DUBAI (Reuters) - Saudi Aramco is establishing a domestic fuel retailing subsidiary as part of the national oil company’s drive to expand beyond crude oil production into downstream businesses.
The new firm, Saudi Aramco Retail Co, will create a network of filling stations within Saudi Arabia to sell automotive fuels, Aramco said on Wednesday, without giving details of the size, cost or time-frame for the network.
In April, Aramco said it had signed a memorandum of understanding with French firm Total (TOTF.PA) to evaluate the feasibility of jointly buying a retail service station network in Saudi Arabia.
But Wednesday’s statement did not mention Total or the possibility of buying existing stations. The new Saudi network will complement a global retail network which Aramco already operates through joint ventures, the company said.
In the long run, the new retail subsidiary could help Saudi authorities conduct an initial public offer of shares in Aramco. Plans to sell 5 percent of Aramco were suspended this year, partly because it became clear Riyadh was unlikely to achieve the $2 trillion valuation for the company that it wanted.
Aramco is now focusing on a range of downstream projects, including the purchase of a major stake in petrochemical producer Saudi Basic Industries (2010.SE), which could boost its value and attractiveness to international investors, ultimately allowing the IPO to go ahead.
Reporting by Andrew Torchia; Editing by Robin Pomeroy and Kirsten Donovan