London/Kuwait/Dhahran: The UK government agreed to a $2 billion loan guarantee for Saudi Arabian Oil Co. (Saudi Aramco) as Britain and the US compete to host the state-run energy giant’s proposed initial public offering (IPO), likely to be the largest in history.

The unusually large export credit guarantee, designed to finance the purchase of British goods, will be seen by many as an attempt to help woo the Saudi Aramco IPO to the London Stock Exchange, the most viable venue for the international portion of the sale, aside from New York. On Saturday, President Donald Trump said it a tweet that he’d love to see Aramco comes to the US.

A former senior official at the UK Treasury criticized the deal as an affront to free markets. The government “guaranteeing a loan to Aramco would be a further lurch in descent to mercantilism", Nicholas MacPherson, who was the most senior non-elected official at Britain’s finance ministry until 2016, said on Twitter. He finished the tweet with the hashtag #stateaid.

A spokesman for the treasury earlier confirmed a Financial Times report published on Thursday that the government was planning the loan. To put the $2 billion figure in perspective, in the past five years, Britain’s export credit agency has provided £14 billion ($18 billion) in support for UK sales abroad.

Prime Minister Theresa May visited the Saudi kingdom back in April and took with her London Stock Exchange Group Plc chief executive officer Xavier Rolet as part of her pitch.

Britain’s main financial regulator, the Financial Conduct Authority, has already drawn criticism for proposed changes to listing rules that would make it easier for Aramco to trade in London. Andrew Bailey, who heads the regulator, said last month he didn’t believe the proposals would weaken investors protection as some fund managers have alleged.

The government is keen to attract Aramco as a post-Brexit win. A listing would help politicians make the case that the UK is open for business and remains a financial hub even as it leaves the European Union and its single market.

The Saudis are currently deciding where to stage the offering. Choosing New York in addition to Tadawul, the Saudi exchange, could boost the longstanding strategic alliance between the two countries. Lawyers and bankers working on the IPO had concerns about a New York listing, however, in part due to strict regulations about oil-reserves disclosure, accounting rules and the potential for litigation.

Despite the criticism, it’s not the first time that the UK has provided export credit to Aramco. It is one of several government agencies that helped finance the construction of Aramco’s Sadara chemical projects.

The latest export finance deal was also criticized by environmental groups which said that government shouldn’t be using its balance sheet to support the world’s largest oil producer.

“Bankrolling the multi-billion-pound industries that are driving more climate change makes no environmental or economic sense," said Greenpeace’s UK executive director, John Sauven. “It’s high time the UK government stopped acting like a benevolent fund for fossil fuel firms and started championing the clean technologies."

Meanwhile, Saudi Aramco on Thursday signed agreements worth $4.5 billion with firms from Europe, the US, China and the United Arab Emirates, for oil and gas projects in the kingdom.

The companies are Spain’s Tecnicas Reunidas, Italy’s Saipem , China Petroleum Pipeline, US’ McDermott, Jacobs Engineering and National Petroleum Construction of Abu Dhabi.

The signing took place at the company’s headquarters in Dhahran. Bloomberg/Reuters

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