RIYADH: Oil behemoth Saudi Aramco has taken the next step towards its initial public offering by hiring two U.S. companies to audit its oil reserves. Aramco, the state-run entity of Saudi Arabia, is estimated to own about 15% of the world’s oil. According to Reuters , sources familiar with the matter confirmed that Saudi Aramco has asked a subsidiary of Baker Hughes BHI , Gaffney, Cline & Associates, to review its reserves. Sources apparently also indicated that DeGolyer and MacNaughton, a Dallas-based reserve auditor, has been asked to do some work.
Aramco’s initial offering is set to be the world’s largest IPO yet, and Deputy Crown Prince Mohammed bin Salman has said that he expects the deal to value the company at more than $2 trillion. Prince Mohammed serves as the head of Aramco’s ten-member “Supreme Council” and has been tasked with preparing the kingdom’s economy for a future that is less-dependent on oil. Saudi Arabia has been plagued by inefficient government and declining oil revenues; a reform effort called “Vision 2030” was created to address these issues.
An IPO is just one piece of Vision 2030, which has the overall goal of making the kingdom’s economy less reliant on oil prices . While some transition away from the oil industry is expected, Saudi Arabia is also working on refocusing its oil empire. One ongoing initiative is for Aramco to get more involved with downstream efforts. Last year, the company teamed up with the kingdom’s petrochemical brand to develop an oil-to-chemicals project. Saudi Aramco’s CEO, former petroleum engineer Amin H. Nasser, also announced a massive shipbuilding complex to be installed within a few years. Specific plans related to the IPO have yet to be finalized, but most analysts expect the company to offer up about 5% to 10% of the company in a listing on the domestic market, as well as a dual listing in a foreign market. The scope of the IPO and overall value of Aramco will depend on the results of reserve audits, as the specific internal details of the company remain well-guarded and our current perception of its holdings are solely based on estimates.
