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 crown prince calls for establishing health center dedicated to Pakistani hero

Updated 15 min 7 sec ago
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Saudi crown prince calls for establishing health center dedicated to Pakistani hero

  • The directive was issued during the crown prince’s visit to Pakistan on the first leg of his Asia tour
  • Khan managed to save 14 lives, but he drowned as he attempted to rescue the 15th person.

DUBAI: Saudi Arabia’s Crown Prince Mohammed bin Salman has called for the creation of a health center in Pakistan’s Khyber Pakhtunkhwa province dedicated to the memory of a Pakistani hero who saved 14 lives in Jeddah’s 2009 floods, Saudi state-news agency SPA reported.

The directive was issued during the crown prince’s visit to Pakistan on the first leg of his Asia tour.

In November 2009, as flash floods roared through the port city, Farman Ali Khan secured a rope to his waist and jumped into the water to rescue people.

He managed to save 14 lives, but he drowned as he attempted to rescue the 15th person.

He was posthumously awarded the King Abdul Aziz Medal of the First Order by the Saudi government and Pakistan’s Tamgha-e-Shujat by then President Asif Ali Zardari. 

“What this man displayed is a rare act of heroism,” said Rania Khaled, an account executive in Jeddah. “He didn’t pause to think of where these people came from or their nationality — all he cared about was that everyone survived the terrible flood. As a result, he lost his life and that’s what makes his tale so heroic. He cared for humanity, not just his own well-being and safety.
“He set a very high example of what a human should aspire to be. Your background, race and nationality shouldn’t matter; what matters is that we all stand together and help each other. I think if people lived with a similar mindset to that of Khan, the world would be a better place.”
Razan Sijjeeni, a photography instructor in Jeddah, said: “I think what Khan did was not only heroic but also human. It says a lot about the kind of person he was in that moment when he chose to risk his life to save others. He gives us a lot to reflect on — who we are today and how much we should value human lives that are not necessarily related to us.”
Nora Al-Rifai, who is training to be a life coach, said that she hopes Khan’s widow and three daughters continue to receive the help and support they deserve.
“It’s a nice gesture that a Jeddah street was named after him as a reminder to all of us and the next generations of his selflessness and heroism.”