Public offering would make world’s largest oil producer more transparent, says Saudi Arabia deputy crown prince
Muhammad bin Salman is deputy crown prince of Saudi Arabia (Wikimedia Commons/Mazen AlDarrab)
By Megan Darby
Saudi Aramco, the world’s biggest oil producer, is thinking of floating on the stock exchange.
That was revealed by Muhammad bin Salman, Saudi Arabia’s deputy crown prince, in an interview with the Economist on Thursday.
“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, and it is for the interest of more transparency, and to counter corruption, if any, that may be circling around Aramco.”
A decision is to be made in the next few months on whether to start selling shares in the state-owned energy firm, as part of a Kingdom-wide privatisation drive.
The move would give investors and analysts an insight into a hitherto opaque fossil fuel giant. Aramco’s stated reserves are ten times the size of the largest private oil major, ExxonMobil.
In December, 195 countries agreed a climate change pact in Paris that signalled a phaseout of coal, oil and gas burning this century.
Coupled with oil prices falling below US$35 a barrel, that put further pressure on petropowers like Saudi Arabia to diversify their economies.
Prince Muhammad touted opportunities in mining, with 6% of the world’s uranium reserves, projecting non-oil revenues of US$100 billion in the next five years.
There are also moves to curb wasteful domestic energy consumption, which contributes to annual CO2 emissions of 17 tonnes a head, more than triple the world average.
In its recent budget, Saudi Arabia cut its generous energy subsidies, hiking the price of petrol by 50% to 24 cents a litre.
The Kingdom is targeting further reforms, Prince Muhammad told the Economist: “We want to reach free energy markets, but with subsidy programmes for those with low income, and not to have the subsidy in the form of lowering the energy prices, but through other programmes.”