As the sun sets on oil, the sun will rise on solar power

(EurActiv, 21 Aug 2019) When shares in Saudi Aramco eventually go public, there will doubtless be a feeding frenzy on what promises to be the largest initial public offering ever seen. More significantly, the move would also signal Saudi Arabia’s recognition that sunset for fossil fuel is just over the horizon, writes Jonathan Gornall.

There was a distinct lack of crucial financial detail, so it wasn’t the world’s most conventional investor relations call. But when the world’s biggest oil producer this month offered a tantalising glimpse behind the veil of secrecy that normally conceals its activities, it may also have raised the curtain on the last act of the fossil fuels era.

It’s been three years since Saudi Aramco first announced it was planning to go public. Since then, the plan has been on and off again several times, but now it seems to be back on again. If, as Saudi energy minister Khalid Al Falih has suggested, Aramco shares are floated on the market at some point in the next year and a half, it promises to be the largest initial public offering ever seen.

This company, owned outright by the Saudi government, is gigantic. In 2018 it made a net profit of $111.1 billion, making it almost twice as big as Apple, the world’s most profitable publicly quoted company, and dwarfing the profitability of each of the other major oil companies. On August 12, the company revealed its income for the first half of 2019 had fallen by 12% to $47 billion, a drop blamed on a dip in the price of crude, but Aramco remains easily the world’s most profitable company.

So why, then, is Saudi Arabia looking to offer outsiders a slice of the action?

The most plausible explanation is that, 86 years after Saudi Arabia signed the concession agreement with a US oil company that led to the creation of the Arabia American Oil Company and 39 years since the government increased its stake in Aramco to 100%, it realises that sunset for fossil fuel is just over the horizon.

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EurActiv, 21 Aug 2019: As the sun sets on oil, the sun will rise on solar power