INTERVIEW: Amin Nasser, Saudi Aramco’s Davos man, spells out blueprint for IPO

INTERVIEW: Amin Nasser, Saudi Aramco’s Davos man, spells out blueprint for IPO
Amin Nasser, the president and CEO of Saudi Aramco, had a busy few days at last week’s World Economic Forum (WEF) annual meeting in Davos. (Illustration: Luis Grañena)
Updated 27 January 2019

INTERVIEW: Amin Nasser, Saudi Aramco’s Davos man, spells out blueprint for IPO

INTERVIEW: Amin Nasser, Saudi Aramco’s Davos man, spells out blueprint for IPO
  • Nasser was speaking in a private meeting salon at the Hotel Grischa near the main railway station of Davos
  • Just a few weeks ago, Aramco announced the results of an audit by DeGolyer & MacNaughton, the leading independent expert on the oil industry

DAVOS: Amin Nasser, the president and CEO of Saudi Aramco, had a busy few days at last week’s World Economic Forum (WEF) annual meeting in Davos.

“We had about six hours at the International Business Council, three hours at the oil and gas community, two hours on the climate change initiative — and then about 40 bilateral meetings. In Davos, you make every minute count,” he said.

Nasser was speaking in a private meeting salon at the Hotel Grischa near the main railway station of the Swiss Alpine town. He had a plane to catch, but spent some of his precious remaining minutes at Davos speaking to Arab News — about the Fourth Industrial Revolution, technology, the environment, carbon emissions and sustainability.

But first we talked about the forthcoming initial public offering (IPO) of Saudi Aramco. The planned stock exchange listing of the world’s biggest oil company and the Kingdom’s economic dynamo had been slated for later this year, but that timetable slipped into 2021, as Nasser explained.

Did he feel any sense of disappointment or anticlimax that the IPO had been delayed? “No. What I have to say about the IPO is that a lot of work has been done and the commitment is definitely there. The proof of that is what has already been done by the government and by the company. We have changed the tax rules, made a new concession agreement, changed Aramco into a joint stock company, and introduced a lot of fiscal reforms to facilitate a listing,” he said.

Just a few weeks ago, Aramco announced the results of an audit by DeGolyer & MacNaughton, the leading independent expert on the oil industry, which showed Aramco is sitting on a treasure trove of 263.1 billion barrels of oil within its concession area, higher than previous estimates. That was one of the essential requirements for the IPO.

“Everything that is required for listing is there. If the government decided, it could be done in no time,” he said. So why had it not happened?

Basically, Nasser explained, because an alternative strategic play came into view. Aramco decided there were more pressing priorities, especially a tie-up with SABIC, the Kingdom’s petrochemicals and industrial giant.

“We came to the government and said that our desire is to be the leading petrochemical company globally. We can do that organically or inorganically. We are always looking for opportunities in this field and we have huge investments in petrochem with Dow Chemical and Sumitomo. However, if you want to be the leader, you need an acquisition, a major acquisition. You need a platform, a good platform so you can go global, especially with our decision to have 2 million to 3 million barrels of oil going to petrochemical.

“So we approached the Public Investment Fund (Saudi Arabia’s ambitious sovereign wealth fund) to see if it was interested in selling their shares in SABIC, and they were interested. We have been in discussions with them and we went back to the government and said … based on our governance requirements and regulations, you cannot list Aramco while we are going through a major acquisition. It doesn’t work. That process needs to take its course, and the government said that’s fine. Because also you cannot list and then come in three or four months later and say you’re going to acquire a company. That would have to be in the IPO prospectus.

The deal with SABIC — which is valued in the region of $70 billion — will transform Aramco into a global petrochemicals giant, and will take time to put together.

“We need to close a share-purchase agreement and we’re in discussions now with PIF about that. When we reach an agreement we have to go and seek regulatory and antitrust approval. That will take almost until the end of the year 2019, or maybe a little bit more; we don’t know because you need approval from a lot of countries where SABIC has major operations. SABIC is not a small company, it’s a huge company, so you need a lot of approvals from lots of countries,” he said.

