Saudi Aramco is reportedly moving to cut its spending on the oil ministry, Financial Times reports. As Saudi Arabia’s national oil company looks towards a public listing, it will have to make clear the boundaries between Aramco and the government.
FT cited anonymous sources as saying that a key issue, and one of the trickiest, is Saudi Aramco’s habit of paying for oil ministry expenses, including Energy Minister Khalid Al-Falih’s luxury hotel stays and use of one of the company’s jets. Four of FT’s sources said that this could lead to Al-Falih stepping down as Saudi Aramco’s chairman.
One of the sources said that the expenses had been “effectively hidden for years by Aramco,” FT reports.
This is particularly poignant as US lawmakers try to pass a ‘NOPEC’ bill, which would open OPEC, and its members, to antitrust laws. Because of Aramco’s assets in the US (and its plans to further acquire gas-related assets), it could be exposed to lawsuits.
When Saudi Aramco issued a $12bn bond sale, it disclosed in the bond prospectus that it provides “a variety of services to the government for which it does not receive compensation.”
The planned IPO is part of Crown Prince Mohammad bin Salman’s diversification strategy, and would provide an expected $100bn to the government.
Saudi Aramco has opened up as it looks towards a public listing; this year it released annual financial results and will host its first mid-year earnings call in August. Meanwhile, Al-Falih hinted in April that Saudi Aramco would access equity markets “sooner than you think,” for more than just bonds.
