Saudi Aramco's planned initial public offering has a tough road ahead of it amid a shifting political landscape in the United States. The uncertainties over how policies pursued by Donald Trump, when he becomes president, might affect Saudi's oil interests, including the sale of a 5 per cent stake in its state oil company, were underlined by Saudi Arabia's hectic efforts to lobby for changes to a law that could leave the government and its entities open to civil lawsuits. At the same time, a top Trump oil adviser urged the administration to block Saudi ownership of refining assets, arguing that it runs counter to the national interest.
“The potentially biggest IPO in history [of Aramco] is likely to be fraught with challenges and insiders continue to highlight that sorting these out could take a few years,” Amrita Sen, the chief oil analyst at Energy Aspects, a consultancy, has said.
Adel Al Jubeir, Saudi Arabia’s foreign minister, has been lobbying intensely in the US this past month for lawmakers to amend the Justice Against Sponsors of Terrorism Act (Jasta), which in September overrode a presidential veto and gave US citizens the right to bring civil lawsuits against Saudi Arabia on behalf of victims of the September 11, 2001 terrorist attacks.
Mr Al Jubeir has said that eroding the principle of sovereign immunity could backfire on the US, leaving it open to lawsuits abroad, while also pointing out Saudi Arabia’s economic leverage in the US, including its holdings of US$750 billion of US Treasury bonds.
But while he has garnered support from senators John McCain and Lindsey Graham and others for an amendment to the law that would make it much more difficult to sue the government, victims groups that have backed Jasta have railed against any such moves.
Significantly, these groups have the backing of Trump-supporting outfits including Breitbart News, whose former executive chairman, Steve Bannon, was tapped to be chief strategist and senior counsellor in the Trump White House. “I do believe Donald Trump is on our side, he did vocally support Jasta during the election,” said Terry Strada, the national chair of the group 9/11 Families and Survivors United for Justice Against Terrorism, as quoted by Breitbart on Thursday.
Another indication of the pressures Aramco may face came from statements this month by Harold Hamm, the head of Continental Resources, one of the pioneers of the US fracking industry and an energy adviser to Mr Trump during his campaign.
Mr Hamm has been vocal down the years about “energy independence” for the US, by which he mainly means support for domestic oil and gas producers. He successfully lobbied Congress – and, specifically, won over the house speaker Paul Ryan – in pushing through the repeal last year of the 40-year-old law that barred most US crude oil exports.
Foreign oil companies, including Aramco, have acquired substantial shares in US refineries and redesigned them to handle heavy, sour crude, versus the light, sweet crude that comes from Mr Hamm’s oilfields. Aramco is unwinding a US joint venture with Royal Dutch Shell that would leave it as owner of one of the country’s biggest refineries. A key plank of Aramco’s strategy is expanding downstream, especially in the US.
Saudi Arabia has considerable political heft in the US, including on Wall Street where banks stand to make up to $1bn in fees.
But the case of Rosneft is cautionary, says Claire Davidson, a partner at Davidson Ryan Dore in London and long-time spokesperson for shareholders of Yukos, who pursued their case against Rosneft for a decade over the appropriation of its assets and won judgments in The Hague’s permanent court of arbitration for $50bn.
“There were big institutional interests [in London’s financial establishment] who wanted to make sure that IPO got done,” she said, referring to Rosneft’s 2006 London Stock Exchange listing.
amcauley@thenational.ae
Follow The National's Business section on Twitter
