Saudi Aramco prepares for IPO of oil trading unit

Saudi Arabia’s national oil company Saudi Aramco continues to seek an initial public offering of its energy trading business in what could be one of the biggest share sales this year.

Saudi Aramco is working with consultants to launch a listing in Riyadh in late 2022 or early next year. According to some reports, the company is now adding new banks to the IPO, which will value the divisions at more than $30 billion.

Earlier, according to some reports, the company has already appointed three firms from Wall Street as chief advisers. Final decisions are yet to be made and the IPO may be delayed if market conditions deteriorate.

While the global IPO market has been hit hard by the weakening economy and higher interest rates, Saudi Arabia, the fastest growing of the G20, is still seeing a lot of deals going on. Oilfield services company Arabian Drilling Co. attracted $43 billion worth of listing orders this month.

Aramco is carefully considering the deal at the time, as national oil companies in the Gulf are also eager to grow their business. Saudi Aramco is evaluating the prospect of buying all or part of the Gunvor Group in what will be one of the largest deals in the commodity trading industry in several years. The largest gas company Qatar Energy also plans to expand its trading activities.

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These moves will change the situation in the Middle East, where companies previously made money from conventional mining and exports, and now they are looking to move into more profitable areas of the market.

Western energy giants, including Shell Plc and TotalEnergies SE, have built trading divisions over the past decades that sometimes bring in billions of dollars a year but do little to disclose their operations.

Aramco’s IPO move, meanwhile, comes amid escalating tensions between Saudi Arabia and the US. The Biden administration reacted negatively to OPEC+’s decision this month to cut production.

Aramco Trading Co. founded back in 2011, buys and sells a variety of commodities from crude oil to diesel and liquefied natural gas. In 2020, according to the head, the company sold about 5 million barrels of oil and petroleum products per day.

The parent company sold about 2% of its shares in 2019. It was the world’s largest initial public offering, although international investors did not buy many of the shares due to the high price.

Aramco pumps about 11 million barrels of oil every day and is valued at $2.1 trillion.