Aramco confirms studying options to list in capital markets

Options include listing of an appropriate percentage of the company's shares

State oil giant Saudi Aramco confirmed on Friday that it has been studying various options to list in capital markets.

The options include the listing “of an appropriate percentage of the company's shares and/or the listing of a bundle (of) its downstream subsidiaries,” the firm said in a statement.

Deputy Crown Prince Mohammed bin Salman told The Economist magazine in a transcript of an interview released on Thursday that the Saudi government was considering whether to sell shares in Aramco as part of a privatisation drive to raise money in an era of cheap oil.

Aramco is the world’s largest oil firm with crude reserves of about 265 billion barrels, over 15 per cent of all global oil deposits. If it went public, it could become the first listed company valued at $1 trillion or more, analysts have estimated. Aramco said that once the study of the options was completed, the findings would be presented to the company's board of directors, which would make its recommendation to the Saudi Aramco Supreme Council.

"This proposal is consistent with the broad and progressive direction pursued by the kingdom for reforms, including privatisation in various sectors of the Saudi economy and deregulation of markets, which the company strongly supports," the firm said. It added that the process would strengthen the company's focus on "its long-term vision of becoming the world's leading energy and chemical enterprise".

Salman did not say how large a stake the government might sell in Aramco, which produces over 10 million barrels of oil per day, three times as much as the world's largest listed oil company, ExxonMobil.

A sale could in the short term cover much of the huge state budget deficit which Riyadh is running because of low oil prices; the deficit totalled nearly $100 billion last year.

But while it could increase foreign investors' interest in the Saudi stock exchange, the sheer volume of equity could initially weigh heavily on the market, which has a capitalisation of $384 billion.