Possible Saudi IPO wouldn’t include oil reserves

While the nation’s vast oil reserves would not be sold in the potential IPO, analysts have estimated the value of Aramco at trillion, the Wall Street Journal reported Sunday.

Saudi Arabia has been hit hard by plummeting oil prices – now hovering at around $30 per barrel.

Khalid al-Falih, chief executive officer of Aramco, said the company was still considering many options concerning how the reserves would factor into what was available to be publicly traded.

“The reserves would not be sold, but the company’s ability to produce from the reserves is being studied”, he told the satellite channel in an interview from Davos, Switzerland where the annual World Economic Forum was held last week.

Speaking to reporters on the sidelines of a business conference, Falih did not say at what price levels the balance might be achieved.

The chairman of Saudi Arabia’s state oil giant said today that plans for a possible initial public offering are not being driven by a need for cash amid a global slump in oil prices, but instead signal a desire for greater openness to outside investors.

With around 80 per cent of Saudi government revenues generated from oil, the kingdom has projected a budget shortfall of Dollars 87 billion in 2016.

Falih also said Saudi Arabia could survive a low oil price for “a long, long time”.

“The reserves belong to the state but the company’s ability to convert these reserves… into a financial value and at the same time for the company to have a portion of these profits”, he said.

Deputy crown prince Mohammed bin Salman told The Economist magazine that an initial public offering (IPO) of Saudi Aramco was being reviewed and would be decided on soon.