Saudi Aramco's initial public offering (IPO) will take place, but probably in 2021, depending on market conditions and only after the acquisition of a majority stake in petrochemicals company Sabic is complete, Aramco's chief executive Amin Nasser said on Monday.
Saudi Arabia's government is currently "suggesting 2021 for IPO listing, depending on market conditions at that time," S&P Global Platts quoted Nasser as saying at the ADIPEC conference in Abu Dhabi.
Saudi Aramco-whose IPO was indefinitely postponed in the summer-plans to buy the 70 percent in Sabic currently in the hands of the Public Investment Fund (PIF) of Saudi Arabia in a deal expected to be worth US$70 billion.
The much-awaited and several-times-postponed listing of Saudi Arabia's oil giant Aramco is now on the backburner for the Saudi government, which has shifted its focus on the acquisition of the stake in Sabic.
The listing of Aramco has encountered multiple potential problems, including the lofty US$2-trillion valuation that the Saudis were hoping for, the estimate of Saudi Arabia's oil reserves that is shrouded in secrecy, and the international venue for the IPO.
Aramco's listing plans quickly slipped from 'definitely by the end of 2018' early this year to 'indefinitely postponed' this summer.
"[The Sabic deal] needs to be completed first before you can list Saudi Aramco, and that will take some time," Platts quoted Nasser as saying at ADIPEC today. Related: Oil Prices Rise As Saudis Cut Exports
"Then you need to reflect that in your balance sheet for at least a year before you can list Saudi Aramco. And this is where they are talking about 2021 and depending on the market conditions at that time the government will list it," Aramco's chief executive said.
Last month, Saudi Arabia's Energy Minister Khalid al-Falih told Russian news agency TASS in an interview that the Sabic deal would take at least 18 months to close, including receiving regulatory approvals from anti-competition authorities worldwide.
"Only after that we could share the information about the financial benefits of the deal with the investors. We are looking at 2021 as potentially the year of IPO. If all goes well, IPO will be more successful in 2021 compared to 2018," al-Falih told TASS in October.
By Tsvetana Paraskova for Oilprice.com
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Comments
Saudi Arabia’s claimed proven reserves of 266 billion barrels (bb) are not true. My own research and many others’ have shown them to be in the range of 74-80 bb. Saudi Aramco and the Saudi government as well as the CIA know that Saudi Arabia has not been truthful about its proven oil reserves.
The repercussions of submitting Saudi reserves to an independent auditing and proven wrong will be so horrendous to fathom. They will shatter the myth of Saudi Arabia as an indispensable oil superpower, lead to the collapse of the Saudi economy and see oil prices rocketing to $150-$200 a barrel not to mention the very adverse impact on the global economy.
The other major reason behind the demise of the IPO is the risk of American litigation. Any Saudi investment in the US or listing of the IPO internationally could be at risk by the legislation passed by the US Senate and the US House of Representatives in May 2016 that would allow families of September 11 victims to sue the Saudi government for damages. The law removes the sovereign immunity, preventing lawsuits against countries whose citizens were found to be involved in the attacks. The minute one law case is launched by an American citizen against the Saudi government, all Saudi assets in the US will be frozen.
Dr Mamdouh G Salameh
International Oil Economist
Visiting Professor of Energy Economics at ESCP Europe Business School, London