Why the IPO of Saudi Arabia’s crown jewel has stalled
Maybe the biggest issue is that an IPO could have forced the kingdom to divulge closely guarded state secrets. Going public requires transparency.
#Aramco would likely be forced to lift the veil of secrecy around private information about the size of the kingdom’s oil reserves. Keeping those numbers confidential has added to Saudi Arabia’s clout inside OPEC.
“Anybody with a smartphone would have access to detailed reserve figures that are now state secrets,” said Jim Krane, an energy analyst at Rice University’s Baker Institute for Public Policy.
The Aramco problems could raise doubt about the kingdom’s commitment to the wise strategy of diversifying away from fossil fuels by selling a stake in Aramco.
The rationale behind the diversification “remains sound,” Krane said, but the method “turned out to be flawed.”
The stalled IPO has forced Saudi Arabia’s to look elsewhere for resources.
The kingdom’s sovereign wealth fund is now seeking $12 billion in loans from international banks, the Financial Times reported on Thursday.