Page 9 - MEOG Week 38

MEOG PoLiCy MEOG
MBS proceeds with Aramco IPO
sAudi
AmID all the proxy wars, threats and counter threats of impending direct military confronta- tion in the Persian Gulf, one thing that seems a certainty is saudi Crown Prince mohamed bin salman’s headstrong plans to partially privatise the state oil champion saudi Aramco in the near future against all odds.
Only last week Aramco had its largest oil processing facility at Abqaiq hit by drones and missiles, forcing the company to suspend the production of 5.7mn barrels per day, roughly half of its total capacity. This week the company announced that engineering works will enable production to restore most of the lost capacity by the end of september.
Despite the fireworks, and as if to double down on their bet, this week the saudi energy minister as well as Aramco’s CEO reiterated their pledge to push ahead with privatisation plans.
The company has previously indicated that it would list a minority percentage of shares, in the low single digits, on the saudi stock exchange tadawul as early as October followed by a dual listing in a global financial center.
Furthermore, on september 20, Bloomb- erg reported Aramco increasing the number of bookrunners for the IPO to 15 to include BNP Paribas, Barclays, Deutsche Bank AGG, UBs, Credit Agricole, Gulf International Bank BsC and societe Generale.
In addition to a number of banks originally picked that included JP morgan, Goldman sacks, Bank of America, Credit suisse, Citi, mor- gan stanley and HsBC, samba Financial Group and National Commercial Bank.
separately, the Financial times reported over the weekend that saudi authorities have resorted to bullying tactics pressuring wealthy families in saudi Arabia to purchase shares in the Aramco IPO, as part of a plan to achieve the $2bn valua- tion sought by the crown prince.
This smells somewhat of desperation on the part of the ambitious crown prince who has pinned his plans for financing the diversification of saudi Arabia’s oil dependent economy and modernisation of its traditional society on the proceeds of a successful Aramco IPO.
In light of the current geo-political configura- tion, it seems that the crown prince sees a small window of opportunity to launch the IPO and has adopted a do or die approach.
An estimated 4% of Aramco stock will be auc- tioned internationally, with 1% to be sold on the local stock exchange. However, with the oil con- cession not included in the listing, doubts have been cast about the valuation it will be able to achieve. The price eventually achieved for the 5% of shares in Aramco that will be made available is expected by independent analysts to give the firm a total valuation of around $1.5tn.™
Turkey hits out at Greek Cypriots after signing of exploration deals
turkey
tHE turkish Foreign ministry on september 19 castigated the Greek Cypriot government for signing agreements with international oil com- panies for offshore hydrocarbon exploration in “so-called licence area number 7”, the Anadolu Agency state news service reported.
“We repeat our strong warning that the uni- lateral acts of GCA [Greek Cypriot Administra- tion], which aim at usurping the rights of the turkish Cypriots, do not contribute to peace and stability in the Eastern mediterranean,” Hami Aksoy, spokesman for the ministry, was cited as saying in a statement.
He referred to reports of GCA deals with France’s total and Italy’s ENI for exploration in part of what Cyprus deems its exclusive economic zone (EEZ). turkey has sent its own drilling ships, accompanied by warships, to drill in the EEZ, saying discovered deposits must be shared with the turkish Cypriots and turks, who
run an internationally unrecognised breakaway state in the north of the island of Cyprus.
“As repeatedly underlined and shared with the international community, a section of the so-called licence area number 7 remains within the turkish continental shelf, which has been registered with the United Nations,” the turkish official added.
The turkish Cypriots’ proposal for an equita- ble allocation of hydrocarbon natural resources around Cyprus remained on the table, Aksoy also said. “We once more advise the interested companies against any hydrocarbon activities to be attempted within the turkish continental shelf, trusting null and void licences issued by the GCA,” he added.
Both the Us and the EU, of which Cyprus is a member state, have warned turkey not to conduct hydrocarbon exploration in the Greek Cypriot EEZ.™
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