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Saudi Arabia moves billions of Aramco's value to wealth fund

February 13, 2022

The transfer was made to support the "restructuring of the national economy," the Saudi Press Agency said. Crown Prince Mohammed bin Salman is aiming to diversify away from oil revenues.

Two women walk past a billboard of Mohammed bin Salman in Jiddah
Crown Prince Mohammed bin Salman is seen by some as the face of change in Saudi ArabiaImage: Amr Nabil/AP Photo/picture alliance

Saudi Crown Prince Mohammed bin Salman has transferred 4% of state-run oil giant Aramco to the Public Investment Fund (PIF), Saudi Arabia's sovereign wealth fund, the state-run news agency said on Sunday.

The prince was quoted by the report as saying that "the transfer of these shares is part of the kingdom's long-term strategy aimed at supporting the restructuring of the national economy."'  

The transfer is estimated to have enriched the PIF by nearly $80 billion (€70.5 billion). Some of the money will go toward creating private-sector jobs in the kingdom, the report said.

The fund did not immediately say what its plans for the stock were.

What is Aramco?

Saudi Aramco, officially called the Saudi Arabian Oil Company, is the world's biggest oil producer. It has been the main economic driver of the kingdom for many years, as well has the main source of money for the ruling Al Saud royal family, which still owns 94% of company shares.

A man in a helmet takes photos in the Khurais oil field
Saudi Aramco is the world's biggest oil producer Image: Amr Nabil/AP Photo/picture alliance

Saudi Aramco is one of the world's most-valued companies alongside Apple and Microsoft, with its assets estimated at just under $2 trillion. Currently, it is additionally profiting from a surge in the price of oil, which is trading above $90 a barrel — the highest level since 2014.

Aramco and its assets were once under tight government control and considered off-limits to outside investment.

But the crown prince, who has come up with a wide-ranging reform program known as Vision 2030, has begun to loosen restrictions.

In December 2019, Aramco sold a tiny portion of its shares on the Saudi stock exchange, generating $29.4 billion in the world's biggest initial public offering.

Security staff and delegates walk past a wall showing the Aramco logo at a 2019 conference
Aramco took a hit during the pandemic, but profits are currently soaringImage: Hamad I Mohammed/REUTERS

What is Saudi Arabia's Public Investment Fund?

Salman is using the fund to invest in a number of sectors as the kingdom tries to reduce its dependence on oil revenue, particularly in view of world fears about fossil-fuel-induced climate change.

Ratings agency Moody's Investors Service said last week that the fund's assets had grown to $412 billion in 2020, up from $152 billion in 2015.

The fund has invested in a number of enterprises, including Uber, the British soccer team Newcastle United, the electric car manufacturer Lucid Motors Inc. of Newark, California and the prince's Neom sustainable city project along the Red Sea coast.

The prince was quoted by the Saudi press as saying that the transfer of shares from Aramco to the PIF is aimed at "supporting the PIF's plans to grow its assets under management to around 4 trillion Saudi riyals [around $1.07 trillion] by the end of 2025."

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tj/dj (Reuters, AP, AFP)