Iran Energy News Oil, Gas, Petrochemical and Energy Field Specialized Channel
Related Articles
Saudi Arabia has made it known for some time that an IPO of the state-owned oil company. Saudi Aramco. would take place this year. Arguably. the largest and most sophisticated financial markets in the world are in the US. and many observers felt that the IPO would naturally take place on the New York Stock Exchange (NYSE). Saudi Aramco has an estimated market cap of US$2Tn.
Even a minority 25% float on the NYSE would have generated enormous fees for President Trump’s friends on Wall Street. The buzz around such a giant listing would have created a halo effect across the oil industry and by extension. the tanker sector. Investors rushing to grab Saudi Aramco shares. might have. for the first time. cast a glance at shares in public tanker companies. whose most frequent complaint is a lack of liquidity and under valuation compared to assets.
Alas. shortly before the official start of the visit. Saudi Arabia quietly announced that the IPO would take place on the Tadawul. the stock exchange in Saudi Arabia. Only 5% of the company would be made public. Even that minority level of floatation will likely challenge the liquidity of the Tadawul. Furthermore. there will also be private placements in the Far East. This is widely taken to mean that China and or Chinese state companies will be offered stakes in the company as part of a larger long-term sovereign-style crude oil supply deal.
China is already one of the largest clients of Saudi crude oil. and such a deal would cement a closer relationship. one that might displace nascent US crude oil sales to China. From the point of view of the larger tankers. this deal may set a ceiling of the potential tonne-mile growth available from US crude oil sales to China. and will be a major talking point at the forthcoming Asian Tanker Conference. Are US long haul crude oil trades to China going to be stymied by sovereign deals between Saudi Arabia and China?
Apart from the disappointment of hundreds of millions of dollars in fees not being generated by Wall Street. the agenda was quite short. The meetings in the US are centred around four big globally significant issues.
Top of the agenda is the Islamic republic of Iran. Saudi Arabia is at war with Iran. via the proxy of the conflict in Yemen. Iranian missiles are said to be falling on Saudi Arabia territory. As a Saudi Arabian ally. the Crown Prince will be asking President Trump to pull out of the 2015 preliminary framework agreement concerning the nuclear programme of Iran. During his election campaign. Mr Trump called the deal “the worst ever.“
The flip side. and second issue on the agenda. is that in return. Saudi Arabia would pull out of Yemen. which President Trump can claim as a triumph of his overseas policy. Saudi Arabia is also seeking to become a nuclear power in the Middle East and is linking the two deals with the incentive that US companies might win the contract to build the nuclear power stations. And any nuclear enrichment facilities.
The third issue is Qatar. Saudi Arabia cut off diplomatic ties with Qatar in June 2017. accusing its Gulf neighbour of state terrorism. and close links to Iran.
The fourth issue on the agenda is to broadcast to the world that Saudi Arabia is open for business. Crown Prince Mohammed bin Salman will be listing the reforms that are taking place in the country. and the business opportunities available.
Just not the one that Wall Street and the oil industry wanted.
