Saudi Arabia says it will launch the float of its state-owned oil firm this month after heavily scaling back plans for a listing.
Riyadh will only list 1-2 per cent of Aramco on its Tadawul stock market for an estimated value of more than US$20 billion.
It represents a U-turn from an initial bid to list around 5 per cent of the Dhahran-based oil major both in Saudi and internationally, implying a record-breaking US$2 trillion valuation that industry analysts have long doubted can be achieved. It sparked an undignified race between London and New York to win Aramco’s business.
Aramco is the greatest contributor to global carbon emissions of any firm on the planet since 1965.
The float is expected to be launched on November 3 with trading in Riyadh due to start on December 11.
The firm, formally known as the Saudi Arabian Oil Company, has about 76,000 staff. It has the exclusive rights to Saudi oil reserves of approximately 257 billion barrels. Last year its oil and gas output was the equivalent of 13.6 million barrels of oil and gas per day, including 10.3 million barrels per day of crude oil. Aramco is also a major refining power.
Pricing and the size of the stake to be sold are to be confirmed in the coming weeks.
BP reported that Saudi Arabia produced 12 million barrels of oil per day last year or 12.9 per cent of the world’s production. In Saudi Arabia, all of the oil production is controlled by Aramco, reportedly the most profitable firm in the world.
Saudi state broadcaster Al-Arabiya reported that the offering price would be announced on November 17, to begin a subscription for investors on December 4 and to trade on the Tadawul from December 11.
Aramco said: “The company continues to engage with the shareholders on IPO readiness activities. The company is ready and timing will depend on market conditions and be at a time of the shareholders’ choosing.”
Aramco reported a profit of US$46.9 billion in the first six half of 2019: almost 10 times that of Exxon Mobil, the largest listed oil company.
The Saudi royals hope to reduce the kingdom’s dependence on oil and gas, which account for about 50 per cent of gross domestic product and 70 per cent of export earnings.
Saudi Arabia has 297.7 billion barrels of proven reserves and great influence over its Opec partners and Russia, which together account for 77.9 per cent of world oil reserves and 53.6 per cent of production. The US accounts for 3.6 per cent of reserves and 16.6 of production.
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