Analytical Instrumentation

How Much is Saudi Aramco Worth?

Nov 15 2017 Comments 0

It's the trillion dollar question on everyone's lips. How much is Saudi Aramco, the world’s biggest energy company, actually worth?

According to Saudi oil minister Khalid al-Falih, “Aramco is by far the lowest-cost producer” in the business. Thanks to low expenses and high margins the state-owned oil company is able to maintain monopoly on around 25% of the world's oil reserves. In fact, statistics reveal that it pumps more crude than Royal Dutch Shell, Exxon Mobil and Chevron combined.

Aramco a "supplier of last resort”

Despite the advent of electric vehicles and the global movement against climate change, al-Falih maintains that “Saudi Aramco is going to be the supplier of last resort.” He asserts that the company will continue to reap profits and is confident that the "last barrel that gets produced globally is going to be here in Saudi Arabia.”

A trillion dollar claim

So just how big is Aramco? The Saudis maintain that the state-owned company is worth at least US$2 trillion. While experts, analysts and oil executives have questioned that figure, there's common consensus that the company is worth at least US$1 trillion. Of course, this leaves a huge value gap. For example, Apple Inc. is the world’s most valuable public company, with an estimated net worth of around US$870 billion.

Saudi Aramco set to go public

Regardless of the exact value, the news that Aramco is going public has triggered global excitement. The company's initial public offering is set to be the largest in history. While it's selling a modest 5% stake the move could earn the company at least US$50 billion. This is two times higher than the record set by Alibaba Group Holding Ltd. back in 2014. Saudi officials have confirmed that the sale is “on track” for 2018.

Mohammed bin Salman, Saudi Arabia's young crown prince will have an important say in where the shares are listed, beyond the local Riyadh stock market. New York, London and Hong Kong are all possible candidates, with each market bringing its own perks and drawbacks.

Crown prince makes final call

For energy experts like Britain's Professor Paul Stevens, the final decision will have a profound impact on the reputation of Mohammed bin Salman. “Clearly, there are many serious problems with Saudi Aramco’s privatisation,” he comments. How the kingdom resolves them could mean a difference of tens of billions of dollars when the world’s investors are finally able to put a price on the company’s shares."

Next generation technology plays an important role in helping companies like Aramco maximise profits. For a closer look at the latest trends 'Is Low Field NMR now a “Must Have” Technique for the Modern Petro Industry Laboratory?' raises important questions about the relevance of nuclear magnetic resonance spectroscopy.

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