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Saudi transfers oil giant Aramco shares to sovereign fund

RIYADH (AFP) – Saudi Arabia has moved four per cent of Aramco shares worth USD80 billion in the world’s biggest oil exporter to the kingdom’s sovereign wealth fund, authorities said yesterday.

Crown Prince Mohammed bin Salman, Saudi Arabia’s effective ruler, announced the move as part of efforts to recalibrate the oil-dominated economy.

The transfer is also the latest sign that Saudi Arabia wants to open up the oil giant and “crown jewel” of the Saudi economy.

The “transfer of four per cent of Aramco shares to the Public Investment Fund (PIF)… is part of the kingdom’s long-term strategy to support the restructuring of its economy”, the crown prince was quoted as saying by the state SPA news agency.

Crown Prince Mohammed said he wants the investment fund to have USD1 trillion in assets by the end of 2025. The fund is the centrepiece of official moves to end economic reliance on oil.

“The shares will bolster the fund’s strong financial position and high credit ratings in the medium term, as the PIF relies on the value of its assets and the returns on its assets under management for its funding strategy,” he said.

Saudi stock market officials watch the stock market screen displaying Saudi Arabia’s state-owned oil company Aramco after the debut of Aramco’s initial public offering on the Riyadh’s stock market in Riyadh, Saudi Arabia, on December 11, 2019. PHOTO: AP

The crown prince stressed that the Saudi state would remain the dominant Aramco shareholder with a 94-per-cent stake. Crown Prince Mohammed is also head of the PIF sovereign fund.

He said in April last year that Aramco was in talks to sell a one per cent stake to a foreign energy giant.

“There is a discussion on the acquisition of one per cent (of Aramco) by one of the world’s leading energy companies, and this will be a very important deal to boost Aramco’s sales in that country,” the crown prince said at the time.

Aramco previously sold 1.7 per cent of its shares on the Saudi bourse in December 2019, generating USD29.4 billion in the world’s biggest initial public offering.

It raised USD6 billion in Islamic bonds in June last year, so that it could pay dividends to the new shareholders. But Aramco announced USD30.4 billion in profits for the third quarter of 2021, a massive rise from USD18.8 billion for the same quarter the previous year, as oil prices took off again.

In December, Aramco said it had signed a USD15.5-billion lease agreement for its gas pipeline network with a consortium led by BlackRock Real Estate of the United States and Hassana Investment Company, a Saudi-state-backed investment management firm.

Aramco and its assets were once kept under a vice-like government control, long off-limits to outside investment.

But with the rise of Crown Prince Mohammed, who has been pushing his ‘Vision 2030’ reform programme, the kingdom has shown readiness to cede some control.

“The kingdom is continuing its initiatives to pursue the economic and financial reform process that it has undertaken and is putting in place economic transformation plans,” the crown prince was quoted as saying yesterday.