Why Saudi Arabia’s Aramco IPO remains a pipeline dream – by David Olive (Toronto Star – July 14, 2018)

https://www.thestar.com/

As the largest oil exporter in the world, Aramco is the means by which Saudi Arabia has de facto control over the world oil price. Aramco was Saudi Arabia’s device in waging a ruinous price war against U.S. shale-oil producers, causing the world oil price to collapse, and driving foreign investment out of the Alberta oilpatch.

A more transparent Aramco would help Athabasca and other world producers to more accurately calculate anticipated rates and return on their costly long-term investments.

For now, the Saudi oil industry is opaque. For competitive and national-security reasons, Saudi Arabia provides only the sketchiest data on the true extent of its massive reserves, rivaled only by those of Athabasca and Venezuela.

Aramco’s impact on the market would be easier to assess if it were publicly traded. In the largest initial public offering in history, Aramco was to become a publicly listed company with total stock-market value of $2 trillion ( all figures in U.S. dollars). With the staggering $100 billion proceeds from selling just 5 per cent of Aramco to investors, Saudi Arabia planned to finance sweeping social and economic reforms.

Those reforms would diversify the kingdom’s economy away from hydrocarbons ahead of widespread global adoption of alternative energy sources. It would narrow one of the world’s widest gaps between rich and poor. And it would transform Riyadh, the Saudi capital, into a regional financial powerhouse.

For the rest of this article: https://www.thestar.com/business/opinion/2018/07/12/why-saudi-arabias-aramco-ipo-remains-a-pipeline-dream.html

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