Fossil Fuel Divestment - Saudis Want Out

[mspohr]

Why are we being herded into buying part of the world's biggest polluter?
Why are we being herded into buying part of the world's biggest polluter?

The era of oil is coming to an end. The Saudi Arabians are cute, flogging it off now, because although it may be the world’s most profitable company at present, it could be worthless within 50 years. At some point there is going to be a global switchover to electric cars. Offshore windfarms, we’re told, can provide more electricity than the world needs. Aramco’s vast reserves will be left in the ground, and we’ll all be quoting Ozymandias: “Round the decay Of that colossal Wreck, boundless and bare The lone and level sands stretch far away.”

Yet the way our asset management industry runs, virtually every company employee with a pension scheme will, over the coming months and years, see it stuffed with Aramco shares – whether they like it or not.

 

[TheTalkingMule]

Well, the Saudis own the largest US refinery, (Port Arthur, TX), so they're still getting a cut.

It's my understanding that refiners in the US aren't making any money. I believe XOM reportedly lost something like $3M PER DAY refining in a recent quarter.

I'm interested to see how markets react to the Saudis boosting prices to Asia and the US today. This could be when the whole thing starts to crumble, certainly no market indicators looking for a move like that. US crude inventory reports will be very interesting through year-end.

 

[RubberToe]

The sooner this clown car comes off the rails the better...

Opinion | What to Know Before Buying Shares in Saudi Arabia’s Oil Company

 

[CSFTN]

apologies if already posted ...
Update to the thesis implied in the title of this thread: apparently, the IPO will be for a TOTAL of 1.5% of the company. So the Royal Family plans on retaining 98.5% of Aramco ... not exactly "getting out"

 

[SageBrush]

apologies if already posted ...
Update to the thesis implied in the title of this thread: apparently, the IPO will be for a TOTAL of 1.5% of the company. So the Royal Family plans on retaining 98.5% of Aramco ... not exactly "getting out"

Yep ... although IIRC the early talk was of divesting 5%. If true then the world appetite for Aramco ownership is limited.

 

[TheTalkingMule]

The're actually only floating 0.5% this round if I'm not mistake. Not because they don't want to monetize 5%, but because there's no real international appetite to invest(within the opaque framework of the current IPO) and 0.5% is all they know they can shake out of Saudi and other regional billionaires.

I assume the plan is the force a $1.5B+ valuation this round by making it "mandatory" for regional powers to invest, then hope that valuation carriers over to an additional 1% sale to the wider international market.

Best of luck with that!

 

[mspohr]

Saudi Arabia aims to buoy oil price before Aramco stock market debut

Saudi Arabia aims to buoy oil price before Aramco stock market debut

Saudi Arabia is planning to use its position at the head of the Opec oil cartel to buoy global oil prices before the $25bn stock market debut of its state-owned oil giant.

The Organization of the Petroleum Exporting Countries is due to meet its oil market allies this week to agree the cartel’s oil production policy for 2020.

The world’s largest oil-producing countries are expected to maintain a tight rein on their oil output in an effort to keep global prices from tumbling below $65 a barrel.

 

[iPlug]

U.S. oil producers and Russia will welcome this news.

 

[iPlug]

DUBAI/RIYADH Reuters) - State-owned oil giant Saudi Aramco’s initial public offering (IPO) will be the biggest in history...

Aramco priced its IPO at 32 riyals ($8.53) per share, the top of its indicative range, according to three sources familiar with the decision, raising $25.6 billion and beating Alibaba’s (BABA.N) record $25 billion listing in 2014.

At that level, Aramco has a market valuation of $1.7 trillion, comfortably overtaking Apple (AAPL.O) as the world’s most valuable listed firm...

...The pricing comes as the Organization of the Petroleum Exporting Countries (OPEC) is gearing up to deepen oil supply cuts to support prices, provided it can strike a deal later this week with allies such as Russia.​

Saudi Aramco prices shares at top of range in world's biggest IPO: sources

 

[SageBrush]

I enjoy news of oil price hikes as much as that of TSLA increases

 

[iPlug]

Then this should help:

OPEC and its allies agree to deepen oil production cuts by a further 500,000 barrels per day

 

[Merrill]

Let’s get gasoline to $10.00 a gallon and more will move to electric cars.

