Saudi Aramco, Saudi Arabia’s state-controlled oil company, is set to publish its accounts ahead of a planned IPO in 2018. Although it issues production figures in its annual report, Aramco’s financial statements have always been a closed book. The company is allegedly overhauling its accounts so as to publish figures for its 2017 financial year in an industry-friendly format. It is also planning to disclose backdated accounts in this format for its 2015 and 2016 financial years. The planned listing of five percent of Aramco, which will transform the private firm to a publicly-owned company, could value the oil giant at more than $2tn. This means it could overtake Apple as the world’s largest listed company.
Aramco’s stock market offering, backed by the kingdom’s influential Mohammed bin Salman, aims to reduce the state’s reliance on oil, by utilising proceeds from the flotation to diversify the country’s economy. Analysts estimate that Aramco generated higher revenues than Apple and Microsoft combined in 2014, before the oil crash. Recent cost-saving measures to lessen the adverse impact of the fall in oil prices includes slashing ministers’ salaries and renegotiating up to $20bn of contracts.
Disclosure of the company’s core energy activities is a complex task, as it finances the majority of government spending whilst also being a big domestic employer. Armaco is said to be organising its reporting in line with BP and ExxonMobil; these companies disclose revenue and earnings generated from crude production, refining and petrochemicals. Tom Nelson, head of commodities and resources at Investec Asset Management told the Financial Times, “The market will be cautious unless the information provided is in line with international [financial] reporting standards. There is a risk that the headline excitement will give way to an opaque and frustrating reality.”