the IPO of the Saudi oil giant is becoming clearer

The world's largest stock market operation was set to begin Sunday, despite the vagueness surrounding certain terms.

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Saudi Aramco, now 100% owned by the Kingdom, sits on the world's largest oil reserves: the equivalent of 260 billion barrels. Maxim Shemetov / REUTERS

Will the world's biggest stock exchange finally take place? According to Saudi television Al-Arabiya, power was to begin on Sunday, the first operations to open the capital of Saudi Aramco, the Saudi oil giant. The goal would be to allow an IPO on the local market on December 11th.

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For more than three years, this operation has been eagerly scrutinized by oil traders and observers. And for good reason: behind this name little known to the general public hides one of the greatest treasures of the Gulf. The Saudi company, now 100% owned by the Kingdom, sits on the world's largest oil reserves: the equivalent of 260 billion barrels. Its closest rival, ExxonMobil, the world's second-largest company, would have 20 billion.

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Above all, it is considered the most profitable company in the world: in the first half, despite the continued fall in oil prices, it posted $ 46.9 billion in profit (42 billion euros). What to ridicule the "majors" of oil – Total for example garnered $ 2.9 billion profit over the same period.

Valued at between $ 1,000 and $ 2 trillion

It must be said that Aramco is favored by dramatically low production costs, which are enough to make Exxon, Total or BP dream: in Saudi Arabia, oil is abundant and easy to extract, infrastructure is depreciated for a long time, The company has invested in cutting-edge technologies to lower costs and is almost completely indebted.

Moreover, the Saudi national partnership is valued between $ 1 trillion and $ 2 trillion – more than twice the valuation of Apple or Google.

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"This operation is the cornerstone of the reform program of Prince Mohammed Ben Salmansays British lawyer Anna Howell, a specialist in the oil sector. It must allow to start a great plan of diversification of the Saudi economy, to get out of its dependence on oil. " In addition to the billions raised, the sale must serve as a catalyst for wider privatization of the economy, in an attempt to establish an industry and services autonomous from the central government.

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In any case, as well as "MBS" presented things at the time of the announcement of its plan in 2016. But the film did not proceed as planned: first, the important fluctuations of the oil market and the difficulty for the Saudis to maintain high prices have slowed the operation. Then, it was necessary to count with the doubts of a part of the royal family, worried with the idea to privatize partly a jewel of the Saudi crown.


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