São Paulo – One of the world’s largest oil companies, the state-run Saudi Aramco, confirmed this Friday (8) that it’s “studying various options” to go public and thus “allow broad public participation in its equity”. In a statement, the company says that it plans to be listed in the capital markets in an “appropriate percentage” with its own shares and even those of its subsidiaries.
“This proposal is consistent with the broad and progressive direction pursued by the Kingdom [of Saudi Arabia] for reforms, including privatization in various sectors of the Saudi economy and deregulation of markets, which the company strongly supports”, says the statement. The oil company hasn’t set dates for the public listing process yet, and said that studies and findings will be presented to its Board of Directors and the Saudi Aramco Supreme Council.
Data from its 2014 corporate report, the most recent available, indicates that Saudi Aramco has estimated reserves of 261 billion oil barrels, with an output of 9.5 million barrels per day and 3.5 billion per year. The director of the Brazilian Infrastructure Center (CBIE), Adriano Pires, said to ANBA this Friday that a possible public listing by the Arab company is “good news” for the sector.
“The public listing will impact the market, since it will show more transparency; investors will have more access and knowledge of the company’s decisions. It’s good for the market, but in theory it’s not that good for the company, due to the fact that the oil prices are in decline and Saudi Arabia is facing an instability period with Iran”, said Pires, mentioning the severing of diplomatic ties between the two countries this week.
When a company puts shares for sale in a stock exchange, it needs to present data of its production, revenues, financial transactions and management procedures so those buyers are aware of what they are acquiring.
Pires also said that, in theory, the listing of the Saudi company could harm Petrobras. “It will be one more competitor in the market searching for investors”, he said, reminding, however, that the Brazilian company is already facing difficulties to get funds because it lost its credit rating.
He believes that the Saudi company’s performance in the market depends on several factors, such as the percentage of shares that the government will list, whether the government will keep itself as majority shareholder and whether the company will have an investment-grade rating.
The oil price, said Pires, should go up, since once Saudi Aramco’s shares are listed, its decisions should be taken based on market logic, “and not the government’s”, he said. Currently, however, the commodity’s prices are trending down. This Friday, the Brent oil barrel closed the day at USD 33.04, a decline of 0.23%.
Saudi Arabia announced, in the last few weeks, measures to increase its revenues and reduce its budget deficit, which stands at 15% of last year’s Gross Domestic Product (GDP). Among the measures are the increases in prices of fuel, water and electric power, as well as the privatization of state-owned companies.
*Translated by Sérgio Kakitani
