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Aramco starts IPO pricing with valuation of as much as USD1.706 trillion

November 18/2019

MOSCOW (MRC) -- Saudi Aramco said Sunday it started pricing of its initial public offering in a range of 30 SAR to 32 SAR (USD8 to USD8.53) per share, indicating a company valuation of as much as USD1.706 trillion, as per S&P Global.

Crown Prince Mohammed bin Salman had been seeking a valuation for the world's biggest oil and gas company of USD2 trillion. Saudi Arabia's government currently owns all of Saudi Aramco's 200 billion shares outstanding.

The IPO will sell a 1.5% stake, Aramco said in an emailed statement. The listing will raise USD25.6 billion for the kingdom, if it ends up with a final price of 32 SAR.

Individual investors will subscribe based on the 32 SAR price, and if the final price is below that, they can get a refund in cash or get additional shares, according to the statement. Bid forms by institutional subscribers need to be sent in by December 4, it said.

Individual investors must submit their forms by November 28 and the final offer price will be announced on December 5.

The IPO is the centerpiece of the crown prince's Vision 2030 to diversify the Saudi economy away from oil.

S&P Global Ratings said in a report on Thursday that the revenue raised by the IPO, most of which will go into the Saudi Public Investment Fund, could "help maintain growth potential through our three-year ratings horizon."

S&P Global Ratings forecasts Saudi Arabia's GDP to grow 1.6% on average per year from 2019 to 2022.

As MRC informed earlier, last week, Saudi Aramco approached Malaysian state energy company Petronas to participate in Aramcos IPO, Petronas said, as the Middle Eastern oil giant seeks cornerstone investors for the listing.

Besides, we remind that Saudi Aramco, which temporarily lost half of its oil production following the September 14 attacks on two key oil facilities, is running its local refineries at full capacity and is forging ahead with plans to start up new refineries. The company is also starting up a joint venture refinery in Malaysia next year. According to Aramco's bond prospectus released in April, the refining and petrochemical joint venture with Petronas - the Malaysian national oil company - collectively known as PRefChem, was supposed to start this year.

The PRefChem joint venture includes a 300,000 b/d refinery, an integrated steam cracker with capacity to produce 1.3 million mt of ethylene located in Johor, Malaysia. Aramco was supposed to provide a significant portion of PRefChem's crude supply under a long-term supply agreement. Jazan and PrefChem will help Aramco reach a gross refining capacity of 5.6 million b/d, it said in the prospectus. The company currently owns and has stakes in four refineries abroad with a total refining capacity exceeding 2 million b/d.

Ethylene and propylene are feedstocks for producing polyethylene (PE) and polyprolypele (PP).

According to MRC's ScanPlast report, Russia's estimated PE consumption totalled 1,589,580 tonnes in the first nine months of 2019, up by 7% year on year.  Shipments of all PE grades increased. The estimated PP consumption in the Russian market was 976,790 tonnes in January-September 2019, up by 4% year on year. Shipments of PP block copolymer and homopolymer PP increased.

Saudi Aramco is an integrated oil and chemicals company, a global leader in hydrocarbon production, refining processes and distribution, as well as one of the largest global oil exporters. It manages proven reserves of crude oil and condensate estimated at 261.1bn barrels, and produces 9.54 million bbl daily. Headquartered in Dhahran, Saudi Arabia, the company employs over 61,000 staff in 77 countries.
Author:Margaret Volkova
Tags:PP, PE, crude and gaz condensate, PP block copolymer, homopolymer PP, propylene, ethylene, petrochemistry, Petronas, PRefChem, Saudi Aramco, Malaysia, Russia, Saudi Arabia.
Category:General News
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