Remarks made by Saudi Energy Minister Khalid al-Falih in London during Crown Prince Mohammed bin Salman’s official trip to the UK recently provide another twist in the tale of Saudi Aramco’s public listing.

What those comments also reiterate is the fact that most reports about Aramco’s potential stock flotation are mostly a product of market perceptions, and do not necessarily come from official Saudi channels.

In an interview with Bloomberg in early March, Al-Falih hinted that the initial public offering (IPO) of Saudi Aramco, presently scheduled for the second half of 2018, may not happen this year after all and could be pushed into 2019.

“Between December 31st and January 1st there is no value lost for the kingdom. So, I don’t see this artificial deadline that you refer to as being significant,” he said.

“The only certain thing about the Saudi Aramco IPO is that a) it will happen, b) the anchor market will be the Tadawul exchange in Saudi Arabia,” Al-Falih said referring to the Riyadh stock market.

The London-based Financial Times has also reported that UK officials have been informed by their Saudi counterparts that Aramco’s stock flotation is likely to be delayed until 2019 to give it more time to prepare and select one or more foreign exchanges to support its Riyadh listing.

Saudi Arabia intends to sell a 5 per cent stake in Aramco, and list the shares at the Tadawul and possibly one or more foreign stock exchanges. Based on its $2 trillion valuation, Riyadh hopes to raise $100bn from the exercise, although most analysts estimate the oil giant’s worth to be lower at $1-1.5 trillion.

Those are the only couple of facts about the Saudi Aramco privatisation drive that are well-known and have been established by the Saudi leadership and Aramco’s management as being the cornerstone of Prince Mohammed’s ambitious economic reform agenda announced in January 2016.

Even the timing of the IPO has been a subject of anticipation, with Aramco chief executive Amin Nasser maintaining that work is in progress to proceed with the stock flotation in the second half of 2018.

Nasser, part of Prince Mohammed’s entourage to London, has recently said at a conference in the UK capital, that decisions regarding when and where to list Aramco’s shares will be made by the company’s largest shareholder – the Saudi government.

Opec’s most influential minister has also said in his interview that Aramco was doing all the groundwork required for the IPO. “We have created the framework – fiscal and otherwise regulatory – for Saudi Aramco to be listed this year. The actual timing will be announced when we feel that the conditions for the success of that listing are in place,” he insisted.

Industry observers say the call on the venue for the overseas IPO will need to be made latest by March or April, if Aramco is to float shares in October or November, or it could be delayed until 2019.

The overseas venue puzzle

In interesting remarks about the potential foreign destination for Aramco’s share sale, Al-Falih has expressed concerns about listing on the New York Stock Exchange (NYSE), contrary to the market belief that New York was ahead of even London in the hotly-contested race among international financial centres to host the IPO, in which the bourses of the two cities are being seen as frontrunners.

“I would say litigation and liability are a big concern in the US. Quite frankly, Saudi Aramco is too big and too important for the kingdom to be subjected to that kind of risk,” Al-Falih has said in another interview to CNN.

His comments align with analysts who have opined that Riyadh is likely to avoid being subjected to globally-standard stringent regulations imposed by leading foreign capital markets on listed companies.

A senior NYSE executive has seemingly responded to Al-Falih’s statement saying only Wall Street can offer Saudi Aramco the exposure to capital that it needs for a successful public listing, in a bid to allay the Energy Minister’s concerns about New York.

Alex Ibrahim, NYSE’s head of international capital markets has told Saudi newspaper Arab News that all the world’s other major oil firms had opted to list on Wall Street. “If you look at the US capital markets and compare it to London or Hong Kong, look at the size of this market and how many companies in the oil centre are listed here,” Ibrahim has said.

“The two largest oil companies from the United Kingdom are listed here. We trade them more here than in the local market,” Ibrahim said in reference to Royal Dutch Shell and BP. “This is a very deep market for the oil sector and [Aramco] should take that into consideration when they decide.” London, Hong Kong and other bourses have less experience with “very large complex transactions” like the looming Aramco share sale, he told the Saudi daily.

Ibrahim’s comments are contrary to remarks his colleague John Tuttle, NYSE’s global head of listings made to Reuters at the World Economic Forum in Davos in January, when he said that Wall Street did not need to “bend over backwards” to attract Saudi Aramco, in an apparent dig at the rival London bourse. London’s stock market regulator and the government of Prime Minister Theresa May has come under the scanner and drawn flak from several quarters for reportedly attempting to relax rules to lure Aramco.

Meanwhile, Hong Kong may still be in the race to win over Aramco for the overseas stock listing. Reuters has reported that Aramco may prefer the Hong Kong market, as both New York and London have stricter disclosure rules.

In January, the Hong Kong market’s chief executive Charles Li told CNBC that Hong Kong would make more sense for Aramco than London, Tokyo, or New York because it would provide the company with access to Chinese investors. “A deal in Hong Kong with the possibility of accessing, either now or later, the Chinese investing public works wonders for Saudi Arabia, for China, for Hong Kong and for everybody else,” Li said. “So, I don’t see any reason why it shouldn’t be here, it may not be here right away, it may not be here on the first go, but it will be here.”

There is also the possibility of the Saudi government shelving its desire to list Aramco abroad, given the complexity of the process, and instead privately offer stakes to foreign investors. The chief of Russia’s sovereign wealth body last month said Russian banks, a joint Russia-China investment fund and even Russian pension funds are keen to invest in Saudi Aramco’s shares, indicating that the option is part of the overall privatisation equation and that Aramco may well consider it.

Vital developments thus far, such as converting Aramco into a joint stock company, and naming advisors and bookrunners for the IPO, as reported in unofficial channels, point towards Saudi Arabia progressing steadily with its wish to publicly trade Aramco shares in capital markets.

Yet, the Saudi government’s resolve to remain tight-lipped about crucial aspects of the campaign such as timing, venue and manner, coupled with market notions about the impact of crude oil prices on the entire exercise, render making predictions speculative.

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