A privately owned gas station, supplied by the Arabian American Oil Company, now Saudi Aramco, in Jeddah, Saudi Arabia, circa 1955. The government has proposed selling off a chunk of the company. (Pictorial Parade/Getty Images)

Ever since oil was discovered in the Arabian desert in 1938, Saudi Arabia has been the world’s premier petro-state and the dominant force within the Organization of the Petroleum Exporting Countries.

Flush with oil revenue, the country has had neither income taxes nor corporate taxes while bestowing on its people heavy subsidies for food and fuel. And the royal family has built spacious palaces at home while buying swanky houses abroad in places like London and yachts in the south of France.

But now the oil-rich kingdom wants to look beyond oil. The crash in crude oil prices that began in 2014 has left the country with a gaping budget deficit. And while oil prices have recovered, climate activists have tried to bring the end of the hydrocarbon age closer and many analysts have predicted the approach of “peak demand” that would mark the end of a long climb in global oil consumption.

The 31-year-old deputy crown prince, Mohammed bin Salman, son of the king, has set out to reinvent the Saudi economy by the year 2030. His plan, called Vision 2030, would foster new private businesses, improve education and trim the budget deficit by cutting subsidies and introducing a 5 percent value-added tax.

Most startling of all: The government has proposed selling off a chunk of its crown jewel, the state-owned oil company Saudi Aramco. The company, which for decades was in the hands of four big U.S. oil companies and whose nationalization became a powerful political symbol, is widely believed to be worth as much as $1 trillion to $2 trillion; its share offering could be the biggest in history. And many analysts think the secretive giant holds closely guarded secrets such as the true cost of a Saudi barrel and the size of payments made to the royal family.

Khaled al-Otaiby, an official of Saudi Aramco, watches progress at a rig at the al-Howta oil field near Howta, Saudi Arabia, in 1997. (John Moore/AP)

Many of the reforms in Vision 2030 have been discussed before, but they suddenly seem pressing. The kingdom’s population has soared 50 percent since 2000, with large numbers of young people unemployed. The government has been borrowing abroad to cover domestic spending, which spiraled upward when oil prices were high. In March, it set terms for a multibillion-dollar Islamic bond, which gives investors a return while complying with the Muslim prohibition of interest.

And costs are believed to have soared on the war in Yemen, where Saudi Arabia has backed the beleaguered president, Abed Rabbo Mansour Hadi. Military spending makes up a quarter of the official budget, and analysts say the true cost of the Yemen fighting could be concealed in a supplemental appropriation.

“It’s all about stability,” said Bassem Snaije, a financial adviser who teaches Mideast economics courses at two major French universities. “Vision 2030 sounds like a positive project, but I would call it Obligation 2030. Extremely high oil prices over a number of years allowed them to build in a spending system. When oil prices came back down to a more reasonable level, they were burning capital faster than they were breathing.”

Ultimately, Mohammed wants the kingdom to be able to run a balanced budget and more balanced economy — without counting oil revenue, which in 2015 accounted for 72.5 percent of government revenue.

“Vision 2030 comes as a response to challenges that we are facing in the medium to long term,” said Mohammed al-Jadaan, who became the Saudi finance minister in November. “We need to come up with something different that basically ensures that by 2030 we are independent of our current dependence on oil only. It also comes as a response to a young population that is looking for a better lifestyle, a better footprint in the world.”

Jadaan, who was in Washington for the International Monetary Fund spring meetings, added that “there are significant opportunities that we are not tapping. Maybe it’s about time we started figuring it out.”

Welcome change in Washington

The Saudi government has used the IMF meetings to carry on a public-relations campaign, a tall task for a nation that does not treat women equally, where the extremist clerical establishment is strong, where executions are sometimes carried out by beheading, and where political opposition is tightly controlled and often suppressed.

The Saudis, who differed with President Barack Obama over human rights and his unwillingness to intervene militarily in Syria, have reached out to the Trump administration. Prince Mohammed had lunch with President Trump in March. CIA Director Mike Pompeo’s first trip abroad was to Saudi Arabia, where he was given an award. Defense Secretary Jim Mattis traveled to Riyadh this past week.

In a speech at the U.S. Chamber of Commerce last week, Secretary of State Rex Tillerson, the longtime chief executive of ExxonMobil, said that the Trump administration is looking for deals for U.S. companies in Saudi Arabia and that he had met several times with the Saudi ambassador.

Vision 2030

The Vision 2030 plan is packed with targets. There are 755 “initiatives” for the national transportation program alone, Majed Bin Abdullah al-Qasabi, the Saudi minister of commerce and investment, said at the Center for Strategic and International Studies. Jadaan noted that the plan calls for doubling the number of tourists, including pilgrims to Mecca, by building a new railroad between Mecca and Medina, and a new airport.

The Public Investment Fund, which will become a more active sovereign wealth fund, has unveiled plans for a new entertainment city the size of Las Vegas south of the capital, Riyadh. It would feature a Six Flags theme park and a safari park, an effort to get Saudis to vacation in the country instead of abroad. The Financial Times reported that in a bid to bolster the popularity of the deputy crown prince the government allowed the popular Saudi singer Mohamed Abdo to perform publicly. He sold out four concerts — though they were for men only.

But in the United States, much of the attention has been focused on the initial public offering for Saudi Aramco.

