Saudi Arabia considers Aramco share sale

Ultra conservative Saudi Arabia is considering selling shares in state-owned Saudi Aramco, the largest oil producer while Nigeria dithers from taking the drastic steps required to revive its collapsing economy.

The move by Saudi Arabia which in one day raised petrol price by 50% last month, will certainly create the most valuable listed company in the world say analysts.

Mohammed bin Salman, the kingdom’s deputy crown prince told The Economist he was “enthusiastic” about launching an initial public offering of Saudi Aramco and a decision would be made “over the next few months”.

His comments came as the world’s largest oil-exporting nation struggles to contain a burgeoning deficit of nearly $98bn following the oil price’s spectacular 70 per cent collapse over the past 18 months.

The Saudi government recently unveiled spending cuts for this year, subsidy reforms and called for privatisations to rein in its widening deficit and if it goes ahed with Aramco’s floatation, it could sell up to 20% of the firm for as much as $200bn.

Like Nigeria, Saudi Arabia’s annual revenues — tied closely to the price of oil — are forecast by the International Monetary Fund to have plummeted 34.5 per cent last year. However, while the world moves on fast paced, Nigeria has been resisting the much needed reforms that will usher in privatisations, true diversification of its economy and in particular the sale of part of its holding in the oil joint ventures.

“I believe it is in the interest of the Saudi market, and it is in the interest of Aramco,” Prince Mohammed said.

He said taking the group public would create “more transparency” and “counter corruption, if any, that may be circling around Aramco”.

A full listing of the oil group could value it in the trillions of dollars. By contrast iPhone maker Apple, currently the world’s most valuable company, is worth $543bn.

Prince Mohammed has become Saudi Arabia’s main powerbroker since his father, King Salman, ascended to the throne last year. As well as acting as defence minister, he is leading efforts to restructure the country’s economy. In May, the king split Saudi Aramco from the oil ministry, bringing the company under the aegis of Prince Mohammed, in another sign of the 30-year-old’s growing clout.