New York allure fades for Saudi Aramco as ‘frivolous’ climate change actions loom
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
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.
World celebrates Saudi National Day
DUBAI: From Dubai to Beirut to New York and Washington, D.C., Saudi National Day was celebrated outside of the Kingdom on Sunday as a show of patriotism by Saudis abroad and as a sign of friendship by countries around the world.
The Dubai airline operated a special one-off A380 service, known as EK 813 and EK 814, on Sunday to the capital city of Riyadh, touching down at King Khalid International Airport at 3:30 p.m. The return flight was scheduled to depart at 6:50 p.m.
A YouTube video from Emirates also showed crew handing out scarves embroidered with the countries’ flags, as well as white roses, to passengers while boarding the A380 aircraft.
The Burj Khalifa was illuminated with the Saudi flag last night, while the Nasdaq Tower’s electronic billboard in New York’s Times Square was lit up with photos of King Salman, Crown Prince Mohammed bin Salman and the flags of Saudi Arabia and the UAE.
The images were posted by Nasdaq Dubai, the UAE-based operation of the New York equities exchange, on Twitter with the message: “Best wishes from #NasdaqDubai to #SaudiArabia on the occasion of the 88th National Day.”
تهنئ #ناسداك_دبي #المملكة_العربية_السعودية بمناسبة اليوم الوطني ال٨٨— Nasdaq Dubai (@NasdaqDubai) September 21, 2018
Best wishes from #NasdaqDubai to #SaudiArabia on the occasion of the 88th National day#الامارات #اليوم_الوطني_السعودي pic.twitter.com/NjbIIh0L4n
In Lebanon, Pigeons’ Rock, also known as the Rock of Raouché, located in the sea of the western capital of Beirut, was lit in the colors of the Saudi flag. The rock, one of the most important Lebanese monuments, was lit during a ceremony attended by the charge d'affaires of Saudi Arabia, Waleed bin Abdullah Bukhari, along with a crowd of dignitaries, including the Mayor of Beirut.
In Washington, the Saudi embassy’s National Day bus toured around the capital on the weekend inviting people to its celebrations on Sunday in National Harbor, Maryland.
In the UAE’s capital, the General Command of Abu Dhabi Police decorated 88 of their cars - one for every year being celebrated – with the flags of Saudi Arabia and the UAE and the words “Together Forever.”
The UAE’s airlines got in on the game. Emirates operated a special one-off A380 service on the routes EK 813 and EK 814 on Sunday to the capital city of Riyadh, touching down at King Khalid International Airport at 3:30pm. Crew handed out scarves emblazoned with the countries’ flags, as well as white roses, to passengers boarding the aircraft.pic.twitter.com/U36yYpxE8T
— شرطة أبوظبي (@ADPoliceHQ) September 23, 2018
Etihad said it was using the only Saudi A380 pilot in the world, Wesam Sameer Al Najjar, to fly its Year of Zayed plane to Jeddah with the UAE’s Captain Ahmed Almalood.
Meet Wesam Sameer Al Najjar, the only Saudi National A380 pilot in the world. Together with Captain Ahmed Almalood from the UAE, he will take our A380 Year of Zayed plane to Jeddah in celebration of the 88th Saudi National Day. pic.twitter.com/cjc5UgQcpP— Etihad Airways (@EtihadAirways) September 21, 2018
In the UAE, children at some schools dressed in green and sang the anthems of both countries, carrying both of their flags. In the evening, there was a Saudi National Day celebration at La Mer beachfront in Dubai that featured a supercar parade, traditional Saudi dancers and, of course, fireworks.