Saudi Aramco IPO looks more likely as change in legal status paves the way for flotation

Saudi Aramco, the Dhahran-based petroleum and natural gas company which had recently been forced to deny plans that it was abandoning its $2tn flotation of 5% of the company, received a shot in the arm on Friday after a royal decree converted the firm into a joint stock company, allowing it to expand its shareholder base beyond the Saudi Arabian government.

"This is part of the preparation process for the IPO. You'd expect that to happen," a source was quoted as telling the Guardian.

The decree changed the legal status of the oil company effective from 1 January, suggesting the planned IPO was still on the cards.

The source said Saudi Aramco was doing all it could to deliver the IPO for Riyadh, claiming the flotation was on track to go ahead during the second half of 2018.

Intense speculation has surrounded the blockbuster international listing, especially regarding the foreign venue on which it would take place, with London, New York and Hong Kong all in the running.

Downing Street was forced to deny in November that a $2bn loan given to the oil company was in any way tied to its efforts to coax Saudi Aramco into listing in London.

Many have shown scepticism over whether or not the listing would be as great as $2trn, but whatever the final valuation, it will hinge on the oil price, which reached a two-and-a-half year high of more than $68 a barrel earlier in the week on the back of heightened geopolitical uncertainty in Iran.