27/10/2017 21:58 AST
Saudi Aramco, the Saudi Arabian kingdom's most prized jewel, is on track for an initial public offering in 2018 and could be valued at upwards of USD 2 trillion.
Saudi Aramco, the Saudi Arabian kingdom's most prized jewel, is on track for an initial public offering (IPO) in 2018 and could be valued at upwards of USD 2 trillion, Saudi Arabia's Crown Prince Mohammad bin Salman told Reuters in an interview.
At this valuation, Saudi Aramco will become the first trillion-dollar company in the world to come out with an IPO. The Kingdom plans to sell a 5 percent stake in the company, in line with its Vision 2030, which is aimed at diversifying the Saudi Arabian economy beyond oil.
This will be an unprecedented event for the oil industry since the biggest of them has finally decided to go public. Aramco is by far the biggest energy company in the world.
Here are some interesting facts about Saudi Aramco.
Aramco wasn't always known as Aramco
Well, this could come as bit of a shock for those who did not know, but Aramco is an American creation and was called Arabian American Oil Company.
The company was born due to oil shortage after World War I, when the Standard Oil of California (now known as Chevron Corporation) was granted a concession by the Saudi Arabian government to explore oil in Saudi Arabia.
The company struck oil for the first time after 4 years of fruitless explorations, but hasn't looked back since then. In 1950, King Abdulaziz of Saudi Arabia threatened to nationalize all oil facilities in the country, forcing the company to share half of its profits with the Kingdom. Eventually, due to geopolitical factors, the Kingdom bought a 100 percent stake in the company and renamed it Saudi Aramco from Arabian American Oil Company earlier.
Aramco holds more oil reserves than the whole of North America
Yes, this is true. Saudi Aramco roughly has 261 billion barrels of oil reserves, roughly 20 percent of the entire world's. This is more than 10 times the oil reserves of ExxonMobil, the largest listed oil company in the world.
Even though Venezuela has the maximum proven oil reserves in the world, oil production in Venezuela is considerably lower than that of Saudi Arabia, with the former acting as more of a supplier to the latter than a manufacturer.
Aramco has a workforce of more than 65,000 and indirectly creates work for over 2,00,000 people
Yes, and nearly 20 percent of its workforce is not from Saudi Arabia. The company, along with its subsidiaries, is known to employ people from China, Japan, India, the Netherlands, South Korea, Singapore, UAE, UK and the United States, among others.
Also, despite already indirectly creating work for over 200,000, the company aims to take this number up to 5,00,000 as it plans to expand in other sectors other than oil.
Aramco operates the world's largest oil field
The most-prized jewel of the Saudi Arabian Kingdom has a couple of prized jewels of its own - the Ghawar and Safaniya oil fields. The Ghawar oil field is the world's largest onshore oil field and produces roughly 5 million barrels a day. The Safaniya oil field is the world's largest offshore oil field and produces around 1.2 million barrels a day, enough to meet China's daily demand alone.
Market Valuation of USD 2-3 trillion
Crown Prince Mohammad bin Salman confirmed that Aramco is currently valued at upwards of USD 2 trillion. This means the company is valued 4 times higher than Apple, which is by far the most valued listed company in the world.
If the Kingdom sells a 5 percent stake in the Aramco IPO as planned, the offer would fetch USD 100 billion or more at the company's current valuation. This will make it the largest IPO in the world till date, 4 times larger than the Alibaba IPO that hit markets in 2014.
Money Central
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