Standard Oil

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Saudi Aramco has confirmed that it plans to list on the Riyadh stock exchange, in what could be The World 's largest initial public offering (IPO).

The state-owned Oil giants to determine the IPO price Will start after the registration of the interest of investors.

Business sources say that the Saudis are likely to share for 1% or 2% of The Company , and the offer for the existing shares of The Company .

Saudi Aramco is thought to have a value of around $1. 2tn (£927bn).

'Historical'

The Company said it is listing no current plans for a foreign share, say, long discussed, plans for a two-stage IPO, including an offer to foreign exchange had been set aside for now.

"For the (international) listing-part, we Will let you know in due course. So far it is only on the Tadawul," Aramco chair Yasir al-Rumayyan said in a press conference, in reference to the Saudi stock exchange.

Chris Beauchamp, chief market analyst at derivatives dealer Ig Group , said: "investment in the Aramco brings with it risks, of course, and not only that, the Oil -fighting prices to move upwards.

"the Political and strategic risks are high for all companies operating in the region, not least of which is an arm of the Saudi state. Aramco also has a limited control in the output Directive, an important part of Saudi Arabia , the Opec management "

the potential risks highlighted in September, when drone attacks hits the Abqaiq Oil facility and the Khurais Oil field in Saudi Arabia , both of which are owned by Aramco.

However, Aramco's chief Amin Nasser, has called the plans "historic", told a media conference after the IPO, the Declaration was published, that The Company was still The Most reliable Oil Company in The World .

In its launch announcement, Aramco, said: "The Company expects that the impact of these attacks have a significant impact on the business, financial or earnings position of the group. "

Saudi Aramco is?

Saudi Aramco traces its roots to the year 1933, when a deal was struck between Saudi-measured Arabia and The Standard Oil Company of California, which later became Chevron, and to do drilling for Oil , the creation of a new Company .

Between 1973 and 1980, Saudi Arabia bought the entire Company .

environmental activist calls the inside, to stop Oil companies, exploring for more fossil fuels

Saudi Arabia is the second largest Oil reserves after Venezuela, according to the. It is also the second in production, after the USA. But it gets its importance because it is able to extract the monopoly on the Oil in the country, and because of how cheap it is to.

It is essentially The World 's largest non-listed companies; it is a massive global Oil producer," said David Hunter , director of market studies at Schneider Electric .

"this is the absolute mother of all Oil and gas companies. "

Why is it worth so much money?

Saudi Aramco is worth $1. 2tn, according to analysis by financial news service Bloomberg, although Riyadh would prefer a valuation of $2tn, which is one reason for this was to delay the share sale A Number of times.

Lord Beauchamp of Ig Group , says: "Aramco is a world away from the tech-were IPOs all The Rage lately, but the valuation problem haunts still you, like the companies of Silicon Valley . "

He adds: "the$2 trillion likely to be overvalued, the value of The Company in a world of high Oil supply and uncertain demand, but $1. 2 trillion is too low for an important part of the Saudi state".

analysis: Katie Prescott, BBC business correspondent.

Once a mystery, Aramco has changed in The Last few years, for this moment,

It has begun the publication of the financial results, holding question-and-answer sessions about The Company and even put journalists on its pages after the recent drone attacks.

And it is a female Western learning, some of his top jobs has rented. The language in today's document speaks to international groups. It describes "a long-term value creation through Oil -price cycles," and the improvement of sustainability "through the use of technology and innovation, reducing the impact on the climate".

" Local People , "Saudi female divorcees" - are entitled to buy shares, and receive a bonus share for every 10 they hold.

Either Way , it's profit is phenomenally profitable. For The First half of 2019, it recorded a net profit of $46. 9bn, almost all of which paid dividends to the Saudi state.

