Naimi’s bat­tles against West­ern ‘greed’ shine light on Aramco IPO

Kuwait Times - - BUSINESS -

LONDON:

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

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