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The deputy crown prince of Saudi Arabia, Mohammed bin Salman, made a momentous announcement in early January about the kingdom's energy company, Saudi Aramco. He told The Economist he supported floating shares of the company, essentially opening it up to outside investment.
It's a step towards partially privatizing Saudi Aramco, which is easily the largest energy company in the world based on its oil reserves, but it is also Saudi Arabia's main source of revenue. With oil prices down, the deputy crown prince is tapping the most sensitive and important Saudi institution for reform at a time of major change in leadership from the older generation of Sauds to the next generation.
Jean-François Seznec, a non-resident fellow at the Atlantic Council and a managing partner of the Lafayette Group, says dropping oil prices are a major reason for this potential change. As the government decreases subsidies on gasoline, for example, the royal family is under pressure to show that the kingdom's oil revenues are accounted for and well-spent.
What you'll learn from this segment
- What part of the company may actually open for investment.
- What kind of transparency we can expect.
- How potential Saudi Aramco investors currently feel.