Any Company that Will attract profitable a high price. By comparison, for the same period, the largest Company in The World , the recorded value is currently, a net profit of $21. 6bn, and is the largest publicly traded Oil Company , has $5. 5 billion

While the alternatives are growing, Oil and gas still dominate The International energy markets

Another aspect is the cost of the production. Whereas the extraction of North Sea Oil is expensive, due to its location beneath hundreds of meters of water, Oil in Saudi Arabia is relatively close to The Surface .

Saudi has many of The Best Oil fields for the extraction, with the help of some of the per-barrel cost under $10, says Mr. hunter. With Brent crude Oil to More Than $60, much difference in profit can.

Why did Saudi want to sell shares?

Saudi Arabia is keen to sell shares in state Oil companies, because it tries to reduce its dependence on Oil .

The Company was founded after an agreement between a U.S. Oil Company , and Saudi-Arabia

Crown Prince Mohammed bin Salman wishes to diversify its economy in the next ten years, in the framework of a programme called Vision 2030.

The Plan includes more solar energy, the use of the land is desert, says Mr. hunter.

analysis: Ellen R Wald, author of "Saudi, Inc. "and President of the transversal Consulting

The First Saudi CEO of The Company , Ali al-Naimi, had a vision that Aramco could Company to a global integrated energy. Over his years as CEO, he built Aramco's assets include downstream (refining) and other assets in the United States, South Korea , China, Indonesia, Japan, and Europe.

He and his successor also Aramco expands its presence in Saudi Arabia , with joint ventures in the refining and petrochemical industry. Saudi Arabia is the largest crude Oil exporter and is today the only Oil -producer claims that at least 2 million barrels per day of spare capacity can be brought to market very quickly.

to produce is The fact that it means a national Oil Company , it has exclusive access to The Best and least expensive Oil resources of The World . This makes it enormously valuable. But there are downsides. Saudi Arabia -upstream-assets are not diversified like other major international Oil companies in the upstream assets. It also means that the Saudi government plays a role in the society. Historically, the Saudi Arabia Aramco allowed to independently work and not in making decisions about the expenditure for the strategy of The Company . There are worrying signs that this is changing now and the government's role to a more active and harmful.

How much Aramco is really value is determined by the market. Banks have more of your reviews, but the market Will show how much it is really worth it. Various sources cited, the reviews range from $1. 2 tn $2 tn.

The Most common number of floated to be now seems to be about $1. 5 tn, maybe $1. 7 tn although the public mood probably indicates that this is a high number. In 30 years, who knows how much Aramco value Will be. We don't know what Will develop other energy technologies, or not, to produce in this time, nor what Aramco and the strategic vision.

In September, The Kingdom said it Will open its doors to international tourists for the First Time , start a visa regime for 49 countries and relax the strict dress code for female visitors.

tourism Minister Ahmed al-Khatib described it as a "historic moment" for the country. It wants to increasing the tourism from 3% to 10% of the gross domestic product by the year 2030.

The push comes as the UK faces a angekratztes international image in the midst of criticism of its Human Rights record in The Last year of the murder of journalist Jamal Khashoggi , and a recent crackdown against women's rights activists.

Why is the sale of controversial?

the questions are, Politically, quite complicated for Saudi Aramco now, in light of the recent Kashoggi scandal, said Mr hunter.

"And the fact that Saudi Arabia in the field of Human Rights . Nothing to do with Saudi-Arabia is always seen through the Prism . "

Aramco is The World 's largest Oil companies

Another wrinkle in The Crown Prince's plan, the increase in the anti-fossil-fuel sentiment in The World , as well as the comparatively low price of Oil compared to the end of last year, where prices were about $80.

"The list could be controversial, because it is a massive fossil fuels ad in a time that investors are increasingly ethical," said Mr hunter.

"It gives a lot of new and existing funds to divest from fossil fuel assets materials. "

In may, fellow Oil producer Norway $1tn sovereign wealth fund said to sell it expected, some of its Oil and gas investments, however, make you less dependent on price fluctuations in the raw material.

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Source of news: bbc.com