Saudi Arabia's Aramco Moves Closer to World's Largest IPO

Saudi Arabia will be primary listing, CEO says, but New York, London, Hong Kong and Tokyo have been keen to woo Saudi officials to trade shares in Aramco

In this file picture taken May 14, 2012, Prince Mohammed bin Salman (MBS) speaks with a Saudi prince while he waits for Gulf Arab leaders ahead of the opening of Gulf Cooperation Council summit, in Riyadh, Saudi Arabia
In this file picture taken May 14, 2012, Prince Mohammed bin Salman (MBS) speaks with a Saudi prince while he waits for Gulf Arab leaders ahead of the opening of Gulf Cooperation Council summit, in RiCredit: AP Photo/Hassan Ammar

Saudi Aramco is primed to float on international markets to complement a planned domestic initial public offering (IPO) which has been selected as its primary listing, the state oil giant's chief executive said on Tuesday.

An IPO of Saudi Aramco would happen "very soon", Amin Nasser cited the kingdom's new energy minister Prince Abdulaziz bin Salman as saying, adding that the ultimate decision on the venue and timing of the flotation rested with the Saudi government.

"We have always said that Aramco is ready whenever the shareholder makes a decision to list ... so we are prepared, that's the bottom line," Nasser told reporters.

"It is going to be the primary listing, to list locally, but we are ready also for listing outside in other jurisdictions," Nasser added.

Saudi Arabia, which has long planned an international IPO of Aramco, now plans a gradual listing of the world's top oil producing company on its home market, sources familiar with the matter said on Monday. The IPO is planned for 2020-2021, but could happen as early as by the end of this year.

Aramco's board last month determined that listing in New York would carry too many legal risks, sources told Reuters. The exchange was favoured by Crown Prince Mohammed bin Salman, who hopes Aramco will be valued at $2 trillion, before plans for the IPO were put on hold last year, the sources said.

Alongside New York, London, Hong Kong and Tokyo have been keen to woo Saudi officials to trade shares in Aramco.

The flotation, which could be the world's biggest IPO, is crucial to raise money for Crown Prince Mohammed's plans to diversify the Saudi economy away from oil revenues and has rapidly regained momentum in recent days.

Nasser welcomed the appointment earlier this month of the head of the kingdom's sovereign wealth fund PIF as Aramco's new chairman, Yasser al-Rumayyan, saying he brings "a lot of riches" to the board with his experience in the financial sector.

Rumayyan took over from former energy minister Khalid al-Falih as chairman in a move to separate Aramco from the ministry, a step Saudi officials have said was important to pave the way for the IPO.

Nasser said that with the appointment of oil veteran Prince Abdulaziz as energy minister, Aramco would have an "arms-length" relationship with the energy ministry.

"The guidelines for production are going to come from the ministry, there is no change when it comes to production targets or maximum sustained capacity," Nasser added


Nasser stressed the need of cleaner oil and gas to address climate challenges and called on the industry to share the responsibility to lower its carbon footprint.

He told the World Energy Congress in Abu Dhabi that oil and gas will remain at the heart of the global energy mix for decades to come and that Aramco was also taking steps to meet the climate challenges.

"We have heard loud and clear the call from stakeholders and society at large for cleaner energy," Nasser said.

"The world faces an incredible climate challenge and we need a bold response to match."

Aramco's upstream carbon intensity is one of the lowest in the world, at about 10 kilograms of CO2 per barrel of oil equivalent, and based on third party verification of greenhouse gas emissions, its methane intensity in 2018 was 0.06% - one of the lowest in the industry, Nasser said.

Since Crown Prince Mohammed first proposed a stock market listing in 2016, climate change and new green technologies are putting some investors, particularly in Europe and the United States, off the oil and gas sector.

Nasser said Aramco was investing in technologies to make car engines more efficient with lower emissions, to use hydrogen fuels, convert more crude to chemicals and capturing CO2 which can be later injected into oil reservoirs.

He also criticised government policies that do not appear to consider the long-term nature of the oil and gas business.

"We have already seen the impact of what I call a 'Crisis of Perception' on long-term investment, and if it continues supply shortfalls will follow as night follows day," Nasser said.

"That would hurt the competitiveness of national economies, threaten their energy security, and potentially create social disruption - by making energy less affordable. The world can no longer afford such policy miscalculations."

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