Saudi state oil producer Aramco ponders IPO to make it largest listed company

Saudi Arabia's state oil company, Aramco, is mulling an initial public offer, according to reports citing the king's son, Muhammad bin Salman.

If it lists, the oil producing giant would be one of, if not the most valuable in the world.

The deputy crown prince told The Economist that a decision on a flotation would be taken in the next few months: “Personally I’m enthusiastic about this step,” he said. “I believe it is in the interest of the Saudi market, and it is in the interest of Aramco.”

Saudi officials say Saudi Aramco, whose 260bn barrel reserves compare to BP and Shell's combined 30bn barrels, for example, is worth “trillions of dollars” though plans for an IPO could see a listing of just some downstream assets or the sale of an initial 5% portion of shares in the parent company in Riyadh.

The Economist was told that Aramco's advisers have already been meeting with potential institutional investors.

Saudi Arabia, as the prime force behind the Organization of the Petroleum Exporting Countries (OPEC), has been behind the oversupply that has led to the massive depreciation in the oil price as the cartel looks to force out higher-cost producers.

In December Opec said it expected oil prices to reach $70 per barrel by 2020 and said it expected to reduce its own production to 30.6m barrels per day in 2019, compared to its three-year high of 31.7m bpd in November as the cartel’s market share falls due to rival production.

Prices have sunk close to $30 this week despite the heightened tension in the Middle East as Riyadh and Tehran relations blow up.

However, the deputy crown prince said a war between Saudi Arabia and Iran would be the beginning of a major catastrophe in the region so, “For sure, we will not allow any such thing”.