Saudi Oil Minister Says Aramco IPO Could Be Delayed to 2019

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(Bloomberg) -- Saudi Arabia’s energy minister hinted the initial public offering of the state oil company Aramco could be delayed until 2019, pushing back a central plank of Crown Prince Mohammed bin Salman’s plan to modernize the economy.

Khalid Al-Falih also said the IPO, potentially the largest ever, would be “anchored” by a listing on Saudi Arabia’s local exchange and any international listing would be announced in due course, if at all.

“Between December 31st and January 1st there is no value lost for the kingdom,” Al-Falih said in an interview in London. “So, I don’t see this artificial deadline that you refer to as being significant.”

Until recently, Saudi officials insisted the IPO was “on track, on time” for 2018, but two months into the year that deadline is looking harder to meet. Still, Al-Falih, who also serves as Aramco’s chairman, insisted the company had made all the necessary preparations for a share sale of the world’s largest oil producer.

"The only certain thing about the Saudi Aramco IPO is that a) it will happen, b) the anchor market will be the Tadawul exchange in Saudi Arabia,” Al-Falih said. “We have created the framework -- fiscal and otherwise regulatory -- for Saudi Aramco to be listed this year. The actual timing will be announced when we feel that the conditions for the success of that listing are in place.”

The IPO is the cornerstone of Prince Salman’s economic program to transform Saudi Arabia, dubbed Vision 2030. Saudi officials hope they will raise $100 billion by selling about 5percent in the company, valuing Aramco at $2 trillion. Yet, many observers have questioned the valuation, suggesting a realistic figure is nearer $1 trillion.

To read a QuickTake on the proposed Saudi Aramco IPO, click here.

Al-Falih’s comments will also dampen hopes among British and U.S. officials that Saudi Arabia is about to choose either New York or London as the international venue for the giant share sale. A dual international-local listing was integral to the original IPO plan, but Al-Falih is the latest senior Saudi to put the emphasis on listing in Riyadh first.

Prince Mohammed, the dominant political force in Saudi Arabia, is visiting the U.K. and U.S. as part of his first overseas trip since becoming first in line to the throne. While he’s in London, Britain and Saudi Arabia agreed to a target of 65 billion pounds ($90 billion) in mutual trade and investment in coming years.

Al-Falih also discussed the outlook for OPEC policy, suggesting that the cuts the group agreed with Russia could continue after the curbs expire at the end of 2018.

"When it’s time to lift, we will lift gradually’ he said. “We adjust to the seasonality. If we lift the curbs in the first quarter, we will need to be conscious of refining maintenance season and lower demand. So we cannot lift all of the curbs and flood the market at a time when demand is less."

©2018 Bloomberg L.P.

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