This comes as the company was named the world’s most profitable enterprise. Aramco’s net income was revealed to be more than that of Apple, Google and Exxon Mobil combined. Sputnik has discussed this issue with Professor Hafez Abdo from the Sheffield Business School at Sheffield Hallam University.
Sputnik: So, in your view, what explains the success of Aramco? Why has it managed to reach the top of the corporations in terms of income? And why has it taken them so long to really come to the bond market when it’s had such phenomenal success?
Hafez Abdo: The company itself is a giant as you have explained earlier, and it fully controls the oil and gas reserves in Saudi Arabia, which is one of the largest [oil-producing] countries.
Instead of allowing [parties] other than the Saudi government to have a stake in their company and probably trying to control its strategies, they’ve found issuing bonds to be safer for the sovereignty of their oil and gas sector and the strategic management of the company. It is a good tactic, anyway.
The company is trying to expand, instead of just being an exploration and production company; to be integrated, moving to acquire parts of SABIC, which is a government oil company as well. So why is this taking them so long? This is probably the way business is conducted in developing countries, and then the move itself – it is a strategy.
Sputnik: The decision to publish their income data. You mentioned it was shocking in many ways in terms of the value of this company. Is the decision then to release this income data and obviously to go to the bond market? Has it got an underlying decision? Is it aimed at any jurisdiction in the world or government or other competitive company in the oil and gas market? Is there an underlying rationale behind this, do you believe?
Hafez Abdo: Whatever we say in this regard is a prediction, because I would imagine nobody knows the underlying rationale for releasing the figures, apart from the company and government officials.
But, however, when going into the international market by IPO or through the bond market, the company must release its figures. We knew last year the company was trying to be listed in the London Stock Exchange.
They have to release their figures. This is one prediction. The other prediction probably is if the company still wants to go through with the IPO, it will enhance their share prices and it will enhance the opportunity for them to raise more funds in the future through an IPO.
These figures are the right ones, I would imagine it is mainly giving a strong signal to the market abouth the profitability and the financial position of this company.
So it can enhance their listing in the future and instead of approaching stock markets and sensing resistance like they did last year with the London Stock Exchange, stock markets will be approaching them and they are probably asking them to be listed in the stock markets.
Sputnik: For sure. I mean how attractive is the company for investors? We know the answer to that one. I suppose the interesting question is: how much could the negative of publicity surrounding the recent Saudi Arabia case with regard to the Khashoggi murder in Turkey, for instance, hinder the company’s IPO intentions?
Hafez Abdo: Well, it is two issues here. How attractive the investment in Aramco is, this is really a questionable question or prediction. The economic involvement or political involvement there is not stable at the moment, especially because of the tension between Saudi Arabia and Iran and this is what we see in the war in Yemen.
It has been used to press the country a bit down politically but nothing else. And it is just one incident. So, I don’t think there will be a big connection or immediate impact between that incident and the issuing of bonds or even an IPO in the future.
The second part of your question is: how attractive? It is attractive but at the same time, it is risky for the reasons I have mentioned. Corporate government of that company is kind of a mess, not too many people know about it.
It is fully controlled by the Saudi government. The political tension between two large countries, Saudi Arabia and Iran, is not allowing probably-safe and stable investment.
Sputnik: Riyadh has been enjoying a long-term partnership with China. Now, what impact could this cooperation have on US-Saudi ties? I mean, the relationship between the United States and Saudi Arabia certainly in recent times has seen very interesting interactions, notwithstanding what you have said about the Khashoggi case. Ties that are becoming warmer between Saudi Arabia and Russia, and also what you were just saying, the relationship between Saudi Arabia and China is almost the Americans take a blind eye to it while with other countries, they are very insistent and robust that relationships between whatever countries and China and Russia are stumped out completely. It is an interesting question and an interesting sort of viewpoint on this one. What is your take on it?
Hafez Abdo: The relationship between Saudi Arabia and the United States is unbreakable, and we know this. The Americans are the ones who built Aramco. The Americans are the ones who actually supported the Saudi King in finding the oil wealth in Saudi Arabia.
We remember the story when the Saudi King came to the British Parliament and tried to talk to the MPs about his expectation of the Saudi oil wealth and the MPs at the time made fun of the King.
At the same time, the Americans helped him and they established that historical strong link. Now, what happened in Turkey in that incident with the journalist? The Americans tried to press Saudi Arabia a bit down, so Saudi Arabia used the right technique and they turned their back and went to China.
So, any country can have the right to establish links with other countries. The Americans sent some signals. The Saudis were very clever in sending some signals back: “if you want to press us down, we can move to China, the most giant economy of the world”. I think things have settled down between the two countries, Saudi Arabia and the United States. And the US has started to pay less attention and give less weight to the incident with the journalist.
Especially, the Americans have always been against the Iranian regime and Saudi Arabia is against the Iranian regime, so both have the same enemy, if you like. This is another factor to unite that political vision of the two countries.
Views and opinions expressed in this article are those of Hafez Abdo and do not necessarily reflect those of Sputnik.
- Attack on Saudi oil plant WAS launched from Iranian base near Iraq, US investigators conclude – as experts study images of missile wreckage and video of 'drones flying south towards their target'
- US Patriots Couldn’t Repel Attack on Saudi Oil Facilities Due to Low Efficiency – Russian MoD Source
- 'Time to Take Out Our Swords': Inside Iran’s Plot to Attack Saudi Aramco Oil Facility
- Gulf state investors step in to help Aramco hit IPO target: sources
- Donald Trump said it's 'looking' like Iran is responsible for the drone attack that pummeled Saudi Arabia's oil facilities and that the U.S. will know soon who was definitively behind it – then decide on any military action
- Saudi Arabia and Israel are pushing US to confront Iran. Trump shouldn't take the bait
- At least eight Saudi writers and intellectuals have been detained in crackdown on dissent
- Special Report:‘Time to take out our swords': Inside Iran’s plot to attack Saudi Arabia
- Saudi Arabia oil attacks – what happened and what’s the background?
- Special Report: ‘Time to take out our swords' - Inside Iran’s plot to attack Saudi Arabia
- 'Time to take out our swords': Inside Iran's plot to attack Saudi Arabia
- ‘Time to take out our swords’: Inside Iran’s plot to attack Saudi Arabia
- CORRECTED-SPECIAL REPORT-‘Time to take out our swords': Inside Iran’s plot to attack Saudi Arabia
- US and France to Boost Saudi Radar Systems in Bid to Prevent New Drone Attacks
- Trump's Embrace of Saudi Arabia No Different Than Past US Presidents - Scholar
- Staff evacuated as rocket strikes near foreign oil firms in Iraq
- Military strike on Iran by Saudi or US will provoke 'all out war', says Zarif
- Turkey aide rejects Riyadh's Khashoggi death story, echoing Western scepticism
- The Latest: Mnuchin meets with embattled Saudi crown prince
- Trump says he remains unsatisfied with Saudi accounts on Khashoggi
US Helped Discover Saudi Oil: Washington-Riyadh Ties Unbreakable have 1521 words, post on sputniknews.com at April 8, 2019. This is cached page on Talk Vietnam. If you want remove this page, please contact us.