Saudi Arabia's state-owned oil behemoth could be going public


Saudi Arabia's state-owned oil behemoth could coming to the public markets.

According to a report in The Economist, Saudi Aramco, the state-owned company that is the world's largest oil producer, could potentially be listed on a public exchange sometime soon.

Muhammed bin Salam, the kingdom's deputy crown prince, told The Economist the decision by the kingdom will happen in the next few months.


Saudi Aramco is worth "trillions of dollars" according to Saudi officials, which would make it by far the largest company in the world.

Bin Salam told The Economist, "Personally, I'm enthusiastic about this step. I believe it is in the interest of the Saudi market, and it is in the interest of Aramco."

The Economist's report added that current options being considered for an Aramco public float include, "listing some of its petrochemical and other 'downstream' firms, to selling shares in the parent company, which includes the core business of producing crude."


This potential market debut for the company comes amid a continued slide in the price of crude oil.

On Thursday, crude hit a new 12-year low with West Texas Intermediate crude, the US benchmark, falling as low as $32.10 a barrel. Brent crude, the international benchmark, ticked as low as $32.17.

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In 2016, Saudi Arabia - which gets a large chunk of its government revenue through oil - is expected to run a huge deficit as the crashing price of oil has severely hampered the kingdom's finances.


US shale oil production has been singled-out as the main culprit for the collapse in oil prices over the last 18 months.

During this period Saudi Arabia and OPEC, the 13-member oil cartel Saudi Arabia is seen as the de facto leader of, has declined to cut oil production as it works to defend market share and continue bringing in whatever revenues it can.

But a move to public markets would effectively be an admission by Saudi Arabia that these revenues, and these efforts to defend its standing in the oil markets, are not enough.


Read the full report at The Economist's website here »

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