Last Update 21:43
Monday, 18 November 2019

Oil giant Saudi Aramco confirms studying share offer

AFP , Friday 8 Jan 2016
Aramco
Saudi Aramco (Photo: Reuters)
Share/Bookmark
Views: 1274
Share/Bookmark
Views: 1274

State-owned Saudi Aramco, the world's largest crude oil producer and exporter, said Friday it is considering a public share offer.

The company "has been studying various options to allow broad public participation in its equity", a statement said.

This would be through the listing on capital markets "of an appropriate percentage of the company's shares and/or the listing of a bundle (of) its downstream subsidiaries," it said.

"This proposal is consistent with the broad and progressive direction pursued by the kingdom for reforms, including privatisation in various sectors of the Saudi economy and deregulation of markets, which the company strongly supports," it added.

The statement comes a day after The Economist published an interview with Saudi Deputy Crown Prince Mohammed bin Salman who said a share offer was under review.

Saudi Aramco said that, after studying the options, the findings will be presented to the board of directors, which will make recommendations to the company's Supreme Council.

The council is chaired by Prince Mohammed and has overseen Saudi Aramco since it was separated from the oil ministry last year.

The kingdom is confronted by unusual economic challenges caused by plunging global oil prices.

Last week, it reported a record deficit of $98 billion (90 billion euros) for 2015.

And it projected a shortfall of $87 billion this year, with crude prices currently around $34 a barrel, down from more than $100 early in 2014.

In an unprecedented departure from its decades-old generous welfare system, Riyadh's budget last week announced rises in fuel, electricity, water and other prices.

In his interview, Mohammed said a share offer "is something that is being reviewed, and we believe a decision will be made over the next few months".

The thirty-something prince said he was personally enthusiastic about the step, which would be in the interests of the market, the company and greater transparency

Mohammed, the son of King Salman, is also defence minister and heads the kingdom's main economic coordinating council.

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).

They refuse to cut crude production as they seek to drive less-competitive players, including US shale producers, out of the market.

Analysts expected the kingdom would make only a small stake available to the public.

Abhishek Deshpande, an analyst at Natixis, said talk of an IPO shows the kingdom's determination to address the economic consequences of low oil prices.

"It could be a very big step forward and also means oil prices will stay low for a while," Deshpande said.

Other analysts agreed there would be limited or no effect on the oil market itself.

The kingdom has adopted a policy of selling shares in all major state-owned firms.

Saudi Arabia's stock exchange for the first time last year allowed foreign banks, brokerage houses, fund managers and insurance companies to invest directly on the Tadawul All-Shares Index (TASI), provided they meet the requirements.

Short link:

 

Email
 
Name
 
Comment's
Title
 
Comment
Ahram Online welcomes readers' comments on all issues covered by the site, along with any criticisms and/or corrections. Readers are asked to limit their feedback to a maximum of 1000 characters (roughly 200 words). All comments/criticisms will, however, be subject to the following code
  • We will not publish comments which contain rude or abusive language, libelous statements, slander and personal attacks against any person/s.
  • We will not publish comments which contain racist remarks or any kind of racial or religious incitement against any group of people, in Egypt or outside it.
  • We welcome criticism of our reports and articles but we will not publish personal attacks, slander or fabrications directed against our reporters and contributing writers.
  • We reserve the right to correct, when at all possible, obvious errors in spelling and grammar. However, due to time and staffing constraints such corrections will not be made across the board or on a regular basis.
1



Sam Enslow
08-01-2016 09:03pm
0-
1+
Sign of financial distress
A company is taken public when markets are in 'Bull Mode', going up. Oil at $33., the only reason to sell at these levels (and not at $100) indicates low oil is hurting even the Saudis.
Email
 
Name
 
Comment's Title
 
Comment
Latest

© 2010 Ahram Online.