Saudis Plan to Sell 49% of Aramco in 10 Years

Saudi Arabia is planning to sell almost half of Saudi Arabian Oil Co., the world’s largest oil company.

A 49% stake will be sold within 10 years, according to al-Eqtisadiah, the Riyadh-based newspaper, which cites an unidentified senior government official, Bloomberg reported.

Deputy Crown Prince Mohammed bin Salman said in April that an initial public offering is planned for 2018, or even a year earlier, with the country planning to sell less than 5%, Bloomberg reported.

Saudi Arabia, under pressure from lower crude prices, has been planning the share sale as part of an effort to generate revenue and reform its economy. The government hopes to raise about $100 billion from the IPO of its flagship asset.

Saudi Arabia’s Public Investment Fund will use the proceeds, and eventually control more than $2 trillion and help wean the kingdom off oil.

“Going from 5% to 49% is a huge jump but if you do it gradually over 10 years and in small chunks it is possible,” John Sfakianakis, head of economics research at the Gulf Research Center in Riyadh, said by phone on Saturday.

“The Saudis are looking at their sources of revenue beyond 10 years and they are asking what we should do more to diversify our non-oil income.”

Money from a 49% stake sale will be used by the Public Investment Fund on local and international projects, according to Eqtisadiah. The fund will play a major role in Saudi Arabia’s new economy, being big enough to buy Apple Inc., Google parent Alphebet Inc., Microsoft Corp. and Berkshire Hathaway Inc.

"To buy more shares in Aramco, investors need to see how the first tranche of 5% performs,” Mohamed Ramady, London-based independent analyst, said by phone Saturday. “The government needs to look at many options for selling more shares, including bringing in strategic shareholders and other international oil companies who will be interested in having a stake in Saudi Arabia’s gigantic oil reserves."

Saudi Aramco is planning to report its quarterly results starting next year, Chief Executive Officer Amin Nasser said in November. The initial sale will involve all of the company, not just the refining business, he said in October.