Saudi Arabia has said that a weekend attack on Saudi Aramco oil facilities had no impact on government revenues and that authorities were gearing up to list the state-owned oil giant in an initial public offering (IPO), signalling the kingdom’s resilience following the crippling drone strike on its oil industry.
“In terms of revenues there’s zero impact,” Saudi Finance Minister Mohammed al-Jadaan told the Reuters news agency on Wednesday in an interview on the sidelines of an investor conference in the kingdom’s capital, Riyadh.
“Aramco continued to supply the markets without interruption and therefore revenues should continue as they are.”
He spoke a day after Energy Minister Prince Abdulaziz bin Salman said the kingdom will restore lost oil output by the end of September and has managed to restore supplies to customers to the levels they were at prior to the attacks.
Oil prices fell after the Saudi reassurances, having surged more than 20 percent at one point on Monday – the biggest intraday jump since the 1990-91 Gulf War.
The Saudi stock market was also up 0.4 percent in afternoon trade on Wednesday and Saudi dollar-denominated bonds also recovered on the international market after falling on Monday.
Jadaan said Aramco “showed clearly how resilient Saudi Arabia and the company is and how capable the company is to deal with an incident like this.”
The attacks have also exposed how ill-prepared the Gulf state is to defend itself despite repeated attacks on vital assets during its four-and-a-half year foray into the war in neighbouring Yemen.
“In order to not show too much weakness in front of their domestic audience, the Saudi leadership has little choice but to minimize the impact of the attack,” said Westbeck Capital Management, an investment manager, in a note.
“The planned Aramco IPO is also playing a role in putting up a brave face.”
Bankers at the event in Riyadh, speaking to Reuters on condition of anonymity, said the planned IPO of the oil giant – the world’s largest crude producer – would go ahead despite the attacks.
“There will be a patriotic buy into the company from both the wealthy and the less wealthy Saudis,” John Sfakianakis, chief economist at Gulf Research Center, told Reuters this week.
But there is no clarity on the exact timeline of the deal.
Sources previously told Reuters that Aramco was targeting a domestic listing as early as November, but Aramco’s chairman, Yassir al-Rumayyan, said on Tuesday that the IPO would be ready within the coming 12 months.
The Aramco IPO is a pillar of an ambitious economic diversification drive by Crown Prince Mohammed bin Salman, who has put the firm’s valuation at $2 trillion. The domestic flotation is the first step of a targeted five percent sale.
Based on the indicated $2 trillion valuation that Saudi Aramco had hoped to achieve, a one-percent float would be worth $20bn.
Analysts and bankers, however, have said that a $1.5 trillion is a more achievable valuation for the world’s biggest oil company
Jadaan reiterated that the Aramco IPO is moving ahead as planned and will most likely happen over the next 12 months.
Aramco’s primary listing will be on Tadawul, the local stock market, in Riyadh, but the government is still considering a secondary listing overseas, he said.
Doubts had emerged earlier this week about the timeline of the IPO in the wake of the attack, but despite the concerns, Aramco has pressed ahead with banker meetings this week.