It is an open secret that the economy of Saudi Arabia is built on oil – a dependency that Crown Prince Mohammad Bin Salman Al Saud desperately wants to break.
In its April 2020 Vision 2030 plan, the Saudi Crown Prince presented a progressive and futuristic vision of how the kingdom will develop in economic, social, and technical terms.
Since then, he has monitored the diversification of the Saudi economy, created new sources of revenue, eased restrictive practices, and set plans for the IPO of a part of Saudi Aramco, the world's largest oil producer.
It is expected by the leadership of the kingdom that each IPO of up to 5 percent of Aramco will bring in at least $ 2 trillion ($ 7.34 trillion). With the appointment of Prince Abdulaziz bin Salman as the new Saudi Energy Minister this week, this IPO is now taking a significant step forward – with the new minister's responsibility to maximize its value.
He takes over the leadership of the world's largest oil exporter from Khaled Al Falih, and faces the challenge of making Aramco's IPO successful, maximizing its value, and ensuring that oil prices remain at optimal price levels to strengthen the Saudi economy as a whole
– Mick O & # 39; Reilly
The king's son is already an experienced oil commissioner known for his work in the Organization of the Petroleum Exporting Countries (Opec).
He takes over the leadership of the world's largest oil exporter from Khaled Al Falih, and faces the challenge of making Aramco's IPO successful, maximizing its value, and ensuring that oil prices remain at optimal price levels to strengthen the Saudi economy as a whole.
He is an excellent negotiator and has many years of experience completing business within Opec – and this well-known respect among colleagues can help him implement this initiative.
"He will focus on improving relations within Opec and non-OPEC producers in order to strengthen the stability of the international oil market," a Saudi official told Reuters.
Bassam Fattouh, director of the Oxford Institute for Energy Studies and a regular participant in Opec meetings, said the prince's appointment was "a continuation of existing policies."
World's largest IPO
"The Prince has been a key figure in Saudi's oil and OPEC policy for many years," Fattouh said, adding that he is also a major player in domestic oil policy, such as the reform of energy prices, renewables and energy efficiency in the UK has been.
Gary Ross, an experienced Opec observer and founder of Black Gold Investors, said he had met Prince Abdulaziz for the first time in the early 1980s.
"There is no one in the kingdom who knows more about oil than Prince Abdulaziz," said Ross, who believed the new minister would maximize revenue for Saudi Arabia.
"I do not expect any policy change – the goal is to get higher prices and the IPO for Aramco," said Amrita Sen, co-founder of the Energy Aspects think-tank, which closely follows the Opec guidelines.
Aramco's IPO is expected to occur in 2020-2021, and a firmer oil price level will help to reach this $ 2 trillion mark.
The appointment of Prince Abdulaziz broke with a long tradition in which oil technocrats and non-queens oversaw the UK's energy portfolio. Saudi Arabia has had five oil ministers since 1960, and none of them was a king.
Prince Abdulaziz joined the Oil Ministry in 1987 and worked closely with former Oil Minister Hisham Nazer, and later for years with Ali Al Naimi as his deputy.
Crown Prince Mohammad first announced plans for an initial public offering of the company in 2016, according to which up to 5 percent of the company should be publicly sold. The government has since postponed the date of the IPO, most recently to finalize a deal in which Aramco acquired nearly $ 70 billion in Saudi petrochemical company Sabic.
Even at the low end of energy and market analysts' expected valuation, a partial listing of Aramco may well be the world's largest initial public offering ever. Crown Prince Mohammad plans to transfer funds from Aramco to the SWF and to use this revenue from investment abroad to support large local development projects that can create millions of jobs for young Saudis.
Handling the Aramco file
The 59-year-old is the fourth son of King Salman. Prince Abdulaziz earned a science degree in industrial administration from King Fahd University, and in 1985 he earned a master's degree in business administration specializing in the same subject.
He began his career as a lecturer in energy studies at the University's mineral oil and mineral school. Later he worked as a manager for economic and industrial research, before he became a consultant at the Ministry of Agriculture in 1987. All these experiences are needed to deal with the Aramco file.
Amin Nasser, Aramco's CEO, said last week that the company was ready to list on the Saudi Stock Exchange, but declined how much Aramco would be listed on the Tadawul Stock Exchange or when the company would be internationally listed.
Speaking in Abu Dhabi last Monday, Prince Abdulaziz said he would support the production cuts agreed by the Opec plus group. The cuts were largely borne by Saudi Arabia, and although they have pushed up prices, some speculate that may not be high enough to support this IPO rating.
– With contributions from agencies
Mick O'Reilly is the Europe-based foreign correspondent for Gulf News.