National Post (National Edition)
FINANCIAL POST
TMX OUT OF RUNNING FOR BIG ARAMCO LISTING.
Saudi Arabia has shortlisted New York, London and Hong Kong for the international portion of the listing of national oil company Aramco, according to a report by Reuters, a move that means Toronto, as well as Tokyo and Singapore, are no longer in the running for what is likely to be the world’s biggest IPO.
But a spokesperson for TMX Group has said it’s waiting for an official decision from the company. “We await the company’s decision,” said Shane Quinn.
Reuters reported Thursday that officials in Saudi Arabia planned an initial public offering of the kingdom’s state-owned oil company on Riyadh’s Tadawul exchange and on a yet-to-be-announced combination of either the London Stock Exchange, the New York Stock Exchange and/or the Hong Kong Stock Exchange.
Other exchanges that had hoped to list even a portion of Aramco, which hopes to raise US$100 billion for 5 per cent of the company and achieve a US$2 trillion total valuation, include Singapore and Tokyo.
Saudi Aramco has yet to make an official announcement on an initial public offering of its shares.
The Toronto Stock Exchange had been widely seen as a dark horse to win the listing, even though it lists many domestic and international oil and gas producers and international mining companies.
“Regardless of the outcome, we are encouraged by the way we were able to unite key stakeholders from across the industry in this initiative,” said Nick Thadaney, president and CEO, Global Equity Capital Markets at TMX Group said in an emailed statement.
Still, Thadaney expressed hope his company could win other listings from Saudi Arabia, which is in the middle of a major privatization push as young Crown Prince Mohammad bin Salman is trying to reform the kingdom’s economy and reduce its dependence on oil.
“From energy as a major pocketbook issue to lower gasoline, diesel, electricity and home heating costs. And today we are increasing development as we’re contributing to lower greenhouse-gas emissions — a reality many believed was implausible, if not impossible,” said Gerard.
Gerard credited industry innovation and technological breakthroughs for his country’s ascent to the world’s largest producer of natural gas, oil and refined products. This year, the U.S. is expected to produce more than 10 million barrels a day, elevating itself to one of the world’s largest oil producers alongside Saudi Arabia and Russia.
Meanwhile, the API says U.S. economy-wide CO2 emissions are near 25-year lows, and for the past 10 years energy-related CO2 emissions have fallen in 43 states.
The API is also optimistic about the sector’s employment prospects. As many as 1.9 million new jobs are projected in the oil and natural gas and petrochemical industries by 2035, Gerard said.
“Women and minorities, including African-American and Hispanic workers, will fill nearly 40 per cent of those positions. And the contribution of millennials, who make up one-third of the oil and natural gas industry’s workforce today, are projected to grow.”
The API welcomed a plan to open new offshore areas for exploration, which it says is an acknowledgment of the industry’s advancements in technology to safely access resources, as well as tax reforms that “will allow the natural gas and oil industry to continue building in the millions of jobs we support and billions we invest into the U.S. economy every year.”
In contrast, Canada’s oil and gas sector is looking forward to another year of uncertainty, low prices and increasing tax burdens. The coming big-ticket items are a tanker ban off Canada’s West Coast, reforms of federal regulatory reviews of major projects, tougher methane emissions regulations, and national carbon pricing.
That’s in addition to upheaval from continuing lack of energy export infrastructure — oil and gas pipelines and LNG terminals.
“Canadian oil prices have completely de-coupled from global benchmarks — with the current strip implying the widest heavy (oil) differential in about three years at US$20 a barrel in 2018,” Peters & Co. analysts say in a recent outlook report.
And there isn’t a quick fix. Canadian oil supplies, which are growing with the completion of big oilsands projects, will match pipeline capacity this year and next, Peters said. Of the three pipelines at various stages of approval, only Enbridge’s Line 3 replacement has a high probability of being in service by 2020, according to Peters, while due to continuing delays both Keystone XL and the Trans Mountain expansion are anticipating in service dates after 2020.
The story is even bleaker on the gas side, where pipelines are full now and export capacity not available until a liquefied gas industry takes off.
The upshot is that capital spending in Canada is expected to stay flat at $51 billion this year, though oilsands spending will decrease by $2.8 billion to $13.6 billion, or about 60-per-cent less than before oil prices crashed in 2014, and spending on the conventional side will increase to $37.5 billion, up $2.4 billion.
Meanwhile, the Alberta government is expected to collect a staggering sum in carbon payments from the oilsands alone — more than $1.1 billion by 2025, from $300 million in 2017.
The U.S. Permian basin, where there are no such payments, is the new hot spot. Spending is expected to increase to about US$40- to US$45-billion this year, from US$35-billion in 2017, Peters said.
Here’s the kicker: by growing, the U.S. oil and gas industry is achieving similar objectives as Canadian governments that are restraining Canadian oil and gas — lower GHG emissions, economic growth and job creation, market diversification and greater innovation.