In 1951 Aramco found the first offshore oil field in the Middle East. In the 1970s and ’80s, control gradually passed to the Saudi Arabian government, which eventually took over Aramco and renamed it Saudi Aramco in 1988.
Story By P.Wallace, A.Nair, M. Martin|Bloomberg, via RigZone.com |The Saudi Arabia government transferred a further $164 billion stake in Aramco to the Public Investment Fund, aka PIF, a move aimed at bolstering cashflow at the state-backed investor that’s ramping up spending on huge local projects.
The 8% stake transfer will cut the government’s direct ownership in the world’s largest oil company to 82%, the Saudi Press Agency said. The move will have no impact on Aramco’s dividend, which the oil giant kept at $29 billion for the third quarter despite a drop in production and weaker oil prices.
A recent decision to halt an increase in output capacity will lower spending, potentially allowing for a higher dividend payout, Bloomberg Intelligence’s Salih Yilmaz said. The firm is set to report annual results on Sunday.
The Public Investment Fund will now hold a 16% stake in Aramco. The fund is a key part of Crown Prince Mohammed bin Salman’s efforts to diversify the Saudi economy and is set to increase the annual deployment of capital to $70 billion a year after 2025.
To help fund these efforts, the PIF has raised $7 billion from two bond sales so far this year. Morgan Stanley expects to see another transaction in the second half of 2024 as the fund’s spending needs continue to rise.
According to a recent prospectus, the fund had $15 billion in cash and equivalents as of September — a relatively low number for an entity so large.
Thursday’s transfer will boost the fund’s assets to about $900 billion, taking it closer to the crown prince’s goal of $1 trillion by next year. The government last moved a stake in Aramco to the PIF in April 2023, when the fund got a 4% shareholding.
Aramco has a free float in Riyadh of roughly 2%. Its shares closed up by 0.2% on Thursday, valuing the company at $2.05 trillion.
Saudi Arabia is considering plans to revive a follow-on offering in the company, Bloomberg reported in January.
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