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Saudi Arabia Denies Reports to Cancel Aramco IPO

Saudi Arabia's energy minister has denied reports that the kingdom has cancelled plans to sell shares in state oil giant Saudi Aramco.

 

Khalid al-Falih said in a statement that the government would proceed with the floatation.

 

It was earlier reported that a group of financial advisers had abandoned a plan to sell 5 per cent of the firm. A source said the decision was taken some time ago but was not being announced.

 

“The Government remains committed to the IPO of Saudi Aramco at a time of its own choosing when conditions are optimum. This timing will depend on multiple factors, including favourable market conditions, and a downstream acquisition which the company will pursue in the next few months, as directed by its board of directors," Al-Falih, who is also the chairman of Saudi Aramco, said in the statement.

 

"To prepare for the listing of Saudi Aramco, the government has undertaken a number of major preparatory measures including issuing a new income tax law as it relates to hydrocarbons activities; reissuing a long-term exclusive concession; and appointing a new board of directors, amongst other measures to safeguard its interests and those of the company’s future private shareholders. The company, for its part, has completed its internal programme for IPO preparedness. Specifically, it has amended its bylaws; converted to a joint stock company; ensured that its internal segmental financial reporting aligns with potential listing venue requirements; established an investor relations function; and undertaken the first independent certification of its hydrocarbon reserves, all confirming the company’s peerless status in the industry," he said.

 

"This is all positive progress on what is a complex process, preparing the company and the kingdom for what will ultimately be a global landmark market offering of unprecedented quality and scale,” added Al-Falih in the statement.

 

Saudi Arabia's Crown Prince Mohammed bin Salman first proposed the share sale in early 2016 as part of his economic reform agenda. At the time he predicted the sale would value Aramco at around $2 trillion. The plan would see shares float on both the local stock market in Riyadh and one of the world's leading international financial centres.

 

Senior industry sources said about the plans being scrapped. "The decision to call off the IPO was taken some time ago, but no-one can disclose this, so statements are gradually going that way - first delay then calling off."

 

The wire service said financial advisers who had been working on the listing were now focusing on the proposed acquisition of a "strategic stake" in local petrochemicals maker Saudi Basic Industries, according to two of its sources.

 

Saudi Aramco ranks as the world's largest oil and gas business. Forbes Magazine estimates it generates $1bn a day in revenues. Its businesses cover management of the world's biggest oil fields, as well as extensive refining and chemicals operations.

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