“After you finish that you need a minimum of one year to reflect the purchase in your balance sheet. It has to be consolidated and show what is the impact on our balance sheet — where is the integration, where is the value, because the investors will want to see … After that you can go to the market,” he said.

“It’s going to happen. There is no doubt the commitment is there, and it was also further confirmed by the Crown Prince Mohammed bin Salman and by the Minister of Energy Khalid Al-Falih. Both of them say the commitment for the IPO is there,” he insisted.

But Nasser admitted the issue is how to fund the SABIC acquisition, which will be the biggest takeover ever in the Middle East.

“We have different funding mechanisms to finance it. We have our cashflow, and also other funding mechanisms like the bond market, and other tools that are needed for a sustained capital program. So all of these financial tools will be utilized as soon as we reach an agreement,” he said, without disclosing the amount of the bond issue. It will be Aramco’s first foray into global debt markets, but Nasser was encouraged by the recent enthusiastic response toa $7.5 billion bond the Kingdom raised.

The upcoming Aramco bond will take place amid market conditions that were the subject of much gloomy prognosis in Davos. The thought-leaders at the WEF see turbulence in global economic and financial markets in 2019, and worry about the trade “war” between the US and China, and other global economic disruptions.

The implications for the oil markets are obvious. An economic slowdown in China and other big economies would sap the appetite for oil and gas, and potentially lead to a price fall for the Kingdom’s most precious asset.

However, based on his conversations in Davos, Nasser did not appear over-concerned about global economic forecasts.

“It’s our view that the market, in terms of global inventories, is moving toward staying within the five-year average. That’s a sign of balanced-out tightness of supply and demand, which is very important. We are optimistic about the market in 2019 in terms of pricing and in terms of tightness of supply-demand. The more it is balanced, the better for the market. And our view is that there is still healthy demand,” he said. He reckoned there was only a 15 percent chance of a global recession in 2019.

“So far China is healthy in terms of demand, as reflected in imports from Saudi Aramco, and it has been growing. Asia in general is a major market — it is the epicenter of demand in terms of global energy right now, and there is a lot of growth. China and India are very important for us,” he said.

So that leaves the way clear for Aramco to get on with its core long-term strategy — to be a global leader in oil, gas, petrochemicals, refining and energy trading — as well as a pioneer in energy technology.

Aramco is already one of the dominant forces in the global oil industry, of course, helping to set the price of crude through its supply deals with other oil producers. But its immediate ambitions are in gas, where it has so far played a lower-profile role globally. Nasser wants to change that, especially in terms of domestic Saudi consumption.

“By 2030, 75 percent of the utilities sector (in the Kingdom) will be on gas, and the rest will be renewable and nuclear alternatives. So we will have gas going outside the Kingdom to export markets, either by pipeline or by LNG. So (we) will be exporters for the first time,” he said.

Aramco is looking at potential deals in the international gas business, with potential partners in Russia, the US and Australia, he said, adding: “We will be a global leader in gas from within the Kingdom, but we are also looking to be a major player globally.”He is also said to be considering acquisitions in the US shale gas industry. “We have no interest in shale oil ... we have plenty of conventional oil at a much lower cost. But we are interested in gas, let me put it that way,” he said.

At Davos, one of the major themes was the challenge posed by climate change, and Nasser was keen to point out that Aramco is among the “best in class” of the big energy groups. He welcomed a recent academic study that classed Saudi Arabia as the second best in the world among energy producers for carbon intensity in upstream emissions, second only to energy minnow Denmark and way ahead of the other big producers, the US and Russia.

--------

MORE ARAMCO NEWS FROM DAVOS

Saudi Aramco’s Amin Nasser warms the night in glittering Davos reception

Saudi Aramco chief sets out roadmap for share sale in 2021

---------

Technology is key to Aramco’s future as a clean energy company. While at Davos, the company was recognized as a technology leader for its gas plant at Uthmaniya, the only energy producer in the world to receive the WEF’s “Lighthouse” award for technology innovation.
“Aramco is already in the era of the Fourth Industrial Revolution,” Nasser said.

The company is investing heavily in technology across 12 centers globally, each looking at aspects of innovation in energy conservation, fuel formulation, engine technology, and carbon capture.

