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Saudi Arabia is considering two options for the shape of Saudi Aramco when it sells shares in the national oil giant next year: a global industrial conglomerate, and a specialised international oil company, industry and banking sources said.
The listing of Aramco, expected to be the world’s biggest initial public offer and raise tens of billions of dollars, is a
centrepiece of the government’s ambitious plan, known as Vision 2030, to diversify the economy beyond oil.
When the plan was publicly released in June last year, it pledged to “transform Aramco from an oil-producing company into a global industrial conglomerate”. But now Saudi officials and their advisers are debating whether to make Aramco “a Korean chaebol”, as one source said, referring to sprawling South Korean conglomerates, or a specialised company focused purely on oil and gas.
A specialised company might be easier to value because of its simplicity and, since the risks in its business would be clearer, achieve a higher price for its shares.
“There are two options being studied now. Either to make Aramco a pure oil and gas company or a conglomerate and expand its role in petrochemicals and other sectors,” said a Saudi industry source.
Other than its core oil and gas production, exploration and refining businesses, Aramco – which employs more than 55,000 Saudi Arabians – has plans to build solar and wind power facilities.
As the kingdom’s biggest company and one of its mos efficient, it is being pressed into service to jump-start industrial projects that are too big or daunting for the private sector.
It is developing a $5 billion ship repair and building complex on the east coast, and working with General Electric on a $400 million forging and casting venture. It has also often been tasked with executing government projects that have social goals, such as building industrial cities, stadiums and cultural centres. It was involved in creating the King Abdullah University of Science and Technology.
As the IPO approaches, officials are asking themselves whether the domestic and international investors who will be asked to buy Aramco shares really want exposure to such a complicated array of assets.
