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In early 2016, the largest state-owned Oil Company in the world, Saudi Arabia-based Saudi Aramco (Aramco), declared a proposal to float an IPO. The crown prince of Saudi Arabia, Prince Salman, had stunned the world when he declared in early 2016 that Aramco’s worth would be around $2 trillion. Aramco was not only an oil company but a budget to run the nation as 85% of Saudi Arabia’s budget came from the tax which Aramco had to pay.

The intent to monetize the state jewel came at a time when the economy of the Kingdom was under pressure. A widening fiscal deficit and depleting foreign reserves indicated that it was no longer viable to depend on oil exports to run the nation. There was a need to diversify and the impetus to do so would come from the proceeds of the IPO. But the IPO which would decide the fate of 33 million Saudis would come with its own set of challenges.

In 2017, the world had strong reasons to believe that oil prices would remain unstable. During prosperous times, Organization of the Petroleum Exporting Countries (OPEC), of which Saudi Arabia was a member had been able to give stable oil prices to the world but the oil glut had put the harmony of OPEC under stress, especially after the shale revolution, that brought in the US as a formidable player into the global oil game.

The success of Aramco’s IPO would be a function of numerous factors – some in the Kingdom’s control and some beyond. In 2017, concerns about climate change were on the rise. Climate policies threatened to put a 40% discount on Prince Salman’s $2 trillion aspirations. The commitment of global leaders to keep a check on global warming would escalate proliferation of renewables across the world and further build a pessimistic outlook for the future of oil prices. Moreover, entrepreneurs like Elon Musk envisaged the death of the internal combustion engine in the near future.

But above all, the elephant in the room was Aramco’s lack of transparency. Several questions were raised in the academia and investor community: Would Aramco pay heed to the voices of minority investors? Or would the monarchy call the shots at the end of the day? How did one valuate an organization with no comparable peers? How would climate control policies play a role in the success or failure of the Aramco IPO? And most importantly, how would an IPO of an oil giant with access to 15% of the world’s oil reserves, impact the future of world climate?

It remained to be seen how an IPO would shape the nation and how an oil giant would shape the future of world climate.

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