 

[TheTalkingMule]

Then this should help:

OPEC and its allies agree to deepen oil production cuts by a further 500,000 barrels per day

The market's quickly going to figure out that really this is everyone saying no to SA and them agreeing to shoulder nearly all the burden. Going to be a hot mess within 2 months.

 

[iPlug]

Supplies are intensifying in Norway, Brazil, and Guyana. OPEC+ cuts are a short term fix.

 

[mspohr]

Forget The Hype, Aramco Shares May be Valued At Zero Next Year | OilPrice.com

The actual killer blow for Aramco is on the cards from the renewed impetus to finally get U.S. President Donald Trump to sign the ‘No Oil Producing and Exporting Cartels’ (NOPEC) Bill, as examined in depth in my new book on the oil markets. This Bill has a broad mandate, making it illegal to artificially cap oil (and gas) production or to set prices. Clearly, fixing (and later heavily influencing) oil pricing is the very reason why OPEC was established in 1960, Saudi Arabia has been its de facto leader ever since, and Aramco is the prime vehicle through which Saudi Arabia’s production and pricing strategies (and those of OPEC) are implemented. Nobody from the Saudi side seemed to have twigged to the fact that there was a major legal issue in this context from both the U.S. and U.K. perspective as both have anti-trust (or anti-monopoly) regulations with real practical bite.

 

[wdolson]

Forget The Hype, Aramco Shares May be Valued At Zero Next Year | OilPrice.com

The actual killer blow for Aramco is on the cards from the renewed impetus to finally get U.S. President Donald Trump to sign the ‘No Oil Producing and Exporting Cartels’ (NOPEC) Bill, as examined in depth in my new book on the oil markets. This Bill has a broad mandate, making it illegal to artificially cap oil (and gas) production or to set prices. Clearly, fixing (and later heavily influencing) oil pricing is the very reason why OPEC was established in 1960, Saudi Arabia has been its de facto leader ever since, and Aramco is the prime vehicle through which Saudi Arabia’s production and pricing strategies (and those of OPEC) are implemented. Nobody from the Saudi side seemed to have twigged to the fact that there was a major legal issue in this context from both the U.S. and U.K. perspective as both have anti-trust (or anti-monopoly) regulations with real practical bite.

I haven't heard of the bill, but I would not be surprised if the Saudis are lobbying him to veto.

 

[ggr]

I haven't heard of the bill, but I would not be surprised if the Saudis are lobbying him to veto.

They won't have to lobby for a veto, since such a bill would never be voted on in the current Senate.

 

[wdolson]

They won't have to lobby for a veto, since such a bill would never be voted on in the current Senate.

Mitch McConnell is refusing to take up anything in the Senate except the absolutely must pass bills like spending bills. He has over 400 on his desk right now. I don't know if the bill is one of the few to make it through the Senate or not.

 

[iPlug]

Aramco shares traded up 10% on opening day. Phony “market cap” of 1.88 trillion based on a sliver of the company trading, compulsory buying, and SA OPEC cuts.

They won’t be able to prop this up for very long and/or trade any significant amount of Aramco. SA and OPEC will continue to lose market share to non-OPEC who will makeup any supply cuts in time; medium to long term oil prices go down regardless.

Ebbing demand will ultimately win the game, but probably will continue to take longer than most here desire.

 

[iPlug]

Oil Inventories to Rise Despite OPEC Cuts, IEA Says

Global oil inventories will rise in the first quarter of 2020 despite attempts by the Organization of the Petroleum Exporting Countries and its allies to balance the market, the International Energy Agency said Thursday.

In its closely watched oil-market report, the IEA said it was trimming its 2020 non-OPEC oil supply growth forecast by 200,000 barrels a day to 2.1 million barrels. However, it still expects global inventories to increase by 700,000 barrels a day in the first three months of next year.
​

Oil Inventories to Rise Despite OPEC Cuts, IEA Says