saudi Aramco list on a stock market as early as at the beginning of 2020, The Wall Street Journal reported on Friday, quoting people close to the talks.
Saudi officials—who have so far vaguely given a timeline in 2020 or 2021—are now reportedly hoping to use the positive market sentiment from Saudi Aramco’s first international bond sale in April this year.
Saudi Aramco’s IPO will take place, but probably in 2021, Aramco’s chief executive Amin Nasser said at the end of last year, when it became clear that the listing plans for 2018 or 2019 were put on hold as the Saudi oil giant focused on acquiring a 70-percent stake in chemicals company Sabic from the Public Investment Fund (PIF) of Saudi Arabia.
In March this year, Aramco signed the deal to buy 70 percent in Sabic for the equivalent of US$69.1 billion in Saudi riyals at the time.
Since Saudi Arabia first announced plans to sell shares in its oil giant in 2016, Aramco’s listing has encountered multiple potential problems, including the lofty US$2-trillion valuation that the Saudis were hoping for, the estimate of Saudi Arabia’s oil reserves that is shrouded in secrecy, and the international venue for the IPO.
Aramco’s listing plans quickly slipped from ‘definitely by the end of 2018’, as Saudi officials assured in early 2018, to ‘indefinitely postponed’ last summer.
In June this year, Saudi Crown Prince Mohammed bin Salman said that Aramco’s IPO is going ahead as planned and is on track for 2020 or 2021.
Mohammed bin Salman is reportedly still holding fast to the notion that Saudi Aramco should be valued at US$2 trillion, while analysts remain skeptical that the world’s largest oil company is truly worth that much.
By Tsvetana Paraskova for Oilprice.com
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Tsvetana is a writer for Oilprice.com with over a decade of experience writing for news outlets such as iNVEZZ and SeeNews.
It is, however, possible that a petrochemical IPO (a downstream one) could go ahead. The reasoning is that investors could see in their own eyes petrochemical assets but they can’t see reserves and therefore they can’t ascertain how much actual reserves are underground without a fully independent audit.
The original IPO can never be resurrected because Saudi Arabia will never submit its reserves to a truly independent audit.
Based on my research, I estimate Saudi remaining proven reserves at no more than 55 billion barrels.
Dr Mamdouh G Salameh
International Oil Economist
Visiting Professor of Energy Economics at ESCP Europe Business School, London