Pavel Molchanov, energy analyst at the advisory firm Raymond James, has called Saudi Aramco a “complete black box” and in a note to investors a year ago said that “if they are truly willing to open the doors . . . that will mark a colossal policy shift.”

Investors are champing at the bit to know Saudi Aramco’s true crude oil production costs, believed to be in the mid-single digits per barrel because of the nature of their prolific reservoirs. They also wonder what the kingdom’s true maximum production capacity is, an important component of calculating how much spare capacity there is for world markets. Saudi officials have pegged reserves at 266 billion barrels — a figure that has changed little even as the country has remained the world’s largest exporter.

There have already been some changes in anticipation of greater transparency. The government disclosed that Saudi Aramco had been paying an 85 percent tax rate and 20 percent royalty rate, and that it was cutting the tax rate to 50 percent to make it more attractive to investors.

The most sensitive issue of all is the unanswered question of how money is allocated and delivered to the House of Saud and its many princes.

Jean-Francois Seznec, who teaches at Georgetown University and has worked extensively on banking and finance in the Middle East, says that his own theory is that oil receipts are all paid to an account at Chase Bank, a relationship that goes back half a century to the Rockefeller family. Chase is now part of JPMorgan. From there, the money that belongs to the family is transferred to Switzerland and elsewhere according to instructions given to only one or two people. He estimates the payments to be in the range of 5 to 7 percent of oil revenue. Then the rest is paid to Saudi Aramco accounts, he said.

The Saudi finance minister Jadaan said, “There is no income that goes anywhere but the treasury. Everything else gets out from the budget.”

Seznec believes that one item holding up the Saudi Aramco IPO might be these payments, but that without the IPO the entire Vision is endangered.

“I think it’s vital to any kind of efforts to modernize the economy,” he said. “The key is to make sure transparency is imposed at all levels — especially for the biggest company in the kingdom — so you can ask the population to make sacrifices.”

A year later, investors are still waiting.

The kingdom appears to be serious. It has hired investment banker Ken Moelis, who began his career at Drexel Burnham Lambert and whose clients have included casino tycoon Steve Wynn, Bain Capital and the Chinese conglomerate Dalian Wanda. The Financial Times quoted a rival who dubbed Moelis “Ken of Arabia.”

“I actually think that being able to be a shareholder in Saudi oil assets is a pretty attractive thing for a lot of folks in the energy industry,” said Sarah Ladislaw, director of the energy and national security program at the Center for Strategic and International Studies.

Chinese companies, eager to curry favor with a reliable source of crude, are likely to buy significant portions. China is the kingdom’s top trade partner. Ladislaw noted that even if oil demand drops, production costs are so low in Saudi Arabia that investors could still make money.

That modifies the risk of the price of oil, which has lurched over the past nine years from a high of $147 a barrel in 2008 to a low of less than $27 a barrel in 2016.

In a speech at Columbia University’s Center on Global Energy Policy on April 14, Saudi Aramco’s chief executive Amin H. Nasser predicted a rebound in prices in the medium term. He said that since 2014, $1 trillion of oil and gas investments had been deferred or canceled and that the volume of conventional oil discovered in the past four years was half the amount discovered in the previous four years. The supply required for the coming years was “falling behind,” he said.

“There can be little or no doubt that the future direction of the market is upward,” he said. Asked whether demand was peaking, Nasser said, “Our belief is that peak demand is not in sight.”

That might work out well for Saudi Arabia as it mulls when to launch its IPO. Jadaan said that the initial public offering would be launched both on Saudi markets and one or more international ones. Asked about estimates that the government would initially offer about 5 percent of the company, Jadaan said, “It could be more, it could be less or it could be more.”

What to do with the money?

What will the kingdom do with the proceeds of a Saudi Aramco stock sale?

Jadaan said the money would go into new investments, such as mining, which the government believes can turn into a huge industry.

“We have a mining industry that is significantly underutilized. Because we had the oil we didn’t have to do much about that,” he said. He said the government could act as an “anchor investor” to ease investors’ qualms and do some initial research into projects.

The money could also go into helping meet new targets for renewable energy. Last week, the government announced a target of building 9,500 megawatts of renewable power capacity by 2023, up from virtually nothing now. Thirty utility-scale solar and wind projects will be developed over the next decade as part of a broader $50 billion program aimed at diversifying the electricity mix and freeing up for export oil now used for electricity generation.

The energy minister said at an industry conference that 10 percent of the domestic electricity mix will come from renewables by 2023.

Will it work?

Whether Mohammed bin Salman’s grand plans can win popular support remains unknown.

“There are some real barriers to their overall goals in terms of converting the economy and moving it away from reliance on oil exports,” said Gregory Gause, a professor at the Texas A&M University.

The private sector, for example, has been growing in recent years and employment has risen by a million jobs from 2004 to 2014, but businesses are mostly hiring foreign workers, not local ones.

And cutting subsidies and raising taxes have rarely been popular planks.

Jadaan said that half the country has been registered to receive welfare payments large enough to cover a portion of the increases in electricity and gasoline prices from cutting subsidies. And besides, the government needs revenue from somewhere.

“We can’t sell gasoline at prices less than water prices,” said Qasabi, the Saudi commerce minister. “I think the time has come to correct this.”