Saudi considers IPO for oil giant Aramco

The dive in oil prices is largely due to Saudi Arabia’s own policies and those of other members of the Organization of the Petroleum Exporting Countries (OPEC). To actually be able to do that will be a dream come true for any policymaker anywhere in the world.

S audi Arabia is considering selling shares of its state-owned oil company Saudi Aramco, according to Deputy Crown Prince Mohammed bin Salman.

Back in 2010, the Financial Times did a back-of-the-envelope valuation of Aramco based on its oil reserves alone, and estimated the company was worth something in the vicinity of $7 trillion.

Aramco said that once the study of the options was completed, the findings would be presented to the company’s board of directors, which would make its recommendation to the Saudi Aramco Supreme Council.

Estimates aside, it really is hard to value a behemoth like Aramco or gauge the power it holds over the global oil trade. Saudi Arabia’s oil revenues fund its strategic outreach to Sunni Arab states enticed by the kingdom’s vast reservoirs of cash – and they fund Saudi military operations in places like Yemen as well.

Prince Mohammed bin Salman told the Economist magazine that war would not be allowed to happen.

“Personally I’m enthusiastic about this step”, Salman said. However, the prince indicated to the Economist that a physical confrontation between the two linchpins was not in Riyadh’s interest. Initial discussions are reported to involve floating about 5 per cent of the company.

The deputy crown prince told the Economist he favoured listing Aramco shares on the stock market.

Aramco produces more than 10 million barrels of oil per day, three times as much as the world’s largest listed oil company, ExxonMobil.

Saudi Arabia also seems determined to keep oil prices low in order to undercut the oil-dependent economy of Iran, its chief regional an geopolitical adversary.

Top of these reforms is the management of state assets and wider structural changes in the national economy. But what I could say was ten months ago half of Aden was not in control of government, and now over 80 percent of Yemeni lands are under the control of the legitimate government. (NASDASQ:AAPL) and Exxon Mobil Corporation (NYSE:XOM) to become the world’s most valuable listed company.

The deputy crown prince also said KSA will aim to further diversify into non-oil industries, including uranium mining and religious tourism, among others.

A potential IPO comes as Saudi Arabia deals with the economic damage caused by the crude oil price debacle, along with mounting tensions with Iran, following the execution of Saudi cleric Nimr Baqr al-Nimr in early January. In response to low oil prices the government is looking both to cut spending – it recently raised the price of the country’s famously cheap gasoline – and raise new revenues from foreign investment and privatization. Limited, perhaps, is the best guess.