Saudi Arabia is reportedly eyeing the sale of a small portion of its state-owned oil company to foreign investors, according to reports citing sources with knowledge in the matter who said the stake could be sold to investors in China.
Crown Prince Mohammed bin Salman said Wednesday that the kingdom is considering the possible sale of a 1% stake in Saudi Aramco to a foreign investor. Based on the current share price and market value of the world's largest oil company, a 1% stake could be worth around $19 billion.
"There is a discussion now about the acquisition of 1% of Aramco by a global leader in the energy field. It will be a very important deal to boost Aramco sales in a very large country," the de facto leader of Saudi Arabia said.
Analysts said China will likely be the buyer for the 1% stake if Saudi Arabia does decide to go ahead with the sale. According to data from China's General Administration of Customs, China is Saudi Arabia's largest buyer of crude oil. China bought more oil from Saudi Arabia than any other country last year, the agency's data showed.
Analysts at Bernstein said the buyer will undoubtedly be an Asian national oil company. Saudi Aramco's largest customers are in Asia, including companies in countries such as India, Japan and South Korea.
Analysts said most investors and oil companies in the U.S. and Europe have been slowly shifting away from oil. Some companies have announced plans to invest billions of dollars into clean energy projects, which means that they are unlikely to be interested in buying Saudi Aramco's 1% stake.
The U.S. is also unlikely to be interested given the recent rise in domestic share production. Analysts in Dubai said the U.S. has a greater degree of energy independence and therefore has less incentive in investing in the Middle East.
During its IPO in 2019 - the largest ever in history - Saudi Aramco sold a 1.7% stake and raised $29.4 billion. The transaction was meant to help fund bin Salman's Vision 2030 plan, which aims to slowly transition the kingdom from oil to other emerging technologies.
