SAUDI Arabia has moved 4% of Aramco shares worth US$80 billion (RM334.8 billion) to the kingdom’s sovereign wealth fund, authorities said today.

Crown Prince Mohammed bin Salman, Saudi Arabia’s effective ruler, announced the move as part of efforts to recalibrate the oil-dominated economy.

The transfer is also the latest sign that Saudi Arabia wants to open up the world’s biggest oil exporter and “crown jewel” of the Saudi economy.

The “transfer of 4% of Aramco shares to the Public Investment Fund (PIF)... is part of the kingdom’s long-term strategy to support the restructuring of its economy,” the crown prince was quoted as saying by the state SPA news agency.

Mohammed said he wants the investment fund to have US$1 trillion in assets by the end of 2025. The fund is the centrepiece of official moves to end economic reliance on oil.

“The shares will bolster the fund’s strong financial position and high credit ratings in the medium term as the PIF relies on the value of its assets and the returns on its assets under management for its funding strategy,” he said.

The crown prince stressed that the Saudi state would remain the dominant Aramco shareholder with a 94% stake. Mohammed is also head of the PIF sovereign fund.

‘Financial reform process’

He said last April that Aramco was in talks to sell a 1% stake to a foreign energy giant.

“There is a discussion on the acquisition of 1% (of Aramco) by one of the world’s leading energy companies and this will be a very important deal to boost Aramco’s sales in that country,” he said.

Aramco previously sold 1.7% of its shares on the Saudi bourse in December 2019, generating US$29.4 billion in the world’s biggest initial public offering.

It raised US$6 billion in Islamic bonds last June so that it could pay dividends to the new shareholders.

But Aramco announced US$30.4 billion in profits for the third quarter of 2021, a massive rise from US$18.8 billion for the same quarter the previous year as oil prices took off again.

Last December, Aramco said it had signed a US$15.5 billion lease agreement for its gas pipeline network with a consortium led by BlackRock Real Estate of the United States and Hassana Investment Company, a Saudi-state-backed investment management firm.

Aramco and its assets were once kept under a vice-like government control, long off-limits to outside investment.

But with the rise of Mohammed, who has been pushing his “Vision 2030” reform programme, the kingdom has shown readiness to cede some control.

“The kingdom is continuing its initiatives to pursue the economic and financial reform process that it has undertaken and is putting in place economic transformation plans,” he was quoted as saying today. – AFP, February 13, 2022.