Investors waiting for the chance to buy a piece of Aramco, Saudi Arabia’s state-owned oil behemoth, will probably have to wait.
Aramco had indicate that it expected to begin trading on a public stock market this year, but, according to three people briefed on the company’s planning, that is now likely to happen in 2019.
The delay reflects the difficulties in arranging what would easily be the world’s biggest-ever initial public offering.
The company’s potential market debut, a centerpiece of an ambitious economic overhaul of Saudi Arabia led by Crown Prince Mohammed bin Salman, has drawn the interest of investors around the world — and political leaders hoping to win the listing.
In November, President Donald Trump publicly courted Saudi officials to list Aramco on the New York Stock Exchange on Twitter. British government officials met with their Saudi counterparts during Salman’s visit to Britain last week. Shinzo Abe, the prime minister of Japan, has privately made entreaties for consideration of the Tokyo Stock Exchange as well.
Aramco is one of the giants in the world of oil production, and its initial public offering is likely to be valued at a minimum of several hundred billion dollars. Saudi officials have not so privately indicated that they hoped the company would be valued at some $2 trillion.
But Saudi and Aramco officials, as well as their legions of advisers, have had to grapple with a host of issues. Salman has also overseen a very public anti-corruption campaign in which scores of fellow royals were detained. The country has also taken an active military role in Yemen’s civil war.
The company has not only been the primary source of Saudi revenue (there were, until recently, no taxes), it has also historically been used to move oil prices.
But its finances have not been transparent, and both the American and London stock exchanges require both transparency and the protection of public shareholders. In addition, while some Saudi officials — reportedly including Salman himself — are said to favor a listing on the New York exchange, others involved in the process have said that a presence in the United States could expose the kingdom to lawsuits.
How a listing would be structured also remains under discussion. The plan is to have Aramco trade on both the kingdom’s Tadawul stock exchange and a major foreign stock market, which would provide both prestige and the investor money needed to support a multibillion-dollar listing.
A public offering abroad was meant, in part, to send a signal that the country was changing. The New York Stock Exchange, the London Stock Exchange and the Hong Kong Stock Exchange have been vying to capture the foreign market listing.
Some people in the energy industry also say that Aramco could face pressure from investors because the company has not gone through the cost-cutting that Western oil companies, like Exxon Mobil, have undertaken in recent years.
“My fear is that they are not prepared for this new world,” Floris Ansingh, a former head of Royal Dutch Shell in Saudi Arabia, said of Aramco. “That will be forced upon them.”
In an interview with Bloomberg Television last week, Saudi Arabia’s energy minister, Khalid al-Falih, hinted that an Aramco offering would probably come next year, asserting that the timeline would make little difference.
“Between Dec. 31st and Jan. 1st, there is no value lost for the kingdom,” al-Falih said. “So I don’t see this artificial deadline that you refer to as being significant.”
Officials and advisers involved in the process have also explored the possibility of not taking Aramco public at all. In the region, speculation has turned to a possible sale of a stake to a sovereign wealth fund, possibly the Chinese.
The Financial Times reported earlier that Saudi officials told their British counterparts last week that a delay to 2019 was likely.
Representatives for Aramco did not immediately respond to a request for comment.
Aramco itself has worked to prepare itself for a listing, though all the major decisions — including when and where the company will be listed — will ultimately be made by its current shareholder, the Saudi government.
“We are preparing for all areas because we don’t know where we will be listed,” Amin H. Nasser, Aramco’s chief executive, said in a recent interview at the company’s headquarters in Dhahran. “It makes us ready for any market the government decides.”