The UK Government has agreed to a $2 billion loan for a Saudi Arabian oil company at a time when global financial markets including London and NY are competing for the 2018 planned floatation of the Saudi oil giant Aramco.
Logo of Saudi Aramco is seen at the 20th Middle East Oil & Gas Show and Conference (MOES 2017) in Manama, Bahrain, March 7, 2017.
Saudi officials have said domestic and global exchanges, including New York, London, Tokyo and Hong Kong, have been considered for a partial listing of the state-run firm.
Britain is among the countries wooing Saudi Aramco, which is considering listing some shares overseas.
"New supplies will help reduce domestic reliance on liquid fuels for power generation, enable increased liquids exports, provide feedstock to petrochemical industries, and reduce carbon emissions", said Amin Nasser, the chief executive of Saudi Aramco.
Critics have said the British government's decision is an affront to free market.
However, some fund managers oppose the proposals, which they say would erode the rights of minority investors.
A spokesman for Britain's finance ministry said the credit guarantees were not part of the attempt to secure the IPO.
Crown Prince Mohammad bin Salman said last month that the IPO, part of an ambitious plan to diversify the Saudi economy beyond oil, was on track to go ahead in 2018.
The UK Treasury confirmed it is "finalising" the credit backstop with the world's largest oil producer through its UK Export Finance (UKEF) group.