Saudi Arabia may launch an initial public offering (IPO) for the world’s largest oil producer, Saudi Arabian Oil Co, better known as Saudi Aramco, according to a media report.
Deputy Crown Prince Mohammed bin Salman told The Economist that a decision will be made in the next few months. The crown prince is widely thought to hold considerable power in the monarchy and also heads the Saudi Ministry of Defense.
“I believe it is in the interest of the Saudi market, and it is in the interest of Aramco,” he said.
Saudi Arabia is dealing with the economic toll declining oil prices have taken on the country. On Thursday, pricing fell below US$35 per barrel, its lowest point since 2004. There is also rising tension between Saudi Arabia and Iran after the execution of a Shiite cleric and attacks on Saudi diplomatic posts in the Islamic Republic.
Oppenheimer & Co analyst Fadel Gheit said an Aramco IPO “makes a lot of sense.”
Exxon Mobil Corp’s market value is more than US$300 billion, and Saudi Aramco produces three times as much oil, Gheit said.
He estimates Aramco could sell off a 20 percent minority interest and raise US$200 billion.
“That will fund their budget for a year,” he said.
The Economist said that options under preliminary consideration for Saudi Aramco range from listing some of its petrochemical and other refining operations to selling shares in the parent company.
However, not everyone considers the IPO a done deal.
Larry Goldstein of the Energy Policy Research Foundation believes that the Saudis will back away from an IPO, but that merely raising the possibility sends signals to their own people and the outside world.
“They are willing to explore things that they haven’t been willing to seriously consider before, including for the first time raising internal prices” for gasoline and diesel, Goldstein said.
Within Saudi Arabia, the IPO comments are a signal “to those who have been living very comfortably off the government that things have to change,” he said.
Goldstein said that an IPO would not be likely to change the way that Saudi Aramco manages production and other aspects of its business.
Gheit agrees and said he believed that the Saudis would treat minority shareholders as just that. He said that Saudi Arabia does not let foreign oil companies own oil reserves in the country, treating them like contractors and not as partners or part-owners.
“Aramco is still going to be run like a government agency,” he said. “The ultimate goal is going to be basically fund the country’s budget.”
PROTECTIONISM: China hopes to help domestic chipmakers gain more market share while preparing local tech companies for the possibility of more US sanctions Beijing is stepping up pressure on Chinese companies to buy locally produced artificial intelligence (AI) chips instead of Nvidia Corp products, part of the nation’s effort to expand its semiconductor industry and counter US sanctions. Chinese regulators have been discouraging companies from purchasing Nvidia’s H20 chips, which are used to develop and run AI models, sources familiar with the matter said. The policy has taken the form of guidance rather than an outright ban, as Beijing wants to avoid handicapping its own AI start-ups and escalating tensions with the US, said the sources, who asked not to be identified because the
Taipei is today suspending its US$2.5 trillion stock market as Super Typhoon Krathon approaches Taiwan with strong winds and heavy rain. The nation is not conducting securities, currency or fixed-income trading, statements from its stock and currency exchanges said. Yesterday, schools and offices were closed in several cities and counties in southern and eastern Taiwan, including in the key industrial port city of Kaohsiung. Taiwan, which started canceling flights, ship sailings and some train services earlier this week, has wind and rain advisories in place for much of the island. It regularly experiences typhoons, and in July shut offices and schools as
FALLING BEHIND: Samsung shares have declined more than 20 percent this year, as the world’s largest chipmaker struggles in key markets and plays catch-up to rival SK Hynix Samsung Electronics Co is laying off workers in Southeast Asia, Australia and New Zealand as part of a plan to reduce its global headcount by thousands of jobs, sources familiar with the situation said. The layoffs could affect about 10 percent of its workforces in those markets, although the numbers for each subsidiary might vary, said one of the sources, who asked not to be named because the matter is private. Job cuts are planned for other overseas subsidiaries and could reach 10 percent in certain markets, the source said. The South Korean company has about 147,000 in staff overseas, more than half
Her white-gloved, waistcoated uniform impeccable, 22-year-old Hazuki Okuno boards a bullet train replica to rehearse the strict protocols behind the smooth operation of a Japanese institution turning 60 Tuesday. High-speed Shinkansen trains began running between Tokyo and Osaka on Oct. 1, 1964, heralding a new era for rail travel as Japan grew into an economic superpower after World War II. The service remains integral to the nation’s economy and way of life — so keeping it dazzlingly clean, punctual and accident-free is a serious job. At a 10-story, state-of-the-art staff training center, Okuno shouted from the window and signaled to imaginary colleagues, keeping
RSS