Naimi’s battles against Western ‘greed’ shine light on Aramco IPO
As Saudi Arabia prepares for the world’s biggest initial public offering (IPO), memoirs from its former Oil Minister Ali AlNaimi offer a rare insight into decades of domestic infighting over the future of staterun Saudi Aramco.
The 300-page book, titled “Out of the Desert” and published by Portfolio Penguin, describes the battles waged by the influential industry veteran including fending off Western attempts to gain control of oil giant Aramco’s best assets. Naimi joined Aramco as a teenager in 1947 and climbed through the ranks to become company chief from 1983 to 1995, when he was named minister of petroleum - a post he retained until his retirement this year.
His career spans the rise of the “petro-politics” that defined the recent history of the kingdom, including the birth of the Organization of the Petroleum Exporting Countries in 1969 and the oil embargo in 1973. Even though the book holds back from detailing any political jostling within the secretive Saudi royal family and government, it gives a clear idea that various factions have often pushed for different paths for Saudi Aramco.
Naimi describes several instances throughout his career when he fought top executives from Western companies including US giant Exxon Mobil trying what he describes as winning lucrative deals via good connections with some Saudi officials.
“They (Exxon) wanted us to turn over highly restricted information about our Ghawar field, for instance, that isn’t even known within the kingdom outside of the oil ministry and Saudi Aramco,” Naimi writes about gas talks between oil majors and Aramco at the end of the 1990s. If Aramco does list its stock as planned in 2018, investors would expect the firm to disclose classified information on its reserves, including Ghawar - Saudi Arabia’s biggest oilfield.
But it could avoid doing so given the sensitivity of the issue and just say that by buying into Aramco, investors would gain access to the world’s cheapest reserves, still controlled by the state, according to sources briefed on the offering. Naimi retired in April and was replaced by Aramco chairman Khalid Al-Falih as energy minister.
The Saudi oil portfolio is overseen by Deputy Crown Prince Mohammed bin Salman, 31, who has been actively promoting the Aramco IPO. Sources in the kingdom have suggested the royal family is far from united on the issue as some see the offering as giving away the crown jewels cheaply to foreigners at a time of low oil prices. Naimi says he fought hard for “the heart and soul” of Aramco to avoid giving Westerners unnecessarily lucrative deals. “(Exxon’s then-boss) Lee Raymond for instance was trying to make the most of his relationship with (the foreign minister at the time) Prince Saud al-Faisal to get a better deal for Exxon Mobil,” Naimi writes.
Naimi says he was convinced that as part of gas talks in the 1990s, Exxon and other oil majors hoped to acquire cheap Saudi reserves of gas condensate, a high-quality form of crude oil.
“I told Lee Raymond my views and that I felt he was trying to gain an unfair advantage. Lee responded in kind and it got a little ugly. From that point onward our negotiations were over. I haven’t seen Lee Raymond since, which was a shame because we were once good friends,” Naimi continues. — Reuters