The attacks on vital Saudi oil infrastructure that took offline more than half of Aramco’s oil production would likely mean that the Kingdom will not list its oil giant this year, two sources with direct knowledge of Aramco’s thinking told Reuters.
The attacks on the Abqaiq facility and the Khurais oil field in Saudi Arabia on September 14 had investors anxious as the Kingdom had just accelerated plans to list Saudi Aramco in what would be the world’s largest initial public offering (IPO) ever. The heightened security risks following the attacks and Aramco’s actual ability to restore production could undermine the valuation of the company at this time, analysts believe.
Saudi Aramco now needs to build up confidence among potential investors, on top of fully restoring production, one of the sources told Reuters.
Saudi Arabia has been consistently claiming that production would be restored in a matter of weeks rather than months, with the oil production lost in the attacks fully restored by early next week.
Before the attacks, the Saudi oil giant was saying it was ready to list on international markets alongside its primary listing on the Saudi stock exchange.
The top managers of the Saudi state oil firm reiterated that it’s up to the sole shareholder of the company—the Kingdom of Saudi Arabia—to decide when the listing will take place.
Even after the attacks, Aramco’s CEO Amin Nasser continued to claim that “We have said we are ready and will proceed with the IPO when our shareholder takes the decision.”
Aramco is also said to be holding meetings this week with more than a dozen junior underwriters as part of the IPO process.
Before the attacks, reports had it that Aramco could list shares on its domestic stock exchange as early as in November 2019. Following the attacks, it looks like international investors and analysts have started to account for major supply risks in Aramco’s valuation and brand.
By Tsvetana Paraskova for Oilprice.com
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There will be no IPO without a truly independent auditing of Saudi reserves.
Dr Mamdouh G Salameh
International Oil Economist
Visiting Professor of Energy Economics at ESCP Europe Business School, London