Sources from both the Saudi and Japanese governments have said they are considering setting up a joint group to study the possibility of oil giant Saudi Aramco listing its shares on the Tokyo Stock Exchange.
Saudi officials are keen to court Asian investors for the sale of the Aramco stake in 2018, and have solicited financial advice from banks with links to China.
The IPO is the centerpiece of the Saudi government’s ambitious plan, known as Vision 2030, to diversify the economy away from oil.
Saudi Arabia is Japan’s biggest oil supplier and Japanese refineries and other oil importers bought about $2.2 billion worth of Saudi oil in January.
The two countries on Monday also signed economic cooperation agreements in industry, energy and finance and on setting up a possible special economic zone in Saudi Arabia.
The news comes as Saudi Arabia’s King Salman is visiting Japan as part of a month-long Asian tour.
(With inputs from Reuters)