Reuters reported Wednesday that “major Chinese investors” are in talks to buy a stake in Saudi Aramco, the national oil company of Saudi Arabia.
Saudi Crown Prince Mohammed bin Salman (MBS) mentioned the possibility of selling some Aramco stock in a television interview Tuesday.
“I don’t want to give any promises but there’s a discussion for acquisition of one percent of one of the pioneer companies for energy that will be a great deal to enhance the sales of Aramco in the country of this company,” he said.
“I cannot mention the name but it’s a huge company, and obtaining one percent will reinforce the industries of Aramco and will promote that,” he added.
Reuters immediately noted China’s state-owned PetroChina and Sinopec previously expressed interest in buying up to five percent of Aramco in 2017.
Aramco raised almost $30 billion with its initial public offering in 2019, providing a significant amount of the money needed to finance MBS’ “Saudi Vision 2030” plan to diversify the Saudi economy.
The IPO ended up selling about 1.7 percent of the company’s stock, much of it to Saudi and Middle Eastern buyers. The record-breaking results were considered something of a disappointment compared to MBS’ original vision of selling 5 percent of the company and raising $100 billion.
The scaled-down IPO was partly a consequence of investors disputing the $2 trillion corporate valuation the Saudis put forward, and partly because Aramco was uncomfortable with some of the transparency requirements demanded by foreign investors. The dogged efforts of Iran’s terrorist proxies in Yemen to blow up Aramco facilities with missiles and drones were not helpful.
On Wednesday, “several sources” confirmed Chinese investors were part of the deal MBS mentioned in his interview, pointing to a sovereign wealth fund called China Investment Corporation (CIC) as a potential buyer.
CNN quoted analysts who said the Aramco investor would almost certainly be “an Asian national oil company,” since most Saudi crude oil is sold in Asia. China is the largest single buyer of Saudi crude, and Saudi Arabia is China’s largest provider.
CNN’s analysts further noted that Western nations are trying to move away from oil by sinking billions of dollars into “clean energy” and “de-carbonization” initiatives, so American and European companies would seem like unlikely customers for a stake in Aramco. China, on the other hand, is hungry not only for oil, but the geopolitical influence that would come with a piece of the Saudi national oil company.
Analysts consider it possible, but unlikely, that MBS was referring to a possible share swap with India’s Reliance Industries in his television interview. The deal, which would give Aramco a 20 percent stake in the oil refining and petrochemical assets of Reliance, appears to be stalled, but MBS might be hoping he can jolt it to life by generating some media buzz.