Saudi Aramco, headquartered in Dhahran, Eastern Province, is at the centre of the latest reforms push to wean the kingdom away from oil and into an era where privatisation and earnest economic diversification will hold sway.

Deputy Crown Prince Mohammed bin Salman unveiled a vision that sees Aramco valued at more than $2 trillion ahead of the sale of less than 5 per cent of it through an initial public offering (IPO). 

He said the kingdom would raise the capital of its public investment fund to SR7 trillion ($2 trillion) from SR600 billion.

The prince aims to end what he says is “a case of oil addiction” and declared: “We will not allow our country ever to be at the mercy of commodity price volatility or external markets.” 

His Vision 2030 envisages raising non-oil revenue to SR600 billion by 2020 and SR1 trillion by 2030 from SR163.5 billion last year. But the plan gave few details on how this would be implemented, something that has bedevilled previous reforms, reports Reuters.

The vision calls for a restructuring of the Public Investment Fund (PIF), which the prince said would become a hub for Saudi investment abroad, partly by raising money through selling shares in Aramco.

Asked where Riyadh would find the funds for a $2 trillion dollar fund after recent borrowing, he said it would come from transferring the ownership of Aramco to the PIF.

“We are speaking about more than $2 trillion. We expect the valuation to be more than $2 trillion. In addition to that there are other assets that will be added to the fund, and part of it is already added.”

He said it could “turn into a global investment fund with a size of up to $3 trillion dollars”.

Elaborating on Aramco’s role in Saudi economic transformation, Prince Mohammed said: “So big is the state oil company because of its rights to the kingdom’s crude reserves, that selling even 1 per cent of its value would create the biggest initial public offering on earth.”

He said other Aramco subsidiary companies would also be listed along with other publicly held companies, and added that one major benefit of privatisation was that it would increase transparency and help limit corruption.

“People used to be unhappy that files and data of Aramco are undeclared, unclear and not transparent.

Today they will be transparent. If Aramco gets IPOed that means it has to announce its statements of accounts,” he said.

The ambitious targets, including raising the private sector share in the economy to 60 per cent from 40 per cent, reducing unemployment to 7.6 per cent from 11 per cent and growing non-oil income to SR1 trillion from SR163 billion were not explained further.

Under his plans, Saudi Arabia would produce or assemble half of its defence equipment internally in order to create job opportunities and Riyadh would make foreign investment easier.

The government ran a deficit of SR367 billion or 15 per cent of GDP in 2015, officials said, and this year’s budget plan aimed to cut that to SR326 billion.

Prince Mohammed’s reform plans include creating a new education curriculum, giving women a bigger economic role and offering improved status to resident expatriates.