JEDDAH, 11 May 2005 — State-owned Saudi Arabian Oil Co. (Saudi Aramco) has announced plans to float shares of the new $5 billion Yanbu oil refinery for public subscription. The announcement was made at the Saudi Mega Projects 2005 conference in Dammam by Isam Al-Bayat, Aramco’s vice president.
The refinery, to be established with the help of a foreign partner, will produce 400,000 barrels of oil daily. “The initial public offering will be offered from the shares of Aramco and the foreign partner,” Al-Bayat said, adding that Aramco was short-listing foreign companies to select the strategic partner.
Several American, European and Asian companies have expressed a desire in becoming strategic partners in this project. Al-Bayat said the partner would be selected by the end of the third quarter of this year.
The new joint venture refinery will sell “high-quality products to Asia, Europe and the United States,” Al-Bayat said.
“Anything with an Aramco sticker on it will sell like crazy,” Riyad Bank Chief Economist Khan H. Zahid said, adding that “it is a good idea. The time has come for more IPOs like this in lieu of huge liquidity available in the Kingdom.”
Aramco’s commitment to spend $50 billion to raise crude oil production to 12.5 million barrels a day by 2009 would make it more attractive to tap soaring domestic capital markets in order to spread out the venture’s risk.
“We are ready whenever the investor is ... “ Al-Bayat said.