Saudi Arabia has handed Aramco its state-owned oil company a 40-year concession to exploit the kingdom’s oil and gas reserves as part of the oil giant’s preparations for an initial public offering (IPO), a person familiar with the matter revealed to the Bloomberg news agency.
Media speculation has centred on the possible cancellation of the flotation amid rumours of over-valuation of the company and a lack of investor interest. Saudi Aramco itself has denied the reports.
The new arrangement replaces norms dating in some cases from 1933, according to Bloomberg, when Saudi Arabia first allowed companies to drill for oil, the person said, asking not to be named discussing internal matters. Saudi Aramco declined to comment.
Saudi Aramco is currently focused on a deal to buy a majority stake in the Saudi Basic Industries Corporation (SABIC) worth as much as $70bn. However Khalid Al Falih, the Saudi Minister of Energy, Industry and Mineral Resources, stated last week that the kingdom remained “committed to the IPO of Saudi Aramco at a time of its own choosing when conditions are optimum.”
As part of the share sale preparations, the kingdom has reissued “a long-term exclusive concession” to the state-owned company, Al Falih stated.
