• 40 mins Aramco In Talks With Chinese Petrochemical Producers
  • 2 hours Federal Judge Grants Go-Ahead On Keystone XL Lawsuit
  • 3 hours Maduro Names Chavez’ Cousin As Citgo Boss
  • 10 hours Bidding Action Heats Up In UK’s Continental Shelf
  • 15 hours Keystone Pipeline Restart Still Unknown
  • 19 hours UK Offers North Sea Oil Producers Tax Relief To Boost Investment
  • 21 hours Iraq Wants To Build Gas Pipeline To Kuwait In Blow To Shell
  • 23 hours Trader Trafigura Raises Share Of Oil Purchases From State Firms
  • 1 day German Energy Group Uniper Rejects $9B Finnish Takeover Bid
  • 1 day Total Could Lose Big If It Pulls Out Of South Pars Deal
  • 1 day Dakota Watchdog Warns It Could Revoke Keystone XL Approval
  • 2 days Oil Prices Rise After API Reports Major Crude Draw
  • 2 days Citgo President And 5 VPs Arrested On Embezzlement Charges
  • 2 days Gazprom Speaks Out Against OPEC Production Cut Extension
  • 2 days Statoil Looks To Lighter Oil To Boost Profitability
  • 2 days Oil Billionaire Becomes Wind Energy’s Top Influencer
  • 2 days Transneft Warns Urals Oil Quality Reaching Critical Levels
  • 2 days Whitefish Energy Suspends Work In Puerto Rico
  • 2 days U.S. Authorities Arrest Two On Major Energy Corruption Scheme
  • 3 days Thanksgiving Gas Prices At 3-Year High
  • 3 days Iraq’s Giant Majnoon Oilfield Attracts Attention Of Supermajors
  • 3 days South Iraq Oil Exports Close To Record High To Offset Kirkuk Drop
  • 3 days Iraqi Forces Find Mass Graves In Oil Wells Near Kirkuk
  • 3 days Chevron Joint Venture Signs $1.7B Oil, Gas Deal In Nigeria
  • 3 days Iraq Steps In To Offset Falling Venezuela Oil Production
  • 3 days ConocoPhillips Sets Price Ceiling For New Projects
  • 6 days Shell Oil Trading Head Steps Down After 29 Years
  • 6 days Higher Oil Prices Reduce North American Oil Bankruptcies
  • 6 days Statoil To Boost Exploration Drilling Offshore Norway In 2018
  • 6 days $1.6 Billion Canadian-US Hydropower Project Approved
  • 6 days Venezuela Officially In Default
  • 6 days Iran Prepares To Export LNG To Boost Trade Relations
  • 6 days Keystone Pipeline Leaks 5,000 Barrels Into Farmland
  • 6 days Saudi Oil Minister: Markets Will Not Rebalance By March
  • 7 days Obscure Dutch Firm Wins Venezuelan Oil Block As Debt Tensions Mount
  • 7 days Rosneft Announces Completion Of World’s Longest Well
  • 7 days Ecuador Won’t Ask Exemption From OPEC Oil Production Cuts
  • 7 days Norway’s $1 Trillion Wealth Fund Proposes To Ditch Oil Stocks
  • 7 days Ecuador Seeks To Clear Schlumberger Debt By End-November
  • 7 days Santos Admits It Rejected $7.2B Takeover Bid
Is This The New Sweet Spot For Shale?

Is This The New Sweet Spot For Shale?

Shale drillers and oil majors…

Chinese Crude Inventories Fall For First Time In 12 Months

Chinese Crude Inventories Fall For First Time In 12 Months

Chinese crude oil inventories have…

Aramco IPO Value May Be Much Lower Than Expected

Oil

While most international analysts have already said that the value of Saudi Aramco in next year’s IPO would not be close to the Saudi target and claim of US$2 trillion, an environmental campaign group said on Sunday that the value of the Saudi state oil giant could be greatly reduced due to climate policies that are set to fight global warming.

According to a report by Oil Change International, most analyses—valuing Aramco at between US$1 trillion and US$1.5 trillion—fail to acknowledge the impact that climate change policies could have on the valuation of the Saudi firm.

Compared to a base-case estimate of around US$1.5 trillion, Aramco’s value could be 25 percent to 40 percent lower in the safer-climate scenarios of the International Energy Agency (IEA), the report says. In the case of oil prices remaining at a constant US$50 in real terms, the valuation of the Saudi firm could turn out to be less than US$700 billion, which is 55 percent below the base case, according to Oil Change International.

Earlier this year, most fund managers were evaluating Aramco at below US$1.5 trillion. That was just before Saudi Arabia cut the tax rate on Aramco to 50 percent from 85 percent, which caused some analysts, including Rystad Energy, to raise their valuation of the Saudi company’s upstream portfolio.

According to Oil Change International’s report, if Aramco’s IPO realizes a valuation of above US$1 trillion, the company’s investors “could face significant risk from climate policy.” On the other hand, if the valuation is lower, this could raise a debate over whether international oil companies (IOCs) are overvalued.

“If IOCs continue to add new oil and gas, Aramco’s reserves stand to push the world beyond climate limits: after carbon budgets are exhausted, there will still be strong economic incentives to extract them due to their low cost,” said the report.

Related: How Will The EU Respond To Fresh US Sanctions On Russia?

“New York and London have been competing hard to get the Aramco listing, but I don’t think they have been paying enough attention to how much it would increase oil price risk and climate risk for investors,” Greg Muttitt of Oil Change told the Financial Times.  

Even though Saudi Arabia’s advisors are said to be favoring London over New York for the foreign venue to list Aramco shares, Saudi Crown Prince Mohammad bin Salman and the Saudi government are said to be more inclined to favor New York for the world’s largest IPO next year.

By Tsvetana Paraskova for Oilprice.com

More Top Reads From Oilprice.com:



Join the discussion | Back to homepage

Leave a comment

Leave a comment

Oilprice - The No. 1 Source for Oil & Energy News