With oil prices now at near historically low levels due to OPEC manipulation, and a slowdown in the global economy, the Saudi government is mulling over implementing an unprecedented event, which is to IPO and make public their long-standing private enterprise known as ARAMCO.
Saudi Aramco, which is officially the Saudi Arabian Oil Company and most popularly known just as Aramco (formerly Arabian-American Oil Company), is a Saudi Arabian national petroleum and natural gas company based in Dhahran, Saudi Arabia. Aramco’s value has been estimated at anywhere between US$1.25 trillion and US$10 trillion, making it the world’s most valuable company.
Headquartered in Dhahran, Saudi Arabia, Saudi Aramco operates the world’s largest single hydrocarbon network, the Master Gas System. Its 2013 crude oil production total was 3.4 billion barrels (540,000,000 m3),and it manages over 100 oil and gas fields in Saudi Arabia, including 288.4 trillion standard cubic feet (scf) of natural gas reserves.
Thus the potential of making ARAMCO a public company could entice millions to buy shares into the declining corporation, but experts disagree on whether public sentiment is high enough right now to actually make the venture really worthwhile.
Fadel Gheit, an oil analyst at the New York-based Oppenheimer & Co. retail brokerage firm, told the newspaper that despite the enormous possibilities for Aramco’s IPO, it could be difficult for Saudi Arabia to reach a significant floatation given the company’s traditional low levels of transparency.
“And he pointed out,” The Guardian noted, “that Prince Mohammed had raised another issue at Aramco that could concern any potential buyers: corruption.”
“If Western investors are to be interested in Aramco they are going to want all sorts of details and reassurances about the way the company will run, its growth prospects and dividend policies. Will the Saudi government be willing to provide these and relinquish control?” Gheit pondered. – Sputnik News
When China wanted to begin floating the RMB and join the basket of currencies with the IMF’s SDR, one of the major stipulations by the West was to ensure a high level of transparency, and crack down on long known corruption within the Chinese banking system. This appears to also be a major requirement for the House of Saud if they wanted to let ARAMCO go public, and according to many sources, this would mean that the world would learn the truth about their declining output in some of the largest wells.
If the Saudi’s follow through with taking their corporate crown jewel public, it would become one of the world’s largest publicly traded companies in the world. But if oil prices continue to remain stagnant, or fall to levels not seen since the 1980’s, then this would be all for naught, and it will go down as a last ditch effort to conduct a fire sale of assets before the House (pun intended) caves in.
Kenneth Schortgen Jr is a writer for Secretsofthefed.com, Examiner.com, Roguemoney.net, and To the Death Media, and hosts the popular web blog, The Daily Economist. Ken can also be heard Wednesday afternoons giving an weekly economic report on the Angel Clark radio show.