In the wake of fluctuating oil prices, Saudi Arabia is trying to diversify and revitalize its economy.
The world’s largest exporter of oil Saudi Arabia is in the process of overhauling its economy.
The process of partially privatising Aramco, a state-owned oil company will be presented to the country’s Supreme Council as per the company’s CEO Amin Nasser. Currently Aramco has a team working on its first ever initial public offering (IPO) which will see 5% of its value be sold to private and public investors. Aramco’s share will be listed in the domestic stock market and will also be listed in two other foreign markets, as per Nasser.
The privatisation plans will be presented “soon” to the Supreme Council, headed by Deputy Crown Prince Mohammed bin Salman. Incidentally, the Prince Mohammed bin Salman is leading the kingdom’s drive to reform and revitalise and diversify its economy in the wake of fluctuating oil prices.
However, the Deputy Crown Prince has stressed that even after the listing, the Saudi government would control the company’s oil and gas output levels, saying “Production is sovereign”.
In its strategy which gives it leeway, Riyadh has traditionally always kept a cushioning space for excess production, which essentially allows to adjust production levels in order to influence oil prices. In contrast, private oil companies do not hold back production levels for strategic gains.
Significantly, Nasser also mentioned that Aramco is looking to expand its foothold in North America and Asia.
“We are looking at the current market status that, even though challenging, is an excellent opportunity for growth,” said Nasser. He went on to add, that he was looking at opportunities in China, U.S, Vietnam, Indonesia and India.
In efforts to diversify the kingdom’s economy, Nasser has also asked Aramco to play a leading role in developing industrial projects aimed at stimulating other sectors of the economy.
In the previous month, Prince Mohammed had said he expects Aramco’s IPO to be valued for at least $2 trillion if not higher. Naturally, any valuation would factor in the Kingdom’s proven oil reserves as well as expected oil prices in the near future.
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