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On again, off again Aramco IPO planned for next month, say sources

The state oil giant's offering, potentially worth as much as $20bn, would open the company to public investment for first time in its history
Employees of Aramco oil company work in Saudi Arabia's Abqaiq oil processing plant on September 20, 2019 (AFP)

Saudi state oil giant Aramco aims to announce the start of its initial public offering (IPO) on 3 November, sources told Reuters on Tuesday, as the kingdom kicked off its flagship "Davos in the Desert" investment conference.

Aramco will start subscription for investors in its initial public offering on 4 December, Saudi-owned news channel Al-Arabiya said in a news flash on Tuesday, citing unnamed sources.

The oil giant plans to announce the transaction's price on 17 November and the company will begin trading on the kingdom's Tadawul stock market on 11 December, the broadcaster reported.

After plans were first announced three years ago, the deal was delayed once again earlier this month to give advisers time to secure new cornerstone investors. Aramco's chief executive officer Amin Nasser would be skipping the conference to meet with them, the Reuters sources said.

Aramco is looking to float between a one and two percent stake on the Saudi stock market, in what would be one of the largest ever public offerings, worth upwards of $20bn.

Aramco told Reuters on Tuesday that it "continues to engage with the shareholders on IPO readiness activities. The company is ready and timing will depend on market conditions and be at a time of the shareholders' choosing."

Losses and valuations

News about the IPO comes after Saudi Arabia, the world's largest oil exporter, lost around $2bn in crude production following the attacks on its oil plants last month, according the Financial Times.

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While the kingdom has worked to restore production to the levels enjoyed prior to the attacks, analysts have questioned whether that is possible and how it can prevent such attacks in the future.

The kingdom has said that its oil output had fallen by about 660,000 barrels per day (bpd), while the newspaper reported the loss may be closer to 1.3 million bpd.

The Financial Times earlier reported that Riyadh was "strong arming" wealthy Saudi families to buy into the IPO.

Crown Prince Mohammed bin Salman flagged the prospect of selling a piece of Aramco three years ago. 

But his desired $2 trillion valuation has always been questioned by some financiers and industry experts, who note that countries have been accelerating efforts to shift away from fossil fuels to curb climate change, putting oil prices under pressure and undermining producers’ equity value.