Saudi Aramco, Saudi Arabia’s state-controlled oil company, held a record-breaking initial public offering earlier in December, becoming the world’s most valuable listed company, ahead of Apple of the U.S.

The listing on the Riyadh stock market on Dec. 11 gave Aramco a market value of $1.877 trillion. The $25.6 billion raised was also a record, breaking the previous mark set in 2014 by China’s e-commerce leader, Alibaba Group Holding.

The IPO has set off speculation about how the stock flotation will affect other state-owned oil producers, especially in Asia.

According to the International Monetary Fund’s latest forecast, Saudi Arabia will incur a fiscal deficit of 178.5 billion riyals ($47.57 billion) in 2019, staying in the red for the sixth consecutive year. The economy of the kingdom is greatly affected by the price of crude oil, which generates 70% of government revenue. As the world moves toward alternative forms of energy to combat climate change, the risks of relying heavily on oil will grow.

In 2016, Saudi Arabia adopted the Vision 2030 plan aimed at reducing its dependence on oil and creating a sustainable growth model. The listing of Aramco is key to the shift.

Trading in Aramco shares has been active, occasionally raising the company’s valuation above the $2 trillion sought by Crown Prince Mohammed bin Salman. Saudi Arabia hopes to raise more cash in the future by listing the shares overseas as well.

Aramco has big plans to invest abroad, principally in Asia. This is not only because 70% Saudi oil exports go to Asia but because the region, as the main engine of global economic growth, offers an opportunity to move into higher added-value midstream and downstream businesses in the oil industry.

The company has already taken steps in this direction. During Crown Prince Mohammed’s visit to China in February, Aramco concluded a deal worth more than $10 billion to build a petrochemical plant in the northeastern province of Liaoning, together with Chinese companies.

In India, it will pump $15 billion into Reliance Industries’ petrochemicals business, taking part in the construction of a petrochemical plant and oil storage facility. It has similar projects underway in Malaysia and Indonesia.

“Aramco’s growing financial strength will no doubt benefit Asian state-owned oil companies as buyers of crude oil,” said Taihei Koto of Japan Oil, Gas and Metals National Corp. (Jogmec)’s research and analysis department.

Will other state-run oil companies follow Aramco’s example with stock offerings of their own?

Some big state-owned producers are already listed, including Russia’s Rosneft and Gazprom, and Equinor, formerly Statoil, of Norway. While many of these companies are majority-owned by their governments, others are not. Eni of Italy and Petrobras of Brazil, for example, are 30% government-owned.

In Asia, China Petroleum & Chemical Corp., or Sinopec, one of China’s three largest state-owned oil companies, and India’s Oil and Natural Gas Corp. are already listed.

Indonesia’s Pertamina, Petronas of Malaysia and PTT Public Co. of Thailand are the three largest national oil companies in Southeast Asia, founded in 1957, 1974 and 1978, respectively. They rank 26th, 23rd and 61st in the world by size, out of 130 oil companies worldwide, based on production volume, reserves, refining capacity and other factors, according to U.S. market researcher Energy Intelligence.

PTT listed in 2001 and its resource development, oil refining and other units followed suit. PTT group’s market value accounts for 30% of the total market capitalization of the Thai stock market.

PTT’s debut was prompted by then-Prime Minister Thaksin Shinawatra, who needed cash to pay for government subsidies to farmers and the poor. But he was criticized for undermining the kingdom’s finances with the handouts.

Thaksin turned to state-owned companies, particularly PTT because of its size, as a way of raising cash without creating a big hole in the budget. But he had another goal in mind: Listing big state-owned companies would let them seek loans from commercial banks, allowing the government to focus its low-interest lending on development of rural areas and other policies.

Another benefit of the listing, from the Thai government’s point of view, was that it would allow the Ministry of Energy to oversee the management of the country’s natural resources separately from PTT, as Saudi Arabia does with Aramco.

In Malaysia, plans to list Petronas emerged soon after Mahathir Mohamad returned as prime minister in May 2018. As the government’s debt under Mahathir’s predecessor, Najib Razak, was discovered to exceed official figures to 1 trillion ringgit ($241.50 billion), word circulated that Mahathir planned to use proceeds from a Petronas listing to pay down the debt.

Petronas is said to be worth around 800 billion ringgit, equal to half the market capitalization of Malaysia’s stock exchange. But prospects for a stock flotation were thrown into doubt when Mahathir, who was in New York for the U.N. General Assembly meeting in September, told investors that listing Petronas would be undesirable for the Malaysian government.

Mahathir “probably does not feel the benefits outweigh the costs,” said Satoru Kumagai, a senior official at the Institute of Developing Economies, a Japanese government-affiliated think tank. 

Unlike Saudi Arabia and Thailand, Malaysia has no natural resources ministry. Petronas is both player and coach. To list the company requires separating those two roles.

Another obstacle is budgetary. Mahathir repealed a consumption tax introduced by the Najib government and reinstated fuel subsidies. To plug the fiscal gap, Mahathir ordered Petronas to contribute a special dividend worth 30 billion ringgit to government coffers. If Petronas is listed, outside shareholders will resist letting the government use the company as a piggy bank.

In establishing Petronas, Malaysia looked to Indonesia’s Pertamina as an example. During the late President Suharto’s more than 30-year dictatorship, Pertamina was politicized and operated as a state within the state. It was seen as a hotbed of collusion and corruption, lowering its corporate value below that of Petronas.

Indonesia passed an oil and gas law in 2001 to meet IMF demands for reform in the wake of the Asian financial crisis in the late 1990s. The law stripped responsibility for the country’s resource management from Pertamina, making a listing possible.

But according to Indonesia’s constitution, the state is responsible for managing natural resources to maximize national welfare. Any move to sell Pertermia shares to a small number of investors would set off strong public protest. Saudi Arabia, as an absolute monarchy, has greater freedom to list its state-owned oil company than does democratic Indonesia.

The oil global industry is facing strong headwinds as investors have begun placing more emphasis on environmental, social and corporate governance matters in their investment decisions.

Aramco displayed its strengths as it pulled off the biggest IPO in history in an unfavorable environment. But not everything has gone its way. Despite three years of preparation, the IPO was limited to the Saudi stock market.

“National oil companies in Asia may have felt keenly the difficulty of listing” following the Aramco IPO, said Jogmec’s Koto. As the era of oil draws to a close, state-owned oil companies may be running out of time to unlock their corporate value.