Saudi government transfers 4% stake in Aramco to PIF-owned Sanabil Investments

The transfer will not affect the energy company's total number of issued shares

A Saudi Aramco oil facility in Abqaiq. The state remains Aramco’s largest shareholder, retaining a 90.186 per cent stake. Reuters

Saudi Arabia has transferred a 4 per cent stake in energy major Saudi Aramco to the Saudi Arabian Investment Company, a wholly-owned subsidiary of the sovereign wealth fund, the Public Investment Fund, Crown Prince Mohammed bin Salman said on Sunday.

Following the transfer to Sanabil Investments, as the PIF unit is known, the state remains Aramco’s largest shareholder, retaining a 90.186 per cent stake in the company, Aramco said in a statement to the Saudi stock exchange Tadawul, where its shares are traded.

The state had transferred 4 per cent of Aramco's shares to the PIF in February as part of the kingdom’s “long-term strategy to support the restructuring of its economy, in line with Vision 2030".

The latest transfer will not affect Aramco's total number of issued shares, and the shares transferred will rank equally alongside other existing ordinary shares, the company said in the bourse statement.

The 4 per cent stake would be worth roughly $77 billion, based on Saudi Aramco's current market price.

“This is a private transfer between the state and Sanabil, and the company [Aramco] is not a party to the transfer and did not enter into any agreements or pay or receive any proceeds from the transfer,” it said.

The company also confirmed that the transfer “does not have an impact” on its operations, strategy, dividends distribution policy or its governance framework.

It will announce any material development as required by the applicable rules and regulations.

Saudi Aramco, the world’s top oil supplier, completed the world's largest initial public offering in 2019, raising $25.6 billion, and later sold more shares boosting the total to $29.4 billion.

Its annual net profit surged 46 per cent in 2022, driven by higher oil prices, to a record $161.1 billion, the company said in a regulatory filing last month.

Earlier this month, Fitch Ratings raised Aramco’s long-term foreign and local currency issuer default ratings to A+ from A with a stable outlook because of the company’s strong business profile and its ambitions to deliver a “sustainable and progressive dividend”.

Yasir al-Rumayyan, governor of PIF and chairman of Aramco, said last year that the company may consider selling more shares if the market conditions are right.

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  An oil tank close to Saudi Aramco's processing facilities at Abqaiq. The company operates the world's largest oil processing facility at the site, which came under attack on September 14. Reuters

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  Work is underway at the damaged Abqaiq oil facilities. Aerial attacks destroyed the 7 million bpd facility's ability to stabilise crude for transportation. Reuters

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  The Saudi energy ministry said two days after the attack that nearly half of its output had been restored. Reuters

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  Around half of Saudi crude production was impacted following the attacks, which also targeted the Khurais oil field in the country's oil-rich Eastern Province. Reuters

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  Workers inspect the spheroids, which suffered extensive damage from sustained aerial attacks in the early hours of September 14. Reuters

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  Oil prices surged as high as $71 per barrel on the first day of trading following the attacks. Reuters

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  By September 25, Saudi Aramco said it had recovered production to pre-attack levels, surprising many by its speedy recovery. Reuters

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  Saudi Arabia, the world's largest oil exporter tapped its inventories to meet customer obligations following the incidents. Reuters

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  Saudi production capacity, which was at 12 million bpd before the attacks, is expected to reach 11 million bpd by the end of October. Bloomberg

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  Damaged parts from the Abqaiq stabilisation tower. Saudi Aramco said full production capacity of 12 million bpd would be restored by end of November. Bloomberg

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  A damaged section of pipe lies near the Khurais oil field in Saudi Arabia. The attacks caused the most significant disruption to supply in history. Bloomberg

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  Oil prices, however, declined to $2 from pre-attack levels following the speedy restoration of output by the kingdom. Reuters

The transfer of a part of the state’s shares in Aramco is a continuation of Saudi Arabia’s long-term initiatives to diversify the national economy and expand investment opportunities in line with Vision 2030, the Saudi Press Agency quoted Prince Mohammed, who is also the chairman of PIF, as saying.

The transfer will also solidify PIF’s strong financial position and credit rating, he said.

The move comes as the fund continues with its mandate to launch new sectors, build new strategic partnerships, localise technologies and knowledge, and create more direct and indirect job opportunities in the local market, he added.

One of the world’s largest sovereign wealth funds, with about $620 billion in assets, the PIF is at the centre of the Saudi Vision 2030 initiative to diversify the country’s economy away from hydrocarbons.

Under a five-year strategy announced in 2021, the PIF aims to more than double the value of its assets under management to $1.07 trillion and commit $40 billion annually to develop Saudi Arabia's economy until 2025. It will contribute $320 billion to the kingdom's non-oil economy.

The fund created 10 new sectors, launched more than 30 new companies, created 331,000 jobs in Saudi Arabia, and tripled assets under management over the past four years.

These include health care, renewables, telecoms, media and technology, food and agriculture, automotive, transportation and logistics, real estate, aerospace and defence, construction and building components and services. The kingdom will also continue to develop entertainment, leisure and sports, financial services, metals and mining, and the retail sector.

Some of the companies established by the fund include the futuristic city known as Neom, the Red Sea Development Company, Qiddiya, the KAFD Development and Management company, SAMI, the Saudi Jordanian Investment Fund, Jeddah New Downtown Company, Saudi Entertainment Venture, Saudi Information Technology Company and National Energy Services.