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Saudi Arabia: Chinese investors in talks to take Aramco stake, say sources

Crown prince said Tuesday that kingdom was in talks to sell one percent of Aramco to a leading global energy company
Aramco, the world's biggest oil company, listed on the Saudi bourse in late 2019, raising $25.6bn in the IPO (Reuters)

Major Chinese investors are in talks to buy a stake in Saudi Aramco, several sources told Reuters on Wednesday, as Saudi Arabia's state oil firm prepares to sell another slice of its business to international investors.

Saudi Arabia was in discussions to sell one percent of Aramco to a leading global energy company, Crown Prince Mohammed bin Salman said in televised remarks on Tuesday.

Bin Salman added the kingdom could sell further shares, including to international investors, within the next year or two.

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A stake of one percent would equate to around $19bn based on Aramco's current market capitalisation.

Sovereign wealth fund China Investment Corporation (CIC) was among those that could invest, two sources told Reuters.

Aramco was talking to CIC, as well as Chinese national oil companies, said one of the sources close to CIC. CIC did not comment for the story. 

None of the other Chinese companies could be reached immediately for comment, said Reuters.

Uighurs deported back to China

Bin Salman said in the interview that Riyadh was strengthening its relationships with China, India and Russia, though the United States remained a strategic partner despite some differences with the Biden administration.

The US had criticised the kingdom over its human rights record.

In October, BBC News reported that Saudi Arabia and other Muslim-majority countries, including Egypt and the United Arab Emirates, had collaborated with Beijing to deport Uighurs back to China. 

Since 2014, the Chinese government has embarked on a campaign against the Muslim minority group in the country's northwestern province.

Aramco had been in touch with Chinese investors for a few years and CIC is the most likely investor, said the second source with a state-backed private equity fund.

"The kingdom does have close relations with China," said a third source, who is close to Aramco. 

"The major shareholder will decide what to do with their shares."

Saudi Arabia, the world's biggest oil exporter, retained its position as China's biggest crude oil supplier for a seventh consecutive month in March.

Another source said before the Covid-19 pandemic, Aramco had toured around China looking for investors, talking to all the major state investors with overseas money, but few were interested. 

CIC and China's Silk Road Fund were also among the firms they approached.

Vision 2030

Aramco, the world's biggest oil company, listed on the Saudi bourse in late 2019, raising $25.6bn in the IPO and later sold more shares under a "greenshoe option" to raise the total to $29.4bn.

"There are talks now for the acquisition of a one percent stake by a leading global energy company in an important deal that would boost Aramco's sales in ... a major country," bin Salman said, without elaborating.

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"There are talks with other companies for different stakes, and part of Aramco's shares could be transferred to the [Saudi] Public Investment Fund and a part listed... on the Saudi bourse," he said in the interview aired by Saudi TV marking the fifth anniversary of Vision 2030.

The 2019 Aramco IPO was seen as a pillar of the economic diversification programme aimed at attracting foreign investment.

The crown prince's multi-trillion-dollar project was supposed to be a catalyst for social and economic reform. 

However, Covid-19 and an oil price crash have thrown its future into doubt.