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Saudi Aramco may delay its IPO further, but it could also sell 10% ownership instead of 5%

Saudi IPO delayed? Saudi IPO stakes raised?

The attack played a role in delaying the IPO, despite progress being made on those facilities The Saudi Royal Court and its advisers have been debating an eventual float of as much as 10% of the Saudi Arabian Oil Co., known as Aramco A 10% float could yield $200 billion, eight times more than the $25 billion Chinese e-commerce giant Alibaba Group Holding Ltd. raised in the biggest IPO in history five years ago

Saudi Arabia is unlikely to list its state-owned oil giant Aramco this year after attacks this September 14 on its facilities, Aramco’s Khurais and Abqaiq plants, two sources with direct knowledge of the company’s thinking told Reuters.

The deal had been slated to take place as early as November, but now 2020 and 2021 dates are creeping into the discussion.

Read: What the experts are saying following Saudi Aramco drone attacks

The initial plan 

The plan was to offer a 1% stake on the Saudi bourse, the first step of the planned 5% sale that could potentially raise $100 billion.

The attack played a role in delaying the IPO, despite progress being made on those facilities. A source told Reuters this week that Saudi Arabia had restored more than 75% of crude output lost after the attacks and would return to full volumes by early next week.

Some Saudi officials and contractors who have surveyed the damage, however, have said it may take many months—rather than the maximum 10 weeks company executives have promised—to restore operations to full working order, according to WSJ.

“Aramco has held meetings with bankers and analysts since the strikes, but doubts emerged among investors about the timeline of the potentially $20 billion domestic leg (Tadawul listing) of the IPO,” said Reuters.

Read: Oil prices taking a breather and so might Aramco’s IPO

New plans under discussion

Saudi Arabia is moving forward with the much-anticipated initial public offering of its state-owned oil company and considering a proposal to offer investors a much bigger stake in the company than previously planned, people familiar with the matter told the Wall Street Journal (WSJ).

The Saudi Royal Court and its advisers have been debating an eventual float of as much as 10% of the Saudi Arabian Oil Co., known as Aramco, doubling the country’s longstanding public intention to list just 5%, according to these people.

A 10% float could yield $200 billion, eight times more than the $25 billion Chinese e-commerce giant Alibaba Group Holding Ltd. raised in the biggest IPO in history five years ago.

“The crown prince is convinced that a larger float would help him finance economic-development projects in the kingdom,” people familiar with the matter told WSJ.

Read: Oil market rattled by Aramco attack

Oil Prices 

Oil prices sank on Tuesday on news that Saudi Aramco was on track to bring production capacity back online by the end of the month. That allowed oil traders to shift their sights back to concerns about the slowing global economy. Still analysts argue that the lack of a risk premium on the price of oil is remarkable given the scale of the attack on Abqaiq, according to OilPrice.com.

Below are prices at time of publishing.

Image courtesy of OilPrice.com

Renewables are the fastest-growing source through 2050, and will surpass petroleum and other liquids on an absolute basis. Renewables grow at an annual rate of 3.1% between 2018 and 2050, according to OilPrice.com. 

The UN estimates that oil and gas production needs to contract by 20% by 2030 and by 55% by 2050 in order to meet climate goals.