#Saudi Aramco 1% Stake Is a Tough Sell - Bloomberg

Saudi Aramco 1% Stake Is a Tough Sell - Bloomberg

Five years after Crown Prince Mohammed Bin Salman ventured that “in 2020 we can live without oil,” he is, once again, hawking Saudi Arabia’s oil champion to raise funds. In a recent, sweeping interview with Arab News, he teased the potential sale of 1% of Saudi Arabian Oil Co., or Saudi Aramco, to a “huge company” in an oil-importing country.

Who would pay $19 billion for that sliver of the Saudi dream? The obvious candidates are in Asia, where the bulk of Saudi Arabia’s oil exports flow.

Chinese sovereign wealth money, as well as the country’s own national oil companies, are said to be in discussions to take the stake, according to a Reuters report. An alternative scenario involves reviving a deal whereby Aramco takes a stake in the energy division of India’s Reliance Industries Ltd. in return for stock instead of cash — although, as my colleague David Fickling writes, that would seem at odds with where Reliance is going.

There is no clear commercial reason for an oil company to actually buy 1% of Aramco. At the best of times, minority stakes in national oil companies come with questionable benefits (unless that stake is deeply discounted). One prominent example, BP Plc’s roughly 20% stake in Rosneft Oil Co. PJSC, is itself the product of the U.K. major’s long and drama-filled dalliance in Russia’s most strategic sector. Beyond a dividend and notional share of production, it’s hard to see what that stake really brings; harder still to see the ultimate exit.