Saudi Aramco’s move to form Saudi Aramco Retail Company (RetailCo) is a decision that creates the potential for the kingdom to reap a number of benefits.

The move was announced by Aramco in December just days after Abu Dhabi’s Adnoc Distribution said its fuel stations had entered operations in Saudi Arabia.

The entry of two of the world’s largest energy producers into the kingdom’s retail fuel arena – considered by many as being large but loosely managed – will infuse much-needed competition among the service providers.

Market competition will ensure that motorists in Saudi Arabia are guaranteed premium fuel grades and quality retail services at fair rates at the kingdom’s petrol stations.

RetailCo also promises to create numerous jobs across the country for the local workforce, thereby enabling Saudi Aramco to perform its key role of driving socioeconomic development as part of its Vision 2030 goals.

The most enticing prospect for Aramco, however, is that it could consider floating shares of RetailCo as a way of achieving its stock listing promise.

The original Aramco privatisation plan, as announced by Saudi Crown Prince Mohammed bin Salman in January 2016, outlined Riyadh’s desire to float shares in Aramco’s downstream business, and not touch the firm’s core upstream operations.

The crown prince in October 2018 revealed that Riyadh’s revised priority was to let Aramco complete the acquisition of Saudi Basic Industries Corporation (Sabic) this year, a full year after which the process of rolling-out Aramco’s initial public offering (IPO) would begin.

By target year 2021, RetailCo would have completed two years of operations, and would be functioning under Aramco’s downstream unit, which by then would have comfortably nestled Sabic within its fold.

When the time for a potential IPO comes, RetailCo’s value proposition would have dramatically improved, giving Aramco the opportunity to float its shares at home and abroad – thereby fulfilling its plan and avoiding the need to sell stakes in its core upstream or downstream units.

The precedent set by Abu Dhabi National Oil Company (Adnoc), when it offered 10 per cent of Adnoc Distribution’s shares on the Abu Dhabi Stock Exchange in December 2017, makes it a genuine possibility that Aramco could do something similar.