Riyadh to revisit Aramco IPO in 2021

13 November 2018
Saudi Aramco CEO says that IPO will not happen until one year after the Sabic acquisition concludes

Saudi Arabia will take another look at part-privatising Saudi Aramco after the state energy giant completes its acquisition of petrochemicals and metals producer Sabic, Aramco CEO Amin Nasser said.

“The government is suggesting 2021 for IPO [initial public offering] listing, depending on the market conditions of the time… The Sabic deal needs to be completed first before you can list Saudi Aramco,” Nasser said at the Abu Dhabi International Petroleum Exhibition and Conference on 12 November.

Aramco is currently working to acquire a strategic stake in Sabic from the state Public Investment Fund (PIF).

"Then you need to reflect that in your balance sheet for at least a year before you can list Saudi Aramco. And this is where they are talking about 2021 and depending on the market conditions at that time the government will list it,” Nasser added.

Nasser's comments follow an interview with Crown Prince Mohammad bin Salman in October in which he said the IPO was postponed until 2021.

The long-awaited IPO of 5 per cent of Aramco is the centrepiece of Saudi Arabia’s economic reforms, under Prince Mohammad’s Vision 2030. The plan involves using the proceeds of the listing to fund economic diversification programmes to reduce the kingdom’s heavy reliance on oil export revenues.

Preparations for the IPO have been completed, but no decision has been taken on timing, or where the listing will take place. This could include a dual listing on an international exchange, such as London, New York or Tokyo, as well as a local listing on the Tadawul exchange in Riyadh.

The acquisition of Sabic will give Aramco a greater footprint in the downstream petrochemicals sector, a key driver of future global oil demand growth.

"We have ambitions to shift 2 million barrels [a day] of crude to petrochemicals to 3 million. For that we needed an acquisition,” Nasser said.

The delays to the Aramco IPO have in large part been due to Aramco’s $2tn valuation – which would have raised around $100bn through the 5 per cent listing. If realised, this would transform the PIF into the world’s largest sovereign wealth fund, reaching in excess of $2tn by 2030, compared to its current $200bn-$250bn.

However, with the Aramco IPO stalled for now, the acquisition of the PIF’s 70 per cent stake in Sabic would help secure new funds for the sovereign wealth fund.

Nasser also confirmed that Aramco is continuing talks with Russia's Novatek to take a major stake in the new Arctic LNG (liquefied natural gas) 2 project. As well as investing in Russia’s LNG project, the talks with Novatek also cover a petrochemicals joint venture with Aramco at Jubail, on Saudi Arabia’s eastern Gulf coast. Novatek holds the majority stake in Sibur which is leading the talks with Aramco for the petrochemicals venture.

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