An oil tank outside Saudi Aramco's headquarters in the city of Damam, Saudi Arabia. Picture: REUTERS/ALI JARAKJI
The oil producer will make its first payment of $7bn to the Public Investment Fund on August 2, Aramco said in a statement to the stock exchange in Riyadh. Under the previous deal reached in October — when crude was at about $60 a barrel — Aramco would have had to pay $25bn by the end of June. Charges on a loan the PIF is providing Aramco for the acquisition now total $5.9bn, up from $2.5bn previously.
The deal effectively transfers cash from one arm of the Saudi state to another. It enables Aramco to accelerate its push to turn oil into products such as plastics, while giving the PIF more cash to increase its burgeoning investments inside Saudi Arabia and abroad, including in US stocks. Crown Prince Mohammed Bin Salman had expected the share sale to value Aramco at $2-trillion and perhaps raise as much as $100bn from global investors. After they balked at his numbers, Aramco settled on a smaller domestic offering, which raised about $30bn, still the largest IPO ever.
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