Riyadh follows its plan. The Saudi authorities have made it official late this Thursday afternoon that they will sell a new share package in the world’s largest oil company, the state-owned Aramco, to finance their megalomaniac investment plan to diversify their economy. It will not be a large percentage, just 0.64%, but the operation will give it an extraordinary income of up to 12,000 million dollars (11,000 million euros). The Desert Kingdom needs quick money, and placing shares of the fossil giant on the market is the easiest alternative.
Saudi Arabia will sell 1,545 million Aramco shares for between 26.7 and 29 rials (between 6.6 and 7.1 euros), reserving an option to include an additional amount of securities in the operation (a practice known as green shoe). The final price, always within that range, will be announced next Friday. The oil company is the fifth most valuable listed company on the planet, only behind Microsoft, Apple, Nvidia and Alphabet (Google), and a key piece in the complicated Saudi financial machine. Its shares have fallen 12% since last January 1.
Saudi Aramco listed on the Riyadh Stock Exchange since the end of 2019, just before the pandemic completely changed the energy paradigm. With that operation, which affected only 1.5% of the oil company’s capital, it managed to raise 29.4 billion dollars (27.1 billion euros).
Saudi forecasts call for a fiscal deficit of $21 billion this year, around 2% of its GDP. To balance its accounts, the Desert Kingdom needs, according to the International Monetary Fund (IMF), for a barrel of oil to be around 100 dollars, far from the slightly more than 80 at which it is quoted today. Saudi Arabia is the largest crude oil exporter on the planet and the de facto leader of the OPEC cartel, engaged for years in a continuous cut in its production to artificially raise the price.
At the beginning of May, Aramco – dragged along by the Saudi State, as a practically sole shareholder – announced an increase in its dividend until it stood at just over $124 billion in 2024. All, despite the stabilization – and even slight decrease – of its main business lines. The objective of this higher dividend is, again, both to reduce the fiscal imbalance and to finance the enormous Vision 2030 diversification plan, which ranges from the electric car to sports competitions to a new flag airline or turning the country into a tourist destination. Exactly the same thing that its Emirati and Qatari neighbors have been doing for years.
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