Tokyo: China and Japan, Saudi Arabia’s biggest oil buyers in Asia, are preparing for a visit by the kingdom’s Deputy Crown Prince Mohammad Bin Salman, an opportunity to deepen energy ties as the world’s largest crude exporter prepares what’s expected to be the biggest IPO ever.
Selling about 5 per cent of the state-run oil producer Saudi Arabian Oil Co., which is estimated to raise about $100 billion, is key to the deputy crown prince’s plan to expand the nation’s economy beyond petroleum. The company also intends to invest in Asian refineries to lock-in buyers in countries including China, India, Indonesia, Malaysia and Vietnam.
“The relationship with Asia is going to be absolutely critical over the coming years as demand increasingly shifts in this direction,” said Neil Beveridge, a Hong Kong-based analyst at Sanford C. Bernstein & Co. “Getting the Chinese to invest either in Aramco directly through the oil majors, or potentially listing in Asia, would be another way of deepening ties.”
Given its size and the potential appetite by public and private investors in Asia, the initial public offering for the state oil company, known as Saudi Aramco, will likely be part of the discussions, said John Sfakianakis, director of economic research at the Gulf Research Center. The kingdom hasn’t decided where the company will be listed.
Vying for IPO
“Almost all the major exchanges have approached us. Everybody is vying for Aramco to be listed,” Khalid Al Falih, Saudi Arabia’s minister of energy and industry said in an interview Thursday in Los Angeles. “Each of these jurisdictions brings some strengths, but also brings some limitations and in some cases some risks.”
Prince Salman will visit China August 29-31 and again on September 4-5 to attend the Group of 20 Summit, according to the Chinese foreign ministry. In between, the prince will meet Prime Minister Shinzo Abe during his Japan visit from August 31 to September 3, according to the Japanese foreign ministry. The Saudi government hasn’t responded to requests for comment on the details of the deputy crown prince’s visit.
