Fueling Change

Saudi Aramco IPO on track for 2021, CEO says 

Key Points
  • At the ADIPEC oil summit in Abu Dhabi on Monday, Saudi Aramco's CEO said an IPO is still on track.
  • Amin Nasser told CNBC that the government will decide when the time is right.
Saudi Aramco CEO: Government will decide on the IPO timing
Saudi Aramco CEO: Government will decide on the IPO timing

Saudi Aramco's CEO has told CNBC its long-awaited plan to sell shares in the oil giant will happen, but he doesn't expect it until at least 2021.

The initial public offering (IPO) of the state-controlled firm is a stated aim of Saudi Arabia's Crown Prince Mohammed bin Salman, who has valued the firm at more than $2 trillion.

Speaking to CNBC's Steve Sedgwick at the ADIPEC forum in Abu Dhabi, Saudi Aramco's CEO Amin Nasser, said both the crown prince and Saudi Arabia's energy minister Khalid al-Falih were targeting a listing within three years.

"I think his royal highness and his excellency, the minister, talked about 2021. At the end of the day the government will decide when the market is good," he said.

Oil prices surged Monday after Saudi Arabia said it was cutting supply by half a million barrels per day in December. However, the bigger picture is that oversupply concerns have seen crude prices drop hard in recent months.

What is Saudi Aramco?
What is Saudi Aramco?

For the past two years, Saudi Arabia has prepared to place up to 5 percent of its national oil company on the stock market but has been reluctant to proceed amid the low-price environment. Until Monday's price spike, the cost of a barrel of oil had endured the longest losing streak since 1984.

While a soft market may not suit a listing, Nasser said a lot of analysts had overlooked the amount of background work being undertaken for the IPO.

"We have a new concession agreement, the reserves were audited, the board was changed, there was a new tax regime signed with the government. There are a lot of reforms happening to list Saudi Aramco," he added.

The state oil giant recently announced the purchase of a majority stake in SABIC, a Saudi state-controlled chemicals and materials group. Aramco's plan is to shift some sales of crude oil to petrochemicals and diversify more toward the downstream market.

Nasser said while SABIC was an obvious strategic fit, the purchase would naturally delay any listing of Aramco.

Saudi Arabia's image has taken a battering in recent weeks, following the unexplained death of the journalist Jamal Khashoggi in Turkey.

Nasser brushed aside any suggestion that recent geopolitical events might have dented investor appetite in Saudi Aramco.

"During FII (Saudi Arabia's Future Investment Initiative investment forum), we signed $34 billion of deals with our partners, so the appetite is there," he said.