×
Newsmax TV & Webwww.newsmax.comFREE - In Google Play
VIEW
×
Newsmax TV & Webwww.newsmax.comFREE - On the App Store
VIEW
Tags: saudi | arabia | armamco | oil

Saudi Arabia Grants Aramco 40-Year Oil Concession

Saudi Arabia Grants Aramco 40-Year Oil Concession
(Ruletkka/Dreamstime)

Monday, 27 August 2018 01:29 PM EDT

Saudi Arabia has granted its state-owned oil company a 40-year concession to exploit the kingdom’s hydrocarbon reserves as part of Aramco’s preparation for a potential initial public offering, a person familiar with the matter said.

The pact replaces norms dating in some cases from 1933, when the kingdom first agreed to let companies drill for oil there, the person said, asking not to be named discussing internal matters.  Saudi Aramco declined to comment.

The legal change may mean little initially since the IPO’s been put on hold while Aramco closes a deal to buy a majority stake in a local petrochemical company worth as much as $70 billion. But Khalid al-Falih, the Saudi oil minister, said last week that the kingdom remained “committed to the IPO of Saudi Aramco at a time of its own choosing when conditions are optimum.”

As part of the IPO preparations, Riyadh reissued “a long-term exclusive concession” to the state-owned company, al-Falih said.

In 1933, Riyadh signed a concession deal with several American oil companies, and it was extended in 1939 to 60 years. When Saudi Arabia created the current form of Aramco in 1988, the royal decree stated that the company would enjoy the rights and privileges of the original deal.

The original concession ended in 1999, leaving a legal vacuum. Since then, “Aramco in effect holds an evergreen concession to exploit the reserves of the kingdom in return for a stream of income in the form of taxes, royalties and dividends,” according to a report by the Oxford Institute of Energy Studies.

The legal changes were first reported by the Financial Times.

© Copyright 2024 Bloomberg News. All rights reserved.


Markets
Saudi Arabia has granted its state-owned oil company a 40-year concession to exploit the kingdom's hydrocarbon reserves as part of Aramco's preparation for a potential initial public offering, a person familiar with the matter said.
saudi, arabia, armamco, oil
269
2018-29-27
Monday, 27 August 2018 01:29 PM
Newsmax Media, Inc.

Sign up for Newsmax’s Daily Newsletter

Receive breaking news and original analysis - sent right to your inbox.

(Optional for Local News)
Privacy: We never share your email address.
Join the Newsmax Community
Read and Post Comments
Please review Community Guidelines before posting a comment.
 
Get Newsmax Text Alerts
TOP

Newsmax, Moneynews, Newsmax Health, and Independent. American. are registered trademarks of Newsmax Media, Inc. Newsmax TV, and Newsmax World are trademarks of Newsmