Chart 3: Saudi Arabia proven crude oil reserves Chart 4: Saudi Arabia proven gas reserves brebbi mSaudi Aramco = Others tn cf ' 300 300 Saudi Aramco = Others _ 250 ] TH 250 200 200 ] 150 - ; | 150 . 100 100 + 50 50 404 N wore wr @OmeWeweeanwseaorwsreseo @ Oo~r-r- rmronr @Or ODnMormeDewryAwmwHork OoOwr Om WO SseseeREQzReSRSSSSSSSSSSS SRSSSSRSSSSRSSSSSSSSSS Se 2oe 22 253 SS SS KS KS NN AN N eee TPT TH KH SFT KH THT NNNNNAN NSN Source: SAMA, Bank of America Merrill Lynch Global Research Source: SAMA, Bank of America Merrill Lynch Global Research Oil sector privatization could slow debt build-up and support Fx reserves Potential energy sector asset partial privatization could raise a substantial amount for the Saudi government, in our view. A share sale would be a non-debt creating financing flow for the budget, which would lessen the need to borrow domestically or externally. A share sale could also increase Saudi Arabia’s ability to project soft power and influence regionally and internationally. However, it would only support the build-up of Fx reserves in the case of foreign investor participation. Assuming a USS2trn valuation suggested by the Deputy Crown Prince as the value for the SWF, the vast majority of which would be Aramco through a possible 5% listing, such a listing could raise up cUS$100bn, which would represent the current annual government borrowing requirements and associated Fx reserves drawdown. We expect further administered energy price adjustments over the next five years, which should increase state revenues, in our view. A share sale may also facilitate international borrowing on the back of Saudi Aramco’s balance sheet. Saudi Aramco also announced it would look to set up a corporate debt program to fund its NTP initiatives, although issuance does not appear to be an immediate prospect. A corporate debt program, alongside a sovereign one, could allow the government to simultaneously tap a new pool of liquidity through corporate bond investors, u