In my Snapchat account and in my weekly article, I had explained that Saudi Aramco's planned IPO is not a "sale" of any kind. I do not understand why some people insist on calling it a "sale of Saudi Aramco." The talk of sale has persisted due to the chatter on social media. But those who understand economics know well the plan can best be described as "partial privatization." When Saudi Aramco's shares are made public, which shares are they and which part of the company will it involve? Saudi Aramco is now a company of multiple activities. It owns oil concessionary rights. The government owns the oil. When its confirmed oil reserves amount to 260 billion barrels, which do not decrease in view of continuous oil explorations and discoveries, what will be the value of such reserves? Is there any cash liquidity anywhere in the world at present to pay such value? When Saudi Aramco goes public, it will not affect the decision determining the future of the company or its policies. When you, as an investor, own such shares and wish to sell them, will you collect the value from another purchaser in the bourse or will you get oil barrels? Let's take SABIC as an example. If you have shares of the company and sell them in the capital market, you get money. You don't get its chemical products. These are securities in the shape of shares or stocks. Today, the question is: What are the activities of Saudi Aramco? They include oil drilling, exploration, production, refining, distribution, shipment and marketing. The products of the company are oil, gas and petrochemicals. Which privatization do we talk about? In one of my articles, I had clarified the financial and international dimensions of the planned IPO, and had made comparisons with the privatization of SABIC, the telecommunications sector, the National Commercial Bank and the Saudi Arabian Mining Company (Maaden). Even if oil is an external investment item and even if the shares are local, foreign investors can enter into the capital market via declared mechanisms. Nothing will prevent a foreign investor from entering the domestic market. Let us be realistic. We are in need of foreign investments to inject new cash liquidity into our economy to increase the market momentum. It is a practice adopted in all advanced countries to encourage foreign investments. But Saudi Aramco is not for sale. It is a partial privatization of known dimensions and perspectives. Those who insist on calling it a "sale," just for generating some excitement of sorts, will soon discover how disillusioned they were.