Nasser sees a big role for alternative and renewable energy sources, but thinks that the challenge to the traditional energy business from the electric vehicle industry has been overstated.

He pointed out that there were only 5 million electric vehicles (EV) in the world today, which roughly amounted to the displacement of just 50,000 barrels of oil out of a total global consumption of 100 million barrels. Many of those EVs are, of course, running on power generated by the highly polluting coal industry.

“You do the math. Our view on EV is that it will continue to grow and it will be a great growth story. However, we firmly believe that by 2040 we will need to use all sources as part of the energy mix to supply the world.”

By then, if all goes to the strategy set out by Nasser and the Saudi energy minister, who is also chairman of Aramco, the world’s leading oil company will be a public-listed corporation, a global leader in the energy industry and a champion of digital industrial technology. But Nasser insisted it would remain true to its roots as the fountain of the Kingdom’s fortunes.

“We try to make sure that, wherever you operate, you add value to the community that you are in. There is a lot of emphasis on taking care of all our stakeholders, as well as our shareholders,” he said.


Saudi Arabia to auction mining licenses in 2022

Saudi Arabia to auction mining licenses in 2022
Updated 18 June 2021

Saudi Arabia to auction mining licenses in 2022

Saudi Arabia to auction mining licenses in 2022

RIYADH: Saudi Arabia plans to auction two major mining licenses in 2022 for commodities including gold, copper and zinc, as the Kingdom aims to triple the mining
sector’s contribution to the national gross domestic product (GDP) to SR240 billion ($64 billion) and double the number of jobs to 470,000 by 2030.
The auction was announced by Vice Minister for Saudi Mining Affairs Khalid Al-Mudaifer during an interview with S&P Global on the sidelines of the Gulf Petrochemicals and Chemicals Association (GPCA) Leaders Forum in Dubai this week.
Looking ahead, Al-Mudaifer said: “We expect to see an increase in international investment in mining, particularly because demand for minerals around the world is growing fast.
According to geological surveys dating back 80 years, the Kingdom has an estimated reserve of untapped mining potential valued at $1.3 trillion.” Saudi Arabia’s mining industry has already attracted some major foreign investors. American industrial corporation Alcoa has a 25.1 percent stake in two companies, Ma’aden Bauxite and Alumina and Ma’aden Aluminum, as part of $10.8 billion joint venture with the Saudi Arabian Mining Company (Ma’aden) located in Ras al-Khair Industrial City in the Eastern Province.
The Mosaic Company, a fertilizer producer, has a 25 percent stake in the $8 billion Ma’aden Wa’ad Al-Shamal Fertilizer Production Complex located in Wa’ad Al Shamal Minerals Industrial City in the north of Saudi Arabia. Furthermore, Barrick Gold has a 50 percent stake with Ma’aden in the Jabal Sayid underground Copper Mine and Plant.
Al-Mudaifer said that a new mining law, which came into force on Jan. 1, 2021, will help attract more foreign investors because it treats them equally with local investors.
“We have already received a number of applications for exploration licenses from locals and are also in conversations with a number of international mining businesses,” he said.
Speaking at the GPCA forum, Al-Mudaifer described how the Kingdom’s mining sector remained resilient throughout the pandemic.
“The government’s robust response to controlling the pandemic, paired with our thoughtful approach to executing the country’s mining strategy, has enabled us to continue moving forward with our industry transformation,” said Al-Mudaifer.
He also highlighted the launch of the National Geological Database, which provides online access to 80 years of national records of geological, geophysical and geochemical information, and the introduction of a new web-based platform called Ta’adin, which will be the single point of access for mining license applications, issuance and information.
Saudi Arabia plans to launch a comprehensive geological survey to map the country’s mining potential. “The mining sector recently invested $500,000 to launch our Regional Geological Survey Program, designed to collect the essential data required for mineral exploration in the Kingdom,” Al-Mudaifer told S&P Global.
“The five-year program will conduct geophysical and geo-chemical surveys and create detailed mapping of more than 700,000 square kilometers of the mineral-rich Arabian Shield area in Saudi Arabia,” he said.
The Vision 2030 reform plan identified the mining sector as a potential third pillar of the Kingdom’s industrial growth, alongside petroleum and petrochemicals. The country is investing SR14 billion to develop the sector.
“We have emerged more confident than ever that mining in the Kingdom is on the fast track to becoming the third pillar of Saudi industry.” the vice minister said.
About $45 billion in private and public sector investments have gone into the mining sector over the past decade, mainly in phosphate and aluminum production.
“Saudi Arabia has some of the world’s largest reserves of phosphate, and so we are investing in major phosphate projects such as Ma’aden’s large-scale phosphate complex, Phosphate 3,” Al-Mudaifer said.
The $6.4 billion Phosphate 3 expansion will make Ma’aden one of the top three global phosphate fertilizer producers and Saudi Arabia the second largest phosphate fertilizer exporter worldwide.


