A giant IPO on track

Updated 19 February 2017
0

A giant IPO on track

The largest initial public offering (IPO) in history seems to be on track. On Friday, the Financial Times newspaper reported that Saudi Arabia is close to appointing the banks that will be lead underwriters on the IPO of Saudi Aramco, the world’s largest oil producer.
Two major banks have been identified, JPMorgan, Saudi Aramco’s longstanding commercial banker and Morgan Stanley that is also expected to be a global coordinator and bookrunner on the listing, according to the news report.
A third bank, HSBC, is tipped for an underwriting role on the Saudi Aramco planned sale of 5 percent stake in the state-controlled company in 2018. The paper said that HSBC’s name was brought up because of its ability to tap Asian investors due to the bank’s origins in Hong Kong and its longstanding presence in the Middle East.
This development is no surprise at all. Saudi Aramco CEO Amin Nasser has pointed out in an interview with Bloomberg’s Editor-in-Chief John Micklethwait during the World Economic Forum (WEF) in Davos last month that Aramco would soon appoint banks that would advise it on theIPO.
So in February, it was reported in the media that Saudi Aramco has chosen Moelis & Co., a boutique investment bank in New York, to be its lead independent adviser on the flotation. Moelis is said to advise the company on how to go about the IPO, including the selection of underwriters and deciding issues such as where the company should list its shares.
As Nasser said, the banks selection is the step that will come before choosing the market where Aramco will list its shares. The list of potential bourses is too long and diverse from Toronto in Canada to Singapore. The company is also working on preparing its quarterly financial statements for the first time. The statements will be ready this year but will not be available to the public until next year when the IPO takes place.
The whole purpose of this exercise is to prepare the company for the flotation and to provide the investors with historical figures to compare future results with.
So, is everything almost in place for the IPO? Not really. There are many pending legal and structural issues to be dealt with and a year’s time could be too short or it could be just enough depending on the speed of the team working on the IPO at Aramco.
So at the “IPO hive,” people are working around the clock and there is no minute to spare. What Aramco needs to decide on hastily is how it will present the company to the global investors? What assets will be included in the sale? At what tax rate it should be sold to public? And at what value the company should be sold?
Aramco’s taxation is still almost the same since the days when it was owned by four American companies. The government obtains 20 percent in royalty fees from the earning and it taxes 85 percent of Aramco’s revenues. At this rate, the cash flow generated from the company will not be enough to lure all the investors. CEO Amin Nasser is aware of this situation and he said in Davos that they were in talks with the government to change the tax regime. So, there are still many things to be done in a limited time. To list Aramco in 2018 is perhaps the biggest challenge for the company.


South Korea imports no Iran oil in November despite sanctions waiver

Updated 16 December 2018
0

South Korea imports no Iran oil in November despite sanctions waiver

SEOUL: South Korea did not import any Iranian oil for the third straight month in November, customs data showed on Saturday, even though it has a waiver from sanctions targeting crude supplies from the Middle Eastern country.
South Korea and seven other countries were in early November granted temporary waivers from US sanctions that kicked in that month over Tehran’s disputed nuclear program.
But it kept imports at zero as buyers have been in talks with Iran over new contracts, with industry sources previously saying they expected arrivals to resume in late January or February.
With no Iranian cargoes arriving for three months, South Korea’s imports of oil from the nation were down 57.9 percent at 7.15 million tons in January-November, or 157,009 barrels per day (bpd), the customs data showed. That compares to nearly 17 million tons in the same period in 2017.
South Korea is usually one of Iran’s major Asian customers. Although the exact volumes it has been allowed to import under the waiver have not been disclosed, sources with knowledge of the matter say it can buy up to 200,000 bpd, mostly condensate.
Condensate is an ultra light oil used to make fuels such as naphtha and gasoline.
But as Iranian condensate supply has been limited due to the sanctions and rising domestic demand in Iran, South Korean buyers have been looking for alternatives from places such as Qatar.
In total, South Korea imported 12.71 million tons of crude oil in November, up 1.2 percent from 12.59 million tons a year earlier, according to the data.
South Korea’s crude oil imports from January to November inched up 0.6 percent from the year before to 131.23 million tons.
Final data on November crude oil imports is due later this month from state-run Korea National Oil Corp. (KNOC).