Saudi Arabia said on Sunday it would transfer 4% of the shares of state oil giant Aramco to a sovereign wealth fund, an injection valued at nearly US$80 billion, as the kingdom attempts to restructure its oil-dependent economy. energy.
The announcement from the state-run Saudi Press Agency comes as the oil company is valued at just under US$2 trillion and oil is trading above US$90 a barrel , its highest level since 2014.
Saudi Crown Prince Mohammed bin Salman, the assertive son of King Salman, made the decision to transfer the shares, according to the state media report. It will go to the Public Investment Fund, the kingdom’s sovereign wealth fund, which has been Prince Mohammed’s vehicle to invest in everything from Uber to British soccer team Newcastle United. The fund is also part of the princely Neom project along the Red Sea coast.
“His Highness added that the transfer of these shares is part of the kingdom’s long-term strategy to support the restructuring of the national economy,” the report said. This will include creating private sector jobs in the kingdom, he added.
Stay away from oil
Saudi Arabia has reaped the benefits of a spike in oil prices after the coronavirus pandemic at one point sent prices plummeting into negative territory, but it also sees growing global concern over climate change fueled by burning fossil fuels. Prince Mohammed’s plans hope oil wealth will pay to create jobs for the kingdom’s youth to move away from oil over time.
The Public Investment Fund has also invested in electric car maker Lucid Motors Inc. of Newark, California.
The fund did not immediately acknowledge what its plans for the stock would be and did not immediately respond to a request for comment. Rating agency Moody’s Investors Service said last week that the fund’s assets had grown to US$412 billion in 2020 from US$152 billion in 2015.
The kingdom remains the company’s largest shareholder, with approximately 94% of the company. The Saudi Arabian Oil Co. has long been both the main economic engine of the kingdom and the main source of funding for its ruling Al Saud royal family.
Saudi Arabia offered a slice of the oil company’s shares on Riyadh’s Tadawul stock market in 2019. The listing made Aramco one of the most valuable companies in the world, alongside Apple and Microsoft.
A share of Aramco stood at 37.3 Saudi riyals, or 9.94 U.S. dollars, before trading on Sunday.