Saudi Arabia’s economy is already feeling the negative impact of the collapse in oil prices. However, the attempt of privatization of Saudi Aramco can not bring the government desired benefits: investors are too frightened by the closeness of the company and the situation on the oil market, write foreign media.
MOSCOW, 9 Jan. The possible privatization through IPO the world’s largest oil exporter – Saudi company Saudi Aramco – has caused shock in the market, writes The Guardian.
If Saudi Aramco will leave on IPO, we will become the most expensive company, whose shares are publicly traded, and will leave behind such giants as Apple, Exxon Mobil and Google, the article says.
Recent statements of the second crown Prince of Saudi Arabia Salman Ibn Muhammad that authorities are considering an IPO of the company, amazed the oil sector and started a discussion on how will the sale of the Saudi Aramco Saudis to change their strategy in order to reduce oil prices by refraining from reducing output, writes the edition.
Despite the fact that the shares of the company are of great interest for potential investors, it is likely that Saudi Arabia underestimates Western concerns of players regarding the closeness of Saudi Aramco and the impact of oil prices, the article says. If foreign investors decide to purchase shares, they will require Saudi authorities details – how the company will be managed, what are the prospects of its development and what will be the principle distribution of a dividend, writes The Guardian with reference to analyst Oppenheimer & Co. (NY) Fadel Gheit.
According to some experts, in particular the head of the office of research commodities Bank of America, Francisco Blanche, the Saudi authorities, “it is a strange idea in a strange time,” writes CNBC.
Information about a possible IPO Saudi Aramco was announced amid a record fall in oil prices. Now investors fear that prices have not bottomed and the situation on the oil market may deteriorate.
Experts suggest that the desire to bring Saudi Aramco IPO provoked by the desire of the Saudi authorities to attract funds into the economy, which already began to feel the effects of the crisis on oil prices, and monetize at least some of their oil assets.
Now Saudi Aramco produces about 10 million barrels of oil per day, and estimated crude oil reserves of 261 billion barrels. This is ten times the reserves, in particular Exxon Mobil.
Saudi company gives on average 90 percent of their profits to the state Treasury. If the company will go public, shareholders will clearly require some money that previously the government had the opportunity to invest in state programs, few outside the energy sector, notes The New York Times.