As oil prices race towards $100, investment bankers touring the Middle East in search of lucrative deals are nudging Saudi Arabia’s leadership to fast-track its plans for a secondary listing for the world’s most valuable oil company, industry sources told the Straits Times.
Saudi Aramco is looking to sell as much as a $50 billion stake, or 2.5 per cent of the company, and has held talks on selling the additional shares on the Riyadh stock exchange and a secondary listing, possibly in London or Singapore, the Wall Street Journal reported on February 4.
A Singapore Exchange (SGX) spokesman, when contacted by the Straits Times, said: “We do not provide any comments as listing applications made to SGX, if any, are confidential.” Aramco declined to comment.
The Straits Times understands that a review committee was set up in Saudi Arabia last year and it had discussed a potential secondary listing, but no further action was taken at the time.
“It is completely possible that if prices hit $100 tomorrow the government will make an announcement of some sort, because at the end of the day they’re a key shareholder of the company,” an industry source told the Straits Times.
The state oil giant’s fortunes have changed dramatically since its record-breaking 2019 initial public offering (IPO) on Saudi exchange Tadawul, which raked in more than $29.4 billion.
After enduring a painful oil-price slump in the early months of the Covid-19 pandemic when prices dived into negative territory, producers worldwide are now enjoying ballooning profits as fears of a global supply scarcity keeps oil on the boil.
“Oil prices are buoyant and Aramco’s production is rising, so, yes, it seems like good timing,” said Dubai-based Robin Mills, CEO of energy consultancy and investment advisory Qamar Energy. “Discussions have been going on for a while already of course.”
Though the talks to sell more shares in Saudi Aramco are understood to be at a preliminary stage, the Straits Times understands that SGX has already established good working relationships with the senior leadership at the company.
Media reports in February 2017 had said that at the time SGX had held talks with Saudi Aramco on the possibility of participating in a secondary listing.
The Singapore bourse had started laying the groundwork as soon as then Deputy Crown Prince Mohammed bin Salman shared his ambitions about selling a stake in the national oil company in an interview with the Economist in January 2016.
“The opportunity is there for SGX, with Hong Kong in flux, but it is going to be challenging for it, given the Singapore market’s size,” the industry sources said.
In an interview with prominent Saudi business and economic publication Al-Ittihad Al-Iktissadi in 2017, SGX CEO Loh Boon Chye said Singapore is a multi-ethnic and multi-religious country, and would provide a stable and politically neutral listing backdrop.
Economic ties between Saudi Arabia and Singapore have been growing in recent years, and Second Minister for Trade and Industry Tan See Leng and Saudi Arabia’s Minister of Transport and Logistic Services Saleh bin Nasser al-Jasser co-chaired the inaugural Saudi Arabia-Singapore Joint Committee (SSJC) Ministerial Meeting in Riyadh last December.
The ministers highlighted the vast potential for strengthening cooperation and discussed various initiatives in the areas of transport, infrastructure and logistics, energy and industry, and the digital economy.
A memorandum of understanding was also inked between Saudi Arabia’s Ministry of Energy and Singapore’s Ministry of Trade and Industry to collaborate on areas including energy efficiency and conservation; research, development and deployment; and capacity building in low-carbon technologies, such as hydrogen and carbon capture, utilisation and storage.
Last month, Saudi Arabian foreign minister Prince Faisal Farhan al-Saud had also made an official visit to Singapore.
THE STRAITS TIMES (SINGAPORE)/ASIA NEWS NETWORK