Posted on 01/12/2016 5:55:42 PM PST by TigerLikesRooster
Tue Jan 12, 2016 7:18
Several Blasts Rock Aramco Oil Facilities
TEHRAN (FNA)- A number of blasts hit Baqiq industrial city in the Southern Saudi province of Jizan where the kingdom's giant Aramco oil facilities is located.
The local residents of Al-Sharqiya region where the Baqiq industrial city and the Aramco oil facilities are located confirmed huge explosions near the huge oil facilities, the Arabic-language media outlets reported on Tuesday.
Baqiq industrial city belongs to Aramco oil company which itself is Saudi Arabia's biggest economic enterprise.
The oilfields of Aramco, including Qawareh oilfield, are located in Shiite-populated Eastern Saudi Arabia.
Aramco oil facilities have come under repeated missile attacks by the Yemeni army and popular forces in the last several months.
The Yemeni forces targeted the oil company in Jizan with Qaher-I ballistic missiles twice from mid to late December.
"The missile precisely hit Aramco oil company on Monday night," the Arabic-language media outlets quoted an unnamed Yemeni army official as saying after the second December attack.
He reiterated that the missile attack came in retaliation for the Saudi-led aggressors' violation of the UN-sponsored ceasefire.
The two attacks were launched on December 21 and 29, but the multi-trillion-dollar company has come under attack, at least, two times more in the last several months.
Qaher-I is an updated version of a Russian-made surface-to-surface missile.
The Yemeni forces' attacks on Aramco oil facilities come as the Saudi oil giant has put its stakes for sale.
Saudi Arabia is considering the partial sale of its state-owned oil monopoly, Aramco. It is the most valuable company in the world, with oil reserves estimated to be ten times those of US oil giant Exxon Mobil. Analysts say the whole company could be worth up to $10 trillion, giving even a partial float the potential to be the world's largest initial public offering.
While Saudi officials contemplate over whether or not to sell off shares of their massive energy company - Aramco, some experts suggest that Riyadh may have underestimated Western investors' concerns about the company's secrecy, corruption, and the global oil glut.
The monster Saudi state energy company Saudi Arabian Oil Co. - better known as Aramco, with its 261 billion barrels in reserves and 60,000 staff, has confirmed rumors that it is considering offering investors an initial public offering (IPO) on a small percentage of the company (around 5%), as part of a broader package of economic reforms.
The company's valuation, according to officials speaking to The Economist, which broke the story, could be in the "trillions of dollars," with Bloomberg suggesting that Aramco, by far the largest energy company in the world, may be worth up to $2.5 trillion - which would make it the most valuable quoted company in the world. Even a small IPO of 5%, of a valuation of $1.5 trillion, Business Insider pointed out, "is still $75 billion."
Deputy Crown Prince Mohammed bin Salman has indicated that an IPO float could be made immediately following a review of the business, scheduled to be completed within the next several months.
However, not everyone is so blinded by the company's monster valuation potential to the point of ignoring some potentially important pitfalls. In their analysis of the possible IPO offer, Britain's The Guardian suggested, citing financial analysts, "that the Saudis could underestimate Western concerns about Aramco's traditional secrecy and the impact of falling oil prices."
Fadel Gheit, an oil analyst at the New York-based Oppenheimer & Co. retail brokerage firm, told the newspaper that despite the enormous possibilities for Aramco's IPO, it could be difficult for Saudi Arabia to reach a significant floatation given the company's traditional low levels of transparency.
"And he pointed out," The Guardian noted, "that Prince Mohammed had raised another issue at Aramco that could concern any potential buyers: corruption."
"If Western investors are to be interested in Aramco they are going to want all sorts of details and reassurances about the way the company will run, its growth prospects and dividend policies. Will the Saudi government be willing to provide these and relinquish control?" Gheit pondered.
Moreover, the financial analyst recalled, "the company may have huge oil reserves but look at what happened when Petrobras (the Brazilian state oil group) was privatized. There was a total lack of understanding of free markets and the stock dived in value."
For his part, Investor's Business Daily contributor Bill Peters noted that with the "shares of global oil majors like Exxon Mobil, Chevron, Royal Dutch Shell, Total and BP" getting thrashed "since crude prices sank in 2014," the question which should be on investors' minds is "Would Aramco shares be any better?"
Echoing Gheit, Peters noted that given that "Saudi Aramco provides little information on finances or other measures of performance…any IP would come amid major strains for Saudi Arabia and the oil market overall."
Meanwhile, Oil Change International, an advocacy group for clean energy which has no love for big oil, nonetheless also suggests that Aramco's partial privatization, driven by Prince Mohammed's "reforming zeal," would be a mistake.
"It's not a smart economic move to sell off an asset when its value is at the bottom of the cycle. When governments are made desperate by low oil prices, they often make that mistake, giving foreign investors a bargain that well outlasts the commodity downturn." Given the existence of Saudi Arabia's sovereign wealth fund, it makes even less sense.
According to OCI, not only would the involvement of multinational investors not serve "as a guarantee against corruption (it is often in fact the opposite)," but "partial privatization of Aramco would require publishing financial and reserves data that is currently secret."
Moreover, "Saudi Arabia is a signatory to the International Convention on Settlement of Investment Disputes (ICSID), which allows investors to challenge governments in secret tribunals, with any compensation awards enforceable by seizing the state's assets in any of nearly 160 countries. While Saudi Arabia is still a long way off addressing the role of its oil reserves in climate change, the threat of investor compensation claims would have a chilling effect if and when action is taken."
It is beginning. I figured it was only a matter of time before the Saudis were targeted.
Better fill up now!
Saudis created and pushed wahhabism. Karma is a bitch.
Does this mean Ann Margret won’t be coming?
Ping.
Strange event. Aramco had just been made public on the market for investments from outsiders. I saw news of that only during the past few days.
If this were to have happened 2 years ago, oil would spike. The price of oil is completely manipulated. Total.
“Farsi News,” Tehran. That explains the warnings against investing in Aramco. ;-)
Not yet, it is being considered. Most of the serious articles I've read about it think seem to think there is no way to really value what they will offer, or what investors would really own.
I would be concerned if they get enough outside money invested, the government would just raise the fees/taxes to make the shares worthless, and buy it back out at very reduced price per share.
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