For decades, Saudi Aramco was a giant with no profile: everyone knew that the oil company was making billions, but how much was always unclear. Now, before the historic IPO, details leaked for the first time.
Apple, Amazon and the Google mother alphabet are running a race for the first group with a market value of one trillion dollars. But it would have to be more precise: the first group with a market capitalization of more than 1,000 billion US dollars.
Currently, Apple comes to 883 billion, Amazon to 701 billion and Alphabet to 719 billion US dollars stock market value. But that’s nothing compared to Saudi Aramco, the Saudi oil giant, which is said to be worth $ 2 trillion
A small part of the Saudis want to go public, and for the first time leaked to the business Saudi Aramcos concrete figures to the outside. For decades, the result of the group was accessible only to a small circle of initiates.
According to information available to the news agency Bloomberg, Saudi Aramco made a profit of $ 33.8 billion in the first half of 2017 – far more than Apple, and more than twice as much as Samsung and Microsoft combined, according to Bloomberg data. In addition, Saudi Aramco seems to be virtually debt-free: taking into account capital reserves, the liabilities amount to only 1.3 billion US dollars.
That sounds like an expirated industry, after a solid business. Alone because of the incredibly low production costs, the Saudis have an immense lever in the price war. Allegedly, Saudi Aramco produces oil and natural gas for less than four dollars a barrel (159 liters). Exxon and Shell said it was about $ 20, Bloomberg said.
The state lavishly uses Aramco’s revenues
However, there are also hooks, and therefore the question remains open whether the currently postponed IPO of five percent of the oil company can really flush $ 100 billion into the coffers of the Saudis.
The Biggest Problem for Future Shareholders: Out of every dollar earned, a sizeable sum goes to the Saudi state. According to the energy analysis house Rystad Energy, Saudi Aramco has been paying only 50 percent of income tax since the end of March 2017, 35 percentage points less than before.
However, taxes have been added to charges that have been rising with barrel prices since last year. According to Bloomberg, the Saudis charge a 20 percent fee on sales at a price of $ 70 per barrel, 40 per cent at prices between $ 70 and $ 100 and 50 per cent at barrel prices over $ 100. Previously, the group had to pay only 20 percent.
Rising oil prices therefore do not automatically mean fuller cash registers at Saudi Aramco – this of course limits dividend payments to the future co-owners of the oil giant. So it does not help that the numbers come from a time before the recent oil rally. The Brent and WTI prices rose 28.4 percent and 25.75 percent over the last 12 months and are currently trading at $ 72.44 and $ 67.39 a barrel, respectively.
Incidentally, Saudi Aramco himself commented on the findings of the Bloomberg research that they are inaccurate and that they do not make themselves known about business development or tax burdens. But forever, Saudi Aramco will not be able to wrap up in secrets. Because at the latest on the IPO, which will probably go over in 2019, the oil company will have to draw bare – to the last subsidized barrel.