Saudi Arabia expects state oil company Saudi Aramco to be valued at more than $2 trillion and plans to sell less than 5% of it through an initial public offering (IPO), Deputy Crown Prince Mohammed bin Salman said on Monday.
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“If anyone had a doubt about Saudi Aramco’s ability to use its logistical system and spot sales to increase market share, its recent 730,000 barrel sale of a cargo to a Chinese teapot refiner in Shandong should lay any doubts to rest”, it added.
Aramco will be converted into an energy holding company with an elected board and some subsidiaries will be listed. “A part of that is related to Aramco and this is a very small aspect”, he said.
Prince Mohammed is leading the biggest economic shake-up since the founding of Saudi Arabia in 1932, with measures that represent a radical shift for a country built on petrodollars.
“Smelling and hearing the sounds of their country and tasting this fantastic multicultural country is something that’s important for any nation that wants to go to the future confidently”, Prince Sultan said. “If Aramco gets IPO-ed that means it has to announce its statements of accounts”. “It will be under the supervision of all Saudi banks, all analysts, all Saudi thinkers”.
The plan foresees social change in one of the world’s most conservative societies.
The country has proven oil reserves of 267 billion barrels and potential reserves of up to 900 billion. New assets, including state oil giant Saudi Aramco, would be included in the redesigned fund. The prince said the PIF made returns of 30 billion riyals ($8 billion) in 2015 and that it would aim to increase its assets to more than 7 trillion riyals from 600 billion riyals.
“The Vision targets are achievable but we need extremely hard work and patience”, he told AFP.
Patrick Dennis, lead Middle East economist at Oxford Economics, said, “The challenges are enormous in terms of implementing the required fiscal austerity, and implementing diversification into manufacturing, tourism etc”. “I don’t buy into this, I’m afraid”, he said from London.
Asked about the proposed King Salman Bridge over the Red Sea, announced last week in an agreement with Egypt, Prince Mohammed said the crossing would link Europe and Asia, provide building and investment opportunities, and help move billions’ worth of cargo across the Red Sea. “Aramco at the end of the day is a big oil company, so the government’s revenue will still essentially be dependent on oil”.
The prince said that military industries will be a prosperous sector which will support the economy and create new jobs.
Saudi Arabia has plans to issue select visas to welcome tens of thousands of tourists a year as part of a sweeping national reform plan aimed at showcasing the country’s rich heritage, including pre-Islamic sites, and encouraging Saudis to spend some of their tourist money at home.
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The Prince also said the Kingdom, which annually welcomes millions of Muslim pilgrims to the holy cities of Makkah and Madina, would become more welcoming to other types of tourists – in line with Saudi Arabia’s values.
