The Saudi Aramco IPO likely won’t happen in 2019, sources familiar with the company’s ruminations said Tuesday.
The proximate cause of the delay: The attacks on the kingdom’s oil infrastructure which crippled 50% of production capacity earlier this month.
As we (and others) noted immediately following the drone and missile strikes on Abqaiq and Khurais, the attacks underscored the inherent precarity of the company’s infrastructure given its proximity to conflict. That, in turn, could affect the valuation, a sensitive issue for Crown Prince Mohammed.
As RBC put it, “even if the current situation normalizes quickly, the threat… is no longer a hypothetical”.
Conflicting headlines have painted an impossibly convoluted picture with regard to the time line on the Saudis fully restoring operations. Last week, Prince Abdulaziz Bin Salman gave a somewhat farcical press conference during which he proclaimed that the kingdom’s oil output had recovered to pre-attack levels, an assessment which was immediately picked apart, dissected and otherwise lampooned.
And yet, even Prince Abdulaziz admitted that full capacity of 12 million barrels wouldn’t likely be available until end-November.
Subsequent reporting (from the Wall Street Journal, among other outlets) suggested repairs could take “months longer” than expected.
According to Reuters’ sources, this has probably derailed the Aramco offering at least until 2020. The first slice (a local offering) was expected as early as November.
Last week, MBS adviser Yasir Al-Rumayyan – who replaced Khalid al-Falih as Aramco Chairman just a week before he was ousted as energy minister in favor of Prince Abdulaziz – said the IPO “will happen anytime in the next 12 months”.
“The attacks will not stop Aramco’s preparations”, Al-Rumayyan declared.
Maybe not, but “anytime in the next 12 months” apparently does not include November or December.
But who knows, anything is possible if MBS manages to cajole wealthy Saudis into guaranteeing the listing’s success – and by “cajole”, we mean threatening to lock them up in the Riyadh Ritz if they don’t cooperate.