In an effort to diversify the country’s economy away from oil, Saudi Arabia’s crown prince has announced a subsidiary of the country’s sovereign wealth fund will acquire a four-per cent interest in the oil giant Saudi Aramco.

The Saudi Arabian Investment Co., also known as Sanabil Investments, will receive the stake as a result of the decision made by Crown Prince Mohammed bin Salman, according to the state-run Saudi Press Agency. 

Sanabil is a part of the Public Investment Fund, a sovereign wealth fund.

“The transfer will also solidify PIF’s strong financial position and credit rating,” the statement said. 

The Saudi Arabian oil company confirmed  the transfer of shares to Sanabil, stating that the Saudi government still owns more than 90 per cent of the oil company.

“This is a private transfer between the state and Sanabil, and the company is not a party to the transfer and did not enter into any agreements or pay or receive any proceeds from the transfer,” Aramco’s stock market filing noted.

Four per cent of Aramco was earlier handed to the PIF in February 2022. Since the business’s first public offering in 2019, only 1.73 per cent  of the company has been traded on Saudi Arabia’s Tadawul stock market.

Aramco is the third most valuable company in the world, behind only Apple and Microsoft, with a market value of $1.94 trillion. 

Last year, Aramco declared a $161 billion profit, the largest ever recorded by a publicly traded firm. 

This followed the rise in energy prices following Russia’s declaration of war on Ukraine in February 2022, with sanctions limiting the sale of Moscow’s oil and natural gas in Western markets. 

One of the world’s cheapest areas to produce petroleum is Saudi Arabia because of its abundant oil reserves, which are found close to the surface of its vast desert terrain. 

With his $500 billion proposed futuristic desert city named Neom and other initiatives, the crown prince aims to wean the monarchy off oil sales using the oil wealth.