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Saudi Aramco gets new chairman in reshuffle

Oil Minister Khalid al-Falih replaced as the head of world's largest oil company as allies of Crown Prince benefit

Saudi Arabia's Oil Minister Khalid al-Falih has seen his powers over the country's economy diminished, losing both chairmanship of state oil giant Saudi Aramco as well as his industry and mining portfolio in a Cabinet reshuffle that has rewarded allies of de facto leader Crown Prince Mohammed bin Salman.

Yasir al-Rumayyan, head of Saudi Arabia’s sovereign wealth Public Investment Fund (PIF), replaced Falih as Aramco's chairman ahead of a crucial initial public offering by the world’s largest oil company.

Falih will, however, remain in charge of directing oil policy in his role as Energy Minister.

The head of the royal court, the key power centre in the kingdom, was also replaced in the wide-ranging shake-up of the Saudi government, which is effectively run by Crown Prince Bin Salman.

Saudi officials have in recent months talked about changing Aramco’s chairman to help separate the company from the government in a bid to improve governance ahead of the IPO, according to industry sources.

Rumayyan, a former investment banker, was appointed managing director of the PIF in September 2015, having previously briefly served as an adviser at the royal court. He has also been an Aramco board member since 2016.

His promotion came shortly after Saudi Arabia created the new Ministry of Industry & Mineral Resources, separating it from the Energy Ministry, in a series of royal orders issued on 30 August.

Bandar Alkhorayef, an investor and industrialist, was put in charge of the new ministry, which will become independent on 1 January.

The industry and mining sectors are vital to the Crown Prince’s plans to diversify the Saudi economy away from crude exports, which make up the bulk of government revenues.

Saudi economist Fawaz al-Fawaz said splitting the super-ministry was a step in the right direction but still not enough.

“There are scattered efforts in local content and military manufacturing and a constant lack of investment. We need more thought,” he said on Twitter.

Falih had overseen more than half of the Saudi economy through a super-ministry created in 2016 to help step up new economic reforms undertaken by Bin Salman.

OPINION: Falih remains key despite reshuffle

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Saudi industry sources say that, despite the Crown Prince’s ambitious plans for industry and mining, the sectors saw relatively little investment under Falih who has devoted most of his energy to helping prop up oil prices in the face of rising US shale production.

“I congratulate my brother His Excellency Mr Yasser Othman Al-Rumayyan,” Falih said in a tweet. It’s “an important step to prepare the company for the public offering, wishing him every success", he added.

Aramco is gearing up for an IPO offering up to 5% of the company by 2020 or 2021. Selling a stake in the world’s most valuable oil company is a centrepiece of Vision 2030, a plan spearheaded by Bin Salman to revitalise the Saudi economy and create more jobs for a fast-growing population in the kingdom.

Plans for the IPO were put on hold last year as Aramco completed the $69 billion acquisition of a majority stake in the giant state petrochemicals producer Sabic.

Bin Salman expects Aramco to be valued at over $2 trillion but analysts see $1.5 trillion as more realistic. The partial privatisation gained traction after Aramco completed a $12 billion bond sale in April.

Falih, who had long served as Aramco’s chief executive, has been less than an enthusiastic advocate of the IPO, warning of the dangers of proceeding with a flotation given the current weak state of the global economy.

He is also concerned that a listing in New York could make the company vulnerable to US litigation.

The royal decrees also named Fahd al-Essa as head of the royal court.

Essa is a royal insider and is said to be close to the Crown Prince, the kingdom’s de facto ruler and heir apparent.

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