Saudi Aramco: The Company and the State

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Saudi Aramco: The Company and the State 4.5
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For the past two years, Saudi Arabia has prepared to place its national oil company on the stock market. Officials talked up the Saudi Aramco initial public offering (IPO) with international exchanges and global banks. It seemed like a great idea that the world's largest oil producing company, valued at $2 trillion, would become the world's largest ever traded stock.

There are many companies in the world which move and shake markets but perhaps no other organization essential to running a country. Aramco is unique and it runs no ordinary country. Saudi Arabia plays a key role in moving global oil prices. The oil market affects everyone on the planet directly or indirectly. Oil prices have developed and destroyed economies – Sudan and Venezuela being the most recent examples. So that company shedding its cloak of secrecy and deciding to go public is a huge deal. Specially for Saudi Arabia which is run by a monarchy and its affairs cannot be publicly evaluated or scrutinized.

The proposed listing of the national champion was a central part of the young Crown Prince Mohammed bin Salman's Vision 2030, a reform drive aimed at restructuring the kingdom's economy and reducing its dependence on oil revenue.

"I think there was a strong case for the IPO and there still is for the selling of a stake of Saudi Aramco and there are lots of reasons for it," explains Jim Krane, an energy researcher at Rice University’s Baker Institute for Public Policy. While Saudi Arabia, like other Gulf states have been trying to move away their economies from oil dependency for years, "the specter of climate action has finally made the Saudis get serious about it. And really the only way to diversify is through Aramco and Aramco is the source of revenues that the Saudi state needs to build other economic sectors."

The Kingdom holds about 16 percent of the world’s oil reserves and is the largest exporter of petroleum among OPEC countries. Nearly half of the country's GDP comes from oil and Aramco itself employs 65,000 people.

The concerns about radical changes in strategy put a spanner in the works for Saudi Aramco's public listing. For the first time in its history, an IPO would bring full public disclosure of Aramco's financial details, a feat that has never been made public.

"Probably the biggest downside is the transparency that would have resulted around Saudi oil reserves," says Krane, a number that doesn't move beyond 260 billion barrels. "If Saudi Aramco would have listed shares on the NYSE or the London stock exchange, the regulators would have forced Saudi Arabia to come clean on all of its reserves, how much of that is proven probable or otherwise."

A lot has changed since Mohammed bin Salman's international public relations drive such as the imprisonment of top Saudi businessmen, the murde r of journalist Jamal Khashoggi, the continued wa r on Yemen, and the Saudi-led blockade on neighbouring Qatar. That has resulted in a flight of capital, reduced foreign investment, increased Saudi borrowing and a halt on Saudi Aramco's IPO.

This is not the first time reforms have been promised in Saudi Arabia. "In many ways, Mohammed bin Salman resembles his grandfather Abdul Aziz al-Saud," according to Chas Freeman, former US Ambassador to Saudi Arabia. The late leader united the country "with tribal marriages...conducted a wa r in the Saudi south, which took land from Yemen...suppressed religious uprisings and it worked." Whether his grandson's current ambitions will work is "unknown," says Freeman.

Aramco owns the largest refinery in the US, Motiva, and hundreds of facilities across the globe and funds universities, think-tanks, lobbying firms and controls a vast media empire. That money shapes policy and perceptions while also covering up criticism of the kingdom.

Saudi Aramco's failure to launch and a young leader's stumble from one crisis to another are directly linked. There is an urgency to rush into things but also a lack of experience. "That is really like planning for the growth of a nation, not the exit of an IPO," says Chad Brownstein, a hydrocarbon investment analyst and CEO of Rocky Mountain Resources. "And the growth of a nation takes a lot more planning than a couple of months."

Saudi Aramco: The Company and the State examines the reasons behind the ambitious offering, the politics of Saudi oil, the strategic importance of Aramco, a faulty evaluation, the challenges of transparency and what it means for an ambitious Prince's 'Vision 2030'.

Filmmaker: Osama bin Javaid
Camera: Sherein Emam, Bobby Gunawan
Editor: George Joseph


#AlJazeeraEnglish #Aramco #SaudiArabia

💬 Comments on the video
Author

It's hard to say that the company belongs to the public when the whole state is owned by one family.

Author — Dany S.

Author

The title should be “The company and the Family”

Author — Men In Black

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Rest in peace JAMAL KHASHOGGI who was chopped in pieces by king´s men.

Author — Abuzar Khan

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🤣🤣🤣transparent saudi NEVER WILL HAPPEN but it does not exist in U.S.A, UK, E.U either so !

Author — Annie Chrisbendy

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9:40 "It's a process that will be, expansive, intrusive, and transformative." That could also describe the camera zooms on the man's face.

Author — Cithrin bel Sarcour

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saudi aramco has no need to issue stock, this is a trillion dollar scam.

Author — zero zzero

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The Saudi government is digging it's own grave by actually making it's state owned company Aramco 'public'!!!

Author — Yusuf Bulbulia

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Murderous prince running a tribal government

Author — Chau Nguyen

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"100 billion dollars is a large amount but not that much 😳

Author — Cheeto Cheeto

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14:50 lol

Edit: Also, Chas Freeman is a psychopath.

Author — zhadow013

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When you hear the word sovereign wealth fund, run.

Author — Kamal Ashraf

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2030 THE MOST REVOLUTIONAIRE PROJECT IN THE WORLD: WOMEN CAN DRIVE 😂😂😂😂😂😂😂😂😂😂😂😂

Author — K.G.B.

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Qatar(the nation that runs this media, also oil-rich ruled by royal family) have huge beef with Saudi Arabia, just keep that in mind while you are watching

Author — Fgsd DsgF

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The Saudi's are in a prison they have built for themselves. They are in trouble because the oil brought them power and influence and they don't want to let go of the power and influence.

Author — Ian Home

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18:15 she says that Aramco not listing in the NYSE limits their access to capital ? how much capital would they need? why would it limit it?

Author — jonathan vladov

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WHY HAVE FASHION STORES WHEN ALL THE WOMEN WHERE BURKAS/

Author — love everyone

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They’re going to need an army of accountants to go public.

Author — NoseyMold

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I love that Saudi elites police themselves by being locked away in a 5 star hotel.

Author — kalikrome1

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Don't trust MBS for a second and his silly guilty smirk on his face.

Author — Dennis

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I'm surprised this video allowed comments!!!

Author — solid waters