IPO not driven by need for cash: Falih

IPO not driven by need for cash: Falih

1942
0
SHARE
Minister of Health and Saudi Aramco Chairman Khalid Al-Falih and Minister of Commerce and Industry Tawfiq Al-Rabeeah speak at a session on “Competitive Sectors: What sectors will drive growth and innovation into the future?” at the Global Competitiveness Forum in Riyadh on Monday. US Ambassador to Saudi Arabia Joseph W. Westphal and President and CEO of US Council on Competitiveness who is also President of Global Federation of Competitiveness Councils Deborah L. Wince-Smith also spoke at the session moderated by Stephen Sackur, broadcast journalist. — SPA

Saudi Gazette report

RIYADH — Saudi Aramco Chairman Khalid Al-Falih said on Monday that plans for a possible initial public offering are not being driven by a need for cash amid a global slump in oil prices, but instead signal a desire for greater openness to outside investors.

Speaking at the Global Competitiveness Forum, he said the potential listing of the world’s largest oil producer “is not for cash” but a “sign of the times” that the Kingdom is open for business.

“If we do it, the percentage will not be such that it’s going to move the needle significantly in terms of the government proceeds,” Al-Falih said, a reference to the potential listing.

He said that despite oil prices recently dipping below $30 a barrel, Aramco’s investments in oil and gas have not slowed down.

“Fiscal discipline becomes number one” in such an environment, he said.

He said the firm has been able to make a lot of cuts “by simply driving down costs,” but investment has continued.

“Our investment in capacity, oil and gas, has not slowed down,” Al-Falih said.

Talking to reporters on the sidelines of the forum, he said excessively high oil prices “precipitated” the current slump since “everybody wanted to contribute to supply more than the demand that was coming in.”

He said Saudi Arabia has the scale and capability to sustain the current slump in prices for “a long, long time” but that “obviously, we don’t wish for lower prices.”

“The fact that the crown jewel of the Kingdom … the company that has been generating the predominant income to the treasury of the Kingdom of Saudi Arabia is being considered to be taken to the stock market, I think is a sign of the confidence the Kingdom has in its enterprises,” Al-Falih said.

He told reporters that his country is not to blame for low prices.

Unlike others who store crude on ships while they look for buyers, “Saudi Aramco and therefore Saudi Arabia does not ship a single barrel without a customer… Our supply is tightly, tightly linked to end-user demand,” he said.

Falih said there are two possible options for a stock market listing of Saudi Aramco, which sits on crude reserves of 261.1 billion barrels.

“One is to bundle together a significant downstream portfolio” such as its chemicals and marketing operations.

Another, being considered for the first time in Saudi Arabia, is to possibly list a percentage of “everything we do,” Falih told the forum, organized by the Saudi Arabian General Investment Authority.

NO COMMENTS

LEAVE A REPLY