Egypt to start electric car production from mid-2022

Egypt to start electric car production from mid-2022
Updated 18 June 2021

Egypt to start electric car production from mid-2022

Egypt to start electric car production from mid-2022
  • Thirteen electric vehicles will be tested on Egyptian streets from next month

CAIRO: Egypt will begin testing electric cars on the country’s streets from July, ahead of plans to launch full-scale production of the vehicles from mid-2022.

Thirteen imported electric vehicles will be tested on Egyptian streets from next month, Hisham Tawfik, minister of the Egyptian public enterprise sector, said while attending the launch of the Nasr E70 electric car.

Nine of the electric cars will be tested by drivers nominated by Uber, the global ride-hailing company, he added.

The Nasr E70 is scheduled to start production in mid-2022 with the El Nasr Automotive Manufacturing Company, an affiliate of the Ministry of Public Enterprise Sector’s Metallurgical Industries Company.

Tawfik said that the ministry began studying the electric car production project in mid-2019 as part of efforts to reform and develop its affiliated companies, including the revival of El Nasr Automotive Company.

FASTFACT

E70

The Nasr E70 is scheduled to start production in mid-2022 with the El Nasr Automotive Manufacturing Company.

The project is in line with the global move toward electric cars and aligns with President Abdel Fattah El-Sisi’s directives to localize the manufacture of vehicles used for clean energy.

The Dongfeng Corporation, one of the largest automobile producers in China, is partnering in the production of the Nasr E70 vehicle, the minister said.

An agreement between El-Nasr and Dongfeng was signed in June 2020 following months of negotiations.

The Ministry of Public Enterprise Sector recently released images of the first electric car of its kind in the country.

El Nasr CEO Hani El-Khouly said that three types of electric car models will be available in Egypt, based on battery capacity.

Batteries initially will be made in China, with production later shifting to Egypt.

Trials of the imported cars will continue for up to four months under a range of Egyptian conditions and with different drivers.

The Nasr E70 can reach a speed of 145 kilometers per hour and travel up to 400 km on a single charge.

El-Khouly said that a delegation from China will arrive in Egypt in July to follow up on the tests.

Government subsidy of the car will total about EGP50,000 ($13,333) to support the local market, he said.


From Australia to Hong Kong, internet outages disrupt services

From Australia to Hong Kong, internet outages disrupt services
Updated 18 June 2021

From Australia to Hong Kong, internet outages disrupt services

From Australia to Hong Kong, internet outages disrupt services
  • Many of the outages were reported by people in Australia trying to do banking, book flights and access postal services.
  • Brief internet service outages are not uncommon and are only rarely the result of hacking or other mischief

SYDNEY: A wave of brief Iinternet outages hit the websites and apps of dozens of financial institutions, airlines and other companies across the globe Thursday.

The Hong Kong Stock Exchange said in a post on Twitter Thursday afternoon Hong Kong time that its site was facing technical issues and that it was investigating. It said in another post 17 minutes later that its websites were back to normal.

Internet monitoring websites including ThousandEyes, Downdetector.com and fing.com showed dozens of disruptions, including to US-based airlines.

Many of the outages were reported by people in Australia trying to do banking, book flights and access postal services.

Australia Post, the country’s postal service, said on Twitter that an “external outage” had impacted a number of its services, and that while most services had come back online, they are continuing to monitor and investigate.

