Saudi Arabia is getting ready for the twilight of the oil age by creating the world’s largest sovereign wealth fund for the kingdom’s most prized assets.

Over a five-hour conversation, Deputy Crown Prince Mohammed bin Salman laid out his vision for the Public Investment Fund, which will eventually control more than $2 trillion and help wean the kingdom off oil. As part of that strategy, the prince said Saudi will sell shares in Aramco’s parent company and transform the oil giant into an industrial conglomerate. The initial public offering could happen as soon as next year, with the country currently planning to sell less than 5 percent.

“IPOing Aramco and transferring its shares to PIF will technically make investments the source of Saudi government revenue, not oil,” the prince said in an interview at the royal compound in Riyadh that ended at 4 a.m. on Thursday. “What is left now is to diversify investments. So within 20 years, we will be an economy or state that doesn’t depend mainly on oil.”

Almost eight decades since the first Saudi oil was discovered, King Salman’s 30-year-old son is aiming to transform the world’s biggest crude exporter into an economy fit for the next era. As his strategy takes shape, the speed of change may shock a conservative society accustomed to decades of government handouts.

Buying Buffett and Gates

The sale of Aramco, or Saudi Arabian Oil Co., is planned for 2018 or even a year earlier, according to the prince. The fund will then play a major role in the economy, investing at home and abroad. It would be big enough to buy Apple Inc., Google parent Alphabet Inc., Microsoft Corp. and Berkshire Hathaway Inc. -- the world’s four largest publicly traded companies.

David Fuller's view

This is certainly a dramatic announcement by the Saudi’s youthful Deputy Crown Prince, presumably designed to cause shock and awe among his subjects, and particularly international allies and rivals.  As a public relations exercise it has garnered plenty of attention.  No doubt numerous lawyers, bankers and brokers will be rubbing their hands in glee, not to mention relief, at the prospect of some much needed business in a global economy operating at half speed.    

Tactically, the plan comes at a very troubled time in Saudi Arabia’s history.  Its policy of flooding the global market with crude oil to knock out competition was always going to be a Pyrrhic victory, at best.  It also underestimated the rapid development of solar-led renewable energy, plus increasing global concern over the use of fossil fuels. 

Theoretically, the Saudi programme makes sense, although the manner of its revelation may indicate a degree of desperation.  After all, the country is burning through its considerable reserves at a rapid rate, while engaged in multiple wars in the troubled Middle East.  The devil is often in the details of grand plans.  For instance, how will this affect the House of Saud’s Faustian pack with hard-line Wahhabis?  In terms of international investments, is it wise to discuss potential targets before terms have been agreed?