New York allure fades for Saudi Aramco as ‘frivolous’ climate change actions loom

Saudi Arabia’s Oil Minister Khalid Al-Falih and Foreign Minister Adel Al-Jubeir arrive in Downing Street in London, March 7, 2018. (Reuters)
Updated 04 April 2018
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New York allure fades for Saudi Aramco as ‘frivolous’ climate change actions loom

  • Threat of climate change lawsuits makes US listing for Aramco less attractive
  • Aramco too big and too important for KSA to be subjected to that kind of risk — oil minister
DUBAI: When Khalid Al-Falih, Saudi Arabian oil minister and chairman of Saudi Aramco, told a TV interviewer of the “risk” and “concern” associated with New York financial markets, it was the first time a senior executive of the national oil company had spelled out, on the record, what others had been saying privately for some time: An American listing might not be best for Aramco.
The New York Stock Exchange had long been regarded as the front runner in the race to stage the biggest initial public offering in history. Ever since the IPO was first announced in late 2016, Wall Street’s Big Board was seen as the inevitable venue for the listing, not least because that was what the shareholder — the government of Saudi Arabia — wanted.
There were other very persuasive reasons to choose NYSE, or even its equally powerful city rival Nasdaq, over other contenders such as London or Hong Kong, for the international element of the IPO in addition to Riyadh’s Tadawul.
The New York exchanges are the two biggest stock markets in the world, by some way. On either, Aramco would be able to rate itself alongside the biggest companies in the energy and high-technology sectors. Each would have the liquidity and investor power to help Aramco to the ambitious $2 trillion valuation officials placed on it.
And, finally, President Trump — regarded as a friend of Saudi Arabia — made it obvious in a series of tweets that he wanted Aramco in New York, and would “appreciate” it if the Saudi company would list there.
Such big-name backing, for a while, made New York seem a shoo-in for the IPO, despite some qualms among Saudi officials and advisers about the threat from anti-terror financing laws and rigorous regulation and disclosure requirements, especially for oil companies and especially relating to reserve disclosures.
But Al-Falih spelt out a more serious worry for Aramco. It was not laws that concerned him, he said, in a reference to the Justice Against State Terrorism Act and Sarbanes Oxley laws, but “litigation and liabilities.”
He explained specifically that on his mind were the big lawsuits brought against five oil companies in New York City by the mayor Bill de Blasio on charges that they had misled the whole world on the effects of climate change over many years.
The charges were “frivolous,” he said, adding: “Quite frankly, Saudi Aramco is too big and too important for the Kingdom to be subjected to that kind of risk.”
Whatever Al-Falih thinks of the climate change actions, they are not seen as “frivolous” in the US. When the charges were leveled against BP, Chevron, ConocoPhilips, Exxon Mobil and Royal Dutch Shell earlier this year, they were just the latest in a barrage of legal actions in California, Texas, and New York State.
At the CERAWeek energy conference in Houston, Texas, last week, the climate change actions were spoken of as a serious threat to the oil companies and their basic product. They compared them to the onslaught against “Big Tobacco” in the 1990s that wiped billions of dollars off their valuations and threatened their very existence.
One oil expert, who did not wish to be named, said: “This legal campaign against the oil companies has all the signs of being carefully coordinated across the country, and is highly organized from state to state. It is a political campaign, masking as an environmental action.”
Some of the oil companies under investigation have had to go back decades in their records in an attempt to prove that they did not knowingly mislead shareholders, customers, and investors about climate change risks. The legal costs of defending the actions will be enormous and will last for years.
Aramco executives are said to regard being caught up in a US campaign against Big Oil with horror. “They could have lived with the Jasta laws — as Saudi business already does in the US — but this was the final straw,” said an oil industry analyst who did not want to be named.
The climate change threat does not necessarily amount to a deal-breaker for Aramco in New York. One expert on Saudi oil, Ellen Wald, author of the forthcoming book “Saudi Inc”, tweeted about Al-Falih’s comments: “He is posturing here — he’s preparing negotiations before (Crown Prince Mohamed bin Salman) visits New York. More than any exemptions from London Stock Exchange, NYSE or Securities and Exchange Commission, they (Aramco) want de Blasio and state attorney generals to quit with ‘frivolous’ climate lawsuits.”
Whether posturing or serious concerns, the climate change lawsuits look certain to be on the agenda of the official party accompanying the royal visit in talks with US politicians, Trump included.
It is difficult to see, however, what even the president can do to stop legal actions brought by city mayors or state legal officers, no matter how much he wants to get Aramco to list in his hometown.


