Saudi Arabia’s state-owned oil behemoth could be coming to the public markets.
According to a report in The Economist, Saudi Aramco, the state-owned company that is the world’s largest oil producer, could soon be listed on a public exchange. Muhammad bin Salman, Saudi Arabia’s deputy crown prince, told The Economist a decision by the kingdom regarding an offering of Aramco would happen in the next few months.
Saudi officials say Saudi Aramco is worth “trillions of dollars,” which would make it by far the largest company in the world.
Salman told The Economist: “Personally, I’m enthusiastic about this step. I believe it is in the interest of the Saudi market, and it is in the interest of Aramco.”
The Economist’s report added that options being considered for an Aramco public float included “listing some of its petrochemical and other ‘downstream’ firms, to selling shares in the parent company, which includes the core business of producing crude.”
This potential market debut for the company comes amid a continued slide in the price of crude oil.
Crude hit a 14-year low on Thursday, with West Texas Intermediate crude, the US benchmark, falling as low as $32.10 a barrel. Brent crude, the international benchmark, ticked as low as $32.17.
Saudi Arabia — which gets a large chunk of its government revenue through oil sales — is expected to run a huge deficit in 2016 because of oil’s declining value.
US shale-oil production has been singled out as the main culprit for the collapse in oil prices over the past 18 months.
During this period Saudi Arabia and OPEC, the 13-member oil cartel of which Saudi Arabia is seen as the de facto leader, have declined to cut oil production as the cartel works to defend market share.
But a move to public markets would effectively be an admission by Saudi Arabia that this revenue, and the efforts to defend the country’s standing in the oil markets, are not enough.