China's offered stake in Aramco could force Saudi's into ditching petrodollar for yuan

11:04 AM aramco, china, ipo, oil, petrodollar, russia, saudi arabia No Comments

Last Friday we published an article which indicated that Saudi Arabia has pulled its planned Aramco IPO for a private partnership that could occur with either Russia or China.  And now it appears that this is being confirmed with new rumors on Oct. 16 that the Far Eastern power is offering cash to buy a 5% stake in the oil conglomerate.

Amid confusion over whether the massive Saudi Aramco IPO is on hold until 2019, or permanently shelved in favor of a private placement, Reuters suggests the latter is now more likely as 'sources familiar with the matter' say China is offering to buy up to 5 percent of Aramco directly (offering the Saudis the lack of transparency they may have been nervous of with a public placing). 

The planned listing of a 5 per cent stake in Saudi Aramco is the centrepiece of an economic reform programme led by Saudi Arabia’s powerful crown prince Mohammed bin Salman, who is keen for a 2018 IPO. He has said the company could be worth $2tn although a Financial Times analysis put the valuation figure at around $1tn. 

An economic recession in the kingdom is piling pressure on the prince, the king’s son and next in line for the throne, amid calls for the government to increase investment and ease austerity. 

And now, as Reuters reports, perhaps the king has options... 

Chinese state-owned oil companies PetroChina and Sinopec have written to Saudi Aramco in recent weeks to express an interest in a direct deal, industry sources told Reuters. The companies are part of a state-run consortium including China’s sovereign wealth fund, the sources say. 

Saudi Arabia’s Crown Prince Mohammed bin Salman said last year the kingdom was considering listing about 5 percent of Aramco in 2018 in a deal that could raise $100 billion, if the company is valued at about $2 trillion as hoped. 

“The Chinese want to secure oil supplies,” one of the industry sources said. “They are willing to take the whole 5 percent, or even more, alone.” 

PetroChina and Sinopec declined to comment. - Zerohedge

Ever since Congress passed legislation allowing for victims of 9/11 to sue the Saudi Kingdom for its role in the terror attack, the OPEC nation has been quickly moving away from U.S. hegemony and has begun signing new energy and trade agreements with both Russia and China.  And should today's rumor become reality in the coming days or weeks, it would mean the Saudi's are fully intent on ditching the uni-polar petrodollar agreement they have used for decades, and it would also solidify the geo-political shift away from the dollar that started four to five years ago with agreements between Moscow and Beijing.