New | Sinopec Group believed to be considering stake in Saudi Aramco’s planned IPO
Saudi Arabia’s state-owned oil company is attractive for its low-cost oil fields, analysts say
The potential opportunity to become a strategic shareholder of Saudi Aramco via its planned initial public offering may open up opportunities for China Petrochemical Corp (Sinopec Group) to invest in low-cost oil production assets, which will help counter-balance the tens of billions of US dollars of high-cost overseas assets amassed by the firm in the past decade, analysts said.
The Saudi Arabian government is planning a three-way stock market listing for state-owned Saudi Aramco in London, New York and Hong Kong, British daily The Telegraph reported on Sunday, adding that the government hopes to attract companies including Sinopec Group, ExxonMobil and BP to take strategic stakes.
They may be offered “long-term access to upstream operations” in Saudi Arabia, in exchange for “cutting-edge technology or refinery deals,” unnamed “sources close to Saudi thinking” were quoted as saying in the report.
The IPO is estimated to be worth US$125 billion - five times that of the world’s largest IPO, Alibaba Group’s US$25 billion deal in 2014 - based on a valuation of the entire firm of US$2.5 trillion, the report said. Saudi Aramco is the world’s largest oil producer and proven reserve holder.
“Sinopec Group has wide-ranging cooperation with Saudi Aramco in the up, mid and downstream segments of the oil and gas industry,” a Sinopec Group spokesman said. “In regards to becoming a strategic investor in Saudi Aramco, we do not have any discloseable news at the moment.”