The UK is finalising arrangements for a $2bn (£1.52bn) loan guarantee to Saudi Arabia’s national oil company, but the government has denied the support is in any way linked to the the state-owned firm’s potential listing on the London Stock Exchange.

The UK’s credit export agency, the UKEF, which helps British companies win contracts with foreign companies, is backing the loan.

The oil-rich kingdom is planning to privatise 5% of state-owned Saudi Aramco in 2019, as part of a plan to raise funds to help diversify its economy. The UK is hoping Aramco will list on the London Stock Exchange.

Downing Street said this week that London had a “strong case” to host what would be the world’s biggest ever flotation. The City regulator has proposed rule changes that would help a listing by a sovereign nation such as Saudi Arabia.

The company could be valued at $2tn, though some experts have said that figure is overinflated.

The Treasury denied there was a link between the new loan guarantee and the listing. “It’s totally separate to that,” an official said.

But Nick Macphereson, former permanent secretary to the Treasury, associated the loan guarantee to the potential listing, attacking it as a commercially motivated move by government.

“Her Majesty’s government guaranteeing a loan to Aramco would be a further lurch in descent to mercantilism. Mr Gladstone will be turning in his grave,” he tweeted.

HMG guaranteeing a loan to ARAMCO would be a further lurch in descent to mercantilism. Mr Gladstone will be turning in his grave. #stateaid — Nick Macpherson (@nickmacpherson2) November 9, 2017

The Treasury could not name the British companies which stood to benefit from the agreement, but said UKEF was holding exporter events in coming months to help British suppliers win deals with the Saudi firm. As well as UK oil and gas companies, renewable energy groups are expected to benefit.

The $2bn loan guarantee is not the first time the UK government has extended financial support to Aramco. UKEF has given the company a total of £500m of credit support over the last five years, including help for Sadara, a huge petrochemical facility in Saudi Arabia.



A Treasury spokesman said: “UK Export Finance works to increase UK exports by providing finance to overseas buyers of our goods and services. As part of this, we will be providing Saudi Aramco with support in the form of credit guarantees to procure from the UK. This builds on previous support for UK exports as part of Saudi Aramco joint venture projects.”

The credit export agency came under fire two years ago for helping oil and gas companies abroad, despite a coalition government pledge to stop the agency aiding “dirty fossil-fuel energy production”.

Greenpeace UK criticised the government for announcing the new support while annual UN climate talks are taking place in Bonn.

“It’s high time the UK government stopped acting like a benevolent fund for fossil fuel firms and started championing the clean technologies that can provide jobs and trade opportunities for Britain,” said the group’s executive director, John Sauven.

Separately, Saudi Aramco said it had signed agreements worth $4.5bn in total with eight international oil and gas contractors to work on gasfields and pipelines in the kingdom.

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