Market conditions will determine additional share sale in Aramco, chairman says

Saudi Arabia's diversification efforts over the last five to six years are but the 'tip of an iceberg', Yasir Al Rumayyan said

Saudi Arabia's sovereign wealth fund is looking to increase its investments at home and is lowering its international allocation, according to its governor Yasir Al Rumayyan, who is also chairman of Saudi Aramco. Pawan Singh / The NationalShow less

Saudi Arabia will consider selling more shares in Saudi Aramco, the world's largest exporter of oil, once market conditions improve, according to the chairman of the state-run company.

"Once we see more appetite from different investment institutions and investors, we will definitely consider selling more shares," Yasir Al Rumayyan, who also serves as governor of the Public Investment Fund told CeraWeek by IHS Markit. The annual energy industry event is being held online due to the Covid-19 pandemic.

"This is not for [the] Aramco board to decide on, it is the government of Saudi Arabia who will decide," he added.

In January, Saudi Arabia's Crown Prince Mohammed bin Salman said the kingdom's state oil firm may have a second listing which will help increase the assets of the PIF to $1.1 trillion.

Aramco listed its shares on the Saudi Stock Exchange, Tadawul, the world’s biggest IPO in 2019, raising $25.6 billion and later selling more shares boosting the total to $29.4bn. In the run up to the 2019 listing, Tokyo and Hong Kong were touted as potential venues for a second share sale.

Mr Al Rumayyan, who become chairman of Aramco ahead of its IPO has been at the helm of the kingdom's sovereign wealth fund since 2015.

The PIF is a seminal part of the kingdom's Vision 2030 initiative, which seeks to diversify the economy, nurture local industries, create jobs and reduce the reliance on oil revenue. The fund is an investor in ride-hailing company Uber and has made technology investments through SoftBank Vision Fund of Japan's Masayoshi Son.

In January, the fund launched a five-year strategy, with the aim of doubling its assets to $1.07 trillion and plans to invest a minimum of $40bn a year into the domestic economy until 2025 and create 1.8 million jobs. It will contribute $320bn to the kingdom's non-oil economy. The fund aims to grow assets under management to over $2tn by 2030

"Prior to 2015, we had less than 2 per cent of our investments going internationally. However, since 2015 until 2020, we increased our international allocation to about 30 per cent," Mr Al Rumayyan said.

The PIF is looking to increase its investments at home and is lowering its international allocation to "a range between 21 to 25 per cent", he added.

"We are committed to invest a minimum of $40bn on annual basis in the domestic economy," he told CeraWeek.

The investments will be directed not to the financial markets but into large multibillion dollar projects such as the sustainable city Neom as well as the Red Sea Development project on the west coast of Saudi Arabia.

The kingdom's diversification efforts over the last five to six years are but the "tip of an iceberg" Mr Al Rumayyan said.

"The things that we would like to achieve in 2030 will be our optimal way of starting the next stage, which is what are we going to do after 2030 to 2040," he said.

Saudi Arabia, which plans to meet 50 per cent of its energy needs from clean sources by 2030 and the remainder coming from gas, is "interested in renewables".

"We are thinking of ourselves as an energy and petrochemical company. So part of the things that we're doing is to consider renewable investments within Aramco," he said.

Last year, the company shipped blue hydrogen produced in Saudi Arabia to Japan. Blue hydrogen is formed when natural gas is split using steam methane reforming.

Aramco shipped the hydrogen in the form of the more easily transportable ammonia for use in zero-carbon power generation in Japan, one of its top importers of crude.