Riyadh – Mubasher: The UK government is considering a $2 billion loan guarantee to Saudi Aramco, as the London Stock Exchange (LSE) eyes hosting the flotation of the 5% stake in country’s mega oil company.
The UK Treasury on Thursday said it had carried out due diligence and was close to “finalising the credit backstop with the world’s largest oil producer through its UK Export Finance (UKEF) group,” according to the Financial Times (FT).
The UKEF offers credit lines and guarantees to overseas buyers of UK goods and services so that they can make purchases or procurements inside the UK.
“But one person familiar with the transaction described the move as a “desperate” attempt to secure the Saudi Aramco IPO,” the FT said, citing another source as saying that the timing was “suspect” as it coincided with the UK bid.
“We will be providing Saudi Aramco with support in the form of credit guarantees to procure from the UK,” a Treasury spokesperson said.
“This builds on previous support for UK exports as part of Saudi Aramco joint venture projects,” they added.
Over the past few years, the UKEF has provided around GBP 500 million ($656.78 million) in support to the Saudi oil giant in order to support UK exports under joint ventures (JVs) between the UK and the Saudi firm.
The most recent of these JVs was the Sadara chemicals project, JV with Dow Chemical established in 2011.
Earlier this year, Saudi Aramco announced plans to list a 5% stake in the company, which analysts have said may be the largest initial public offering (IPO) in the world.
Saudi Aramco, which is also known as Saudi Arabian Oil Co., is the largest oil company in the world and has been in talks with officials from the US, UK, and Japan regarding its IPO.