A slice of aramco for the indian market

A slice of aramco for the indian market

In a historic move, oil giant Saudi Aramco, the world’s most profitable company, is to list on the Riyadh stock market in what may well turn out to the biggest initial public offering (IPO) globally. India, already the third-largest importer of crude oil, is likely to be the top driver of oil demand by 2024, and it would make eminent sense for Riyadh to list a slice of Aramco stock here to shore up the India-Saudi Arabia strategic partnership. Much is at stake.

Saudi Arabia is, of course, India’s second-biggest oil supplier after Iraq, our fourth-largest trading partner too and Saudi investments of about $100 billion are in the pipeline in sectors as diverse as energy, petrochemicals, infrastructure and agriculture. When Aramco is listed abroad, Riyadh needs to leverage market size, trading volumes and demand for an Indian listing. It is a fact that the second-biggest oil reserves are in Saudi Arabia, after Venezuela. Also, in terms of oil output, the kingdom is now second placed, after the US. But in terms of oil recovery costs, State-owned Saudi Aramco is perhaps the most competitive. The oil giant is reportedly valued at about $1.5 trillion, although reports say Crown Prince Mohammed bin Salman’s administration pegs it at $2 trillion. The differences in valuation has led to some delay in the IPO.

Crude oil prices may well have peaked and are likely to stay range-bound save for geopolitical flare-up risks. But the fact remains that there is a shift in the techno-economic paradigm in favour of electric mobility, away from the oil-driven internal combustion engine. We need to be proactive and rev up electric mobility going forward. But in the here and now, and in the foreseeable future, we must gainfully monetise oil demand to boost markets, enterprise and growth.