Many services were up and running after an hour or so but the affected companies said they were working overtime to prevent further problems.

Banking services were severely disrupted, with Westpac, the Commonwealth, ANZ and St. George all down, along with the website of the Reserve Bank of Australia. Services have mostly been restored.

Virgin Australia said flights were largely operating as scheduled after it restored access to its website and guest contact center.

“Virgin Australia was one of many organizations to experience an outage with the Akamai content delivery system today,” it said. “We are working with them to ensure that necessary measures are taken to prevent these outages from reoccurring.”

Akamai counts some of the world’s biggest companies and banks as customers.

Calls to Akamai, which is headquartered in Cambridge, Massachusetts, but has global services, went unanswered.

The disruptions came just days after many of the world’s top websites went offline briefly due to a problem with software at Fastly, another major web services company. The company blamed the problem on a software bug that was triggered when a customer changed a setting.

Brief internet service outages are not uncommon and are only rarely the result of hacking or other mischief. But the outages have underscored how vital a small number of behind-the-scenes companies have become to running the internet.


Saudi and Russian business officials propose Russian bank in Riyadh

Saudi and Russian business officials propose Russian bank in Riyadh
Updated 18 June 2021

Saudi and Russian business officials propose Russian bank in Riyadh

Saudi and Russian business officials propose Russian bank in Riyadh
  • Russian ambassador to the Kingdom says new commercial attache at the embassy will help Saudi businesses

RIYADH: A proposal to open a Russian bank in Riyadh was presented at a meeting between Saudi and Russian officials on Thursday.
The move would facilitate trade and economic exchange between the two countries, a meeting of the Saudi-Russian Business Council of the Council of Saudi Chambers (CSC) was told.
Russia’s Ambassador to the Kingdom, Sergei Kozlov, said he promised to support and study the proposal to open the bank in Riyadh.
He said a commercial attaché had been appointed at the embassy in Riyadh to help Saudi business owners overcome obstacles.
Ajlan bin Abdulaziz Al-Ajlan, president of the CSC, said the meeting provided strong impetus toward developing more trade and economic relations.
Chairman of the Saudi-Russian Business Council Tariq Al-Kahtani said it was important to strengthen economic and trade cooperation.
The meeting also dealt with some challenges that contributed to the weak volume of trade exchange between the Kingdom and Russia, including the lack of a direct shipping line to facilitate import and export operations.


International companies to invest in Egyptian green hydrogen projects, says minister

International companies to invest in Egyptian green hydrogen projects, says minister
Updated 17 June 2021

International companies to invest in Egyptian green hydrogen projects, says minister

International companies to invest in Egyptian green hydrogen projects, says minister
  • Egypt has signed MOU for 1GW green hydrogen project
  • Other EU companies set to partner with Egypt's private sector

RIYADH: International companies are interested in investing in green hydrogen production in Egypt, according to Minister of Electricity and Renewable Energy Mohamed Shaker.

“There are companies from the European Union that will enter into partnerships with the Egyptian private sector,” he said.

The Egyptian government has signed an MoU with Siemens for the first project to produce green hydrogen with a capacity of 1 megawatt, doubling to 2 megawatts over five years, he said.

“Green hydrogen will be the world’s fuel in the next few years, and I see that Egypt started early in this field,” he added.

Work is currently underway to develop and formulate a strategy for the hydrogen industry in Egypt through a ministerial committee in which the Ministry of Petroleum and Mineral Resources participates as a main member, according to previous statements by the Minister of Petroleum and Mineral Resources Tarek El Molla.

Egypt is planning to invest up to $4 billion in a project to generate green hydrogen gas through water electrolysis, Shaker said this week.

The project is currently in the feasibility studies stage, in consultation with the Sovereign Fund of Egypt and a group of concerned ministries, and will be presented next week, he said.

The United States is planning to increase funding to Egypt to help it convert to solar energy and move away from fossil fuels, US special envoy for climate John Kerry said in Cairo on Wednesday.

Egypt is planning to double the state’s funding for green projects to 30 percent of its overall investment plan during the fiscal year 2021/2022 and to raise it to 50 percent by 2024/2025.