King Salman of Saudi Arabia has stepped in and shelved his son’s plans to float a five per cent stake in the country’s national oil company.
Three sources with ties to government insiders told Reuters the decision came after the king spoke to family members, bankers, and senior oil executives about the plan in June.
The monarch was told an initial public offering (IPO) would undermine the kingdom as it would bring full public disclosure of Aramco’s financial details.
In late June, the king sent a message to his diwan, or administrative office, demanding that the IPO be called off, the three sources said. The king’s decision is final, a second source said.
The news of Salman’s action comes as Saudi has restricted Aramco’s exclusive rights over the duration to explore oil and gas, according to the Financial Times.
Saudi Aramco can only explore and develop resources for 40 years, stripping it of its previous forever time limit. Dependent on Saudi Arabia’s economic risk factors, the state has an option whether it wants to renew the contract.
According to Khalid Al Falih, energy minister and chairman of Saudi Aramco, the new process includes overhauling Saudi Aramco’s financial reporting and running an independent audit of its energy volume – reports that would be of interest to foreign investors.