China is offering to buy up to 5 percent of Saudi Aramco directly, sources said, a move that could give Saudi Arabia the flexibility to consider various options for its plan to float the worlds biggest oil producer on the stock market.
Chinese state-owned oil companies PetroChina (0857.HK) and Sinopec (0386.HK) 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 Chinas sovereign wealth fund, the sources say.
Saudi Arabias 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 (£75.2 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.
The initial public offering (IPO) of Saudi Aramco is the centrepiece of an economic reform plan to diversify the Saudi economy beyond oil and it would also provide a welcome boost to the kingdoms budget which has been hit by low oil prices.
But the IPO plan has created public misgivings that Riyadh is relinquishing its crown jewels to foreigners cheaply at a time of low oil prices. Some Aramco employees would like the whole idea to be shelved, sources say.
Internal disagreements between what some advisers recommend and what the crown prince wants have delayed several key decisions about the IPO, industry sources said.
Pretty stunning reversal, with some implications for both the modernization of Saudi Arabia, and Chinese/Saudi relations. That said, an eventual floatation is still likely.