, TOKYO (Reuters) - Japanese companies are unlikely to invest in Saudi Aramco’s blockbuster initial public offering (IPO) because it is difficult to evaluate the value of the world’s biggest oil company, the head of Japan’s largest refiner said on Friday.

FILE PHOTO: Amin H. Nasser, president and CEO of Aramco, and Yasser al-Rumayyan, Saudi Aramco's chairman, attend a news conference at the Plaza Conference Center in Dhahran, Saudi Arabia November 3, 2019. REUTERS/Hamad I Mohammed

The unusually frank remarks from the head of a typically conservative Japanese company underscore potential challenges for the IPO, which Aramco has announced is going ahead although the state-owned oil giant has released few details.

Sources have told Reuters that Aramco could offer 1%-2% of its shares, raising as much as $20 billion to $40 billion. A deal over $25 billion would top the record-breaking IPO of Chinese e-commerce giant Alibaba BABA.N in 2014.

"It's difficult to think that many Japanese investors will make investments," JXTG Holdings 5020.T President Tsutomu Sugimori said at an earnings briefing.

“Japanese companies have stakeholders and they need good reasons to explain to shareholders why they would make such hefty investments and we need to do strict due diligence.”

He was responding to a question on whether Japanese companies would follow Chinese investors, after Bloomberg reported that Chinese state-owned firms, including Sinopec Corp, were considering investing up to $10 billion in the Aramco IPO-ARMO.SE share offer.

“We don’t know about Aramco’s crude oil reserves and how their contracts with the Saudi royal family work and so on. Aramco will need to disclose this information, but it is not clear how open Aramco will become,” Sugimori said.

Aramco, the world’s most profitable company, said on Sunday it was kicking off a domestic IPO, with scant details disclosed and expert valuations varying from around $1.2 to $2.3 trillion.

JXTG and other Japanese refiners have longstanding relationships with Aramco, having been big buyers of Saudi crude for decades, although Japan’s oil imports have fallen as a declining population uses more efficient automobiles.

Aramco supplied almost 36% of Japan’s crude imports in September, which totaled 2.8 million barrels per day.

The Saudi oil company owns a 7.65% stake in Idemitsu Co, 5019.T Japan's second-largest refiner, according the Japanese company's website.

Graphic: Aramco vs. Majors valuation,