Abu Dhabi oil giant sees ‘enormous’ investment potential in Kingdom

Khalid Al-Falih, Dr. Sultan Al-Jaber, and Patrick Pouyanne attend the Future Investment Initiative (FII) conference in Riyadh on October 23, 2018. (AN photo/ Ziyad Alarfaj)
Updated 26 October 2018

Abu Dhabi oil giant sees ‘enormous’ investment potential in Kingdom

  • ADNOC chief executive Sultan Al-Jaber wants to grow energy links between UAE and Saudi Arabia
  • Saudi Arabia and the UAE have grown increasingly close recently in the face of common security concerns and energy market issues

RIYADH: The Abu Dhabi National Oil Co. (ADNOC), is exploring opportunities for further cooperation in energy and petrochemicals with Saudi Arabia, it emerged at the Future Investment Initiative (FII) conference in Riyadh.

Sultan Al-Jaber, the chief executive of ADNOC and UAE minister of state, told Arab News that the investment potential in the Kingdom was “enormous,” and that he was interested in growing energy and other links between the two countries.

The biggest example of joint Saudi-UAE cooperation to date is the co-investment in the $44 billion refinery at Ratnagiri in India, which will provide an outlet for Arabian crude in the subcontinent and an entry to one of the fastest-growing refining and petrochemicals markets in the world.

Al-Jaber said Ratnagiri was “an example of the growing energy links between Saudi Arabia and the UAE, links which I am sure will grow stronger and deepen over time.”

“Saudi Arabia is the largest oil producer in the world, and is taking significant steps to transform its economy to ensure its long-term sustainable development and prosperity. The Vision 2030 plan is ambitious, bold and achievable,” he said.

“Most importantly, Saudi Arabia’s economic transformation will have far-reaching benefits, not only for the Kingdom, but for our region and for the entire world. Economic diversification is the name of the game.

“I have been impressed by the progress being made by the Kingdom to become a global economic powerhouse, and to use its investment strength to create a more diverse and sustainable economy. Particularly impressive is the investments it is making in unlocking the potential of the true architects of the future, the next generation,” he added.

Saudi Arabia and the UAE have grown increasingly close recently in the face of common security concerns and energy market issues. Al-Jaber made it clear that relationship will only get closer.

“Saudi Arabia and the UAE share a common understanding that the shifting global trends are creating an energy landscape where new rules of engagement are required. In this new energy era, we need to adopt more creative strategies and more flexible business models to unlock and maximize value and invest in growth,” he said.

The ADNOC chief said that the FII gathering was “an important and unique forum to meet with decision-makers, policy influencers and existing and potential partners and explore with them the trends impacting industrial development.”

He added: “Saudi Arabia is leading the region in terms of the progressive steps it is taking to develop the entire value chain of the hydrocarbon industry and wisely use its resource wealth to develop a fully diversified economy.

“The FII provides an essential platform to explore innovative ideas that can be taken to scale across the entire region. It is also a great platform to connect to opportunities beyond the Middle East.

“The expanding global energy map holds great potential for energy companies that are willing to adapt and transform. But, in order to make the most of these opportunities, we must work alongside innovative, commercial, financially savvy strategic investors and value-adding partnerships to enable our ambitious smart growth plans.

“The FII conference was an ideal opportunity to connect with potential partners who can provide the technology, know-how and market access we will need to thrive in the evolving energy landscape.

“I have no doubt Saudi Arabia will be successful in delivering a fully diversified and strong economic future, one that provides opportunities and long-term prosperity for all its citizens,” he added.

Investment and energy experts welcome ‘sensible’ Saudi Aramco IPO valuation

Updated 18 November 2019

Investment and energy experts welcome ‘sensible’ Saudi Aramco IPO valuation

  • Price regarded as a sensible compromise and that it will sell the IPO
  • Experts said the Aramco valuation was justified by the financial metrics

DUBAI: Investment professionals and energy experts delivered a mainly enthusiastic response to the pricing of shares in Saudi Aramco and the overall valuation of the biggest oil company in the world at between $1.6 trillion and $1.7 trillion.

Al Mal Capital, a Dubai-based investment bank, said that it was positive on the Aramco initial public offering (IPO) on that kind of valuation, which it said was justified by the financial metrics.

“We believe Aramco’s IPO is a central pillar of Saudi Arabia’s Vision 2030. In our view, the broader privatization of state assets will likely accelerate the flow of foreign capital into the Kingdom, improve liquidity and transparency as well as continue to help diversify its economy away from its dependency on oil. While many investors were skeptical about the ability of Saudi Arabia to roll out its ambitious agenda, they seem to be right on track.”

Tarek Fadhallah, chief executive officer of Nomura Asset Management in the Middle East, said via Twitter: “My first impression is that the price is a sensible compromise and that it will sell the IPO. Aramco should easily raise the $8.5bn from retail investors but the 29 global coordinators, managers and financial advisers will need to find the other $17 billion. A few billion from China would help.”

Robin Mills, chief executive of the Qamar Energy consultancy, said; “I think it’s a reasonable compromise. The price is well above most independent valuations but well below the aspirational price. It implies dividend yields a bit lower than the super-majors (the independent oil companies), but a similar price earnings ratio (the measure of the share price rated according to profits). Retail and local investors should be sufficient. We’ll have to see about the foreign investors.”

Ellen Wald, energy markets consultant and author of the book Saudi, Inc., said American investor would still be undecided on the IPO. 

“Remember, investors don’t put money in because they think the value is accurate. Smart investors put money in because they think the value will rise. It all depends on whether they see signs the price will rise during their time frame.”

American oil finance expert David Hodson, managing director of BluePearl Management, said: “This valuation seems to be more reasonable based on the fundamentals. Potential investors in Western markets will base their decision on cold hard facts like dividends and growth prospects. From what we now know, Aramco is offering them a compelling investment proposition to consider.”