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Big Oil Lawsuits Jeopardize NYSE’s Chances To Host Aramco IPO

Saudi Arabia is seriously concerned that it will run a risk of potential litigation if it were to pick the New York Stock Exchange for the international listing of its oil giant Aramco, Saudi Arabia’s Energy Minister Khalid al-Falih told CNNMoney on Thursday, specifically pointing to New York City’s lawsuit against five Big Oil companies for climate change damages.

“I would say litigation and liability are a big concern in the US,” al-Falih told CNNMoney’s emerging markets editor John Defterios in an interview in London.

“Quite frankly, Saudi Aramco is too big and too important for the kingdom to be subjected to that kind of risk,” the top Saudi oil official said, describing NYC’s allegations against Big Oil as “frivolous”.

In January, NYC Mayor Bill de Blasio said that the City sued BP, Chevron, ConocoPhillips, Exxon Mobil, and Royal Dutch Shell, seeking “to recover the billions needed to fund climate change resiliency measures that the City needs to implement to protect the City, its property, and its residents from the ongoing and increasingly severe impacts of climate change.”

Later the same month, de Blasio threatened Big Oil with more lawsuits.

From the beginning, New York and London have been frontrunners in the contest to host what would be the world’s biggest IPO ever, and the top politicians in the UK and the U.S. have been courting the Saudis to pick their respective stock exchanges.

In November 2017, U.S. President Donald Trump tweeted “Would very much appreciate Saudi Arabia doing their IPO of Aramco with the New York Stock Exchange. Important to the United States!”.

UK’s Prime Minister Theresa May and the head of the London Stock Exchange (LSE) lobbied for London on a visit to Saudi Arabia last year.

Related: IEA Does Not Believe Steel Tariffs Will Affect Global Oil Trade

Saudi Crown Prince Mohammed bin Salman—who supervises the listing of Aramco in the strategic plan to use the proceeds to diversify Saudi Arabia away from oil—is currently on a visit to London and will visit the U.S. later this month.

Speaking to CNNMoney on Thursday, al-Falih sounded more positive about London than New York, but did not rule out any stock exchange.

“As for the announcement of the second listing, it will be made in due course ... but New York continues to be looked at, London continues to be looked at, other exchanges are being looked at,” al-Falih said.

Earlier this week, reports suggested that Hong Kong is emerging as the frontrunner for Aramco’s international listing, as both NYSE and LSE have stricter disclosure rules than the Hong Kong Exchange, which may well tip the scales in favor of the Chinese bourse. New York also holds other litigation risks for Aramco—apart from NYC suing Big Oil—after Congress passed a post-9/11 law allowing U.S. citizens to sue Saudi citizens, and concerns over how the OPEC production cut deal could be construed as price fixing, which is illegal in the United States.  

By Tsvetana Paraskova for Oilprice.com

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