HISTORY: Energy giant Saudi Aramco, also known as Saudi Arabian Oil Company, erstwhile name Arabian American Oil Company (Aramco), which was founded in 1933 by the Standard Oil Company of California (Chevron). Post exploration of oil for 5 years, other US Companies joined after oil was found near Dhahran in 1938. The daily production of oil reached a level of 500,000 barrels per day in 1949. The company grew from strength to strength when cumulative crude oil production hit a new milestone of 5 billion barrels by 1962. The control was gradually passed on to the Saudi Government when 25% stake was bought in 1973, raising it to 60% in the subsequent year and it took over, ultimately, in 1988, renaming it as Saudi Aramco. That followed transformation of the Saudi Aramco from an oil producing and exporting company to an integrated petroleum enterprise. The rapid global expansion continued when it entered into several tie-ups and partnerships – making numerous international investments.
TECHNOLOGICAL ADVANCEMENT: In line with the advancement of technology, Saudi Aramco formed a state-of-the-art Research & Development Centre in Dhahran for the scientist in 2000. This led to networking of research centres across the world those are working on breakthroughs in the areas of discovery and recovery, slash costs, increase safety and protect the environment. The untiring efforts in innovation unveiled giga-cell reservoir simulation technology – GigaPOWERS in 2010. Six years later, in 2016, next round of innovation came in the form of the industry’s first trillion cell reservoir simulation known as TeraPOWERS. In an endeavour to become world’s leading integrated energy and chemical enterprise, diversification continued in many ways, including non-metallic and crude-to-chemicals products. The technology was used for achieving cleaner, efficient production and consumption of oil, including logistics efficiency enhancement and sustainability. The company embarks on its vision of transforming billions more barrels of oil and trillions of cubic feet of gas into multiple streams of value for the energy giant.
LISTING & VALUATION OF THE ENERY GIANT: The prince of Saudi Arabia had announced the plan to list Saudi Aramco on the bourses in 2016 by selling about 5% stake, predicting valuation of around US$ 2 trillion. This was reiterated in Company’s Annual Report 2017, which it termed as landmark event the company and its board awaited with excitement. The International Banks were chosen but no bookrunners were formally appointed. The role of lawyers, Bankers and Auditors was essential to finalise the draft prospectus. However, listing plan was called off in August 2018, citing a foreseeable future. The process resumed in October 2019 when Saudi Aramco decided to sell 1.5% stake in the IPO, retaining rest of the holding in the hands of owner Saudi state.
Saudi Aramco raised US$ 25.60 billion in the biggest ever IPO by offering shares at 32 riyals a piece. The issue was subscribed 4.56 times, receiving bids to the extent of US$ 119 billion. Alibaba Group had raised US$ 25 billion through an IPO in the year 2014. Energy giant Saudi Aramco made maiden debut on Tadawul (Riyadh) Stock Exchange at a premium of 10% over offer price @35.60 riyals. With this listing, Saudi Aramco became the most valued company in the world valuing it at US$ 1.88 trillion, slightly short of anticipated valuation of US$ 2 trillion. In terms of market capitalisation, there are two other listed companies in the world which carries valuation of more than US$ 1 trillion – Apple (US$ 1.19 trillion) and Microsoft (US$ 1.15 trillion). The next two in the fray are Alphabet (Google’s parent company) and online retailer Amazon with valuation of US$ 926 billion and US$ 862 billion respectively. Though Saudi Aramco has gone public, it has to cross multiple hurdles, in order go for an international listing, by being transparent on financials, opening of the books, future of oil and Government control.
Keep watching this space for more updates on Current Affairs!
Comments