Saudi Arabia’s up-and-coming energy park set to transform KSA into a global industrial powerhouse

Situated in the Kingdom’s Eastern Province, between Dammam and Al-Ahsa, the project will be developed in three phases. (Supplied)
Updated 12 December 2018
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Saudi Arabia’s up-and-coming energy park set to transform KSA into a global industrial powerhouse

  • The first phase is scheduled for completion by 2021
  • SPARK will localize more than 300 new industrial services and facilities and will have specialized training centers to cater to the huge influx of manpower

JEDDAH: Saudi Arabia is fast catching up with the world’s ever-growing energy and technology scene ahead of 2030. In fact, the King Salman Energy Park (SPARK) may soon prove a global destination for energy industry investors.

The new energy city mega-project is being developed by Saudi Aramco, which received authoritization to embark on the initiative in the summer, and is operated, managed and maintained in partnership with the Saudi Authority for Industrial Cities and Technology Zones (MODON). 

With projections that the megacity will create more than 100,000 jobs, it is considered one of the most up-and-coming energy parks in the world.

SPARK will localize more than 300 new industrial services and facilities and will have specialized training centers to cater to the huge influx of manpower.

Situated in the Kingdom’s Eastern Province, between Dammam and Al-Ahsa, the project will be developed in three phases. 

The first phase is scheduled for completion by 2021, while the final phase of the project is set for completion in 2035. With all this on track, the 50-square-kilometer project is poised to be a magnet for foreign and domestic investment. 

Crown Prince Mohammed bin Salman inaugurated the King Salman Energy Park at the King Abdulaziz Center for World Culture (Ithra) on Monday. (SPA)

What’s more, Aramco’s espousal of SPARK will also help businesses indulge in technological development, manufacturing and exports channels and build a world-class energy supply chain. Crown Prince Mohammed bin Salman inaugurated the King Salman Energy Park at the King Abdulaziz Center for World Culture (Ithra) on Monday.

During the groundbreaking ceremony, Energy Minister and Aramco Chairman Khalid Al-Falih declared SPARK a special economic zone (SEZ) in which businesses can enjoy exclusive benefits. 

“We are looking forward to collaborating with our first anchor partners at SPARK,” said Saudi Aramco President and CEO, Amin Nasser.

SPARK has already attracted investment from foreign and local companies to produce and manufacture goods and services. The first phase of the project is expected to cost about $1.6 billion. 

The park is set to attract industrial investors in the water, power, petrochemical and wastewater sectors, among others. 

Facilities at SPARK will also help investors bridge gaps in local production back home, increasing competition in the long run. 

“This energy city is exciting because it brings together a multitude of businesses,” Mark McCollum, president and CEO of Weatherford Corp, told SPARK.

“We firmly believe that collaboration and cooperation among service companies and individual providers to the energy sector is vital in breaking new ground.”

The King Salman Energy Park is also set to promote small and medium-sized enterprises. With focus on energy production, it also provides opportunities for investment in residential and commercial real estate projects.

Nasser said that the “King Salman Energy Park will spur a new era of growth for one of the Kingdom’s already thriving sectors. What’s more, it will serve as a central gateway to the region’s economies since Aramco is at the heart of the global oil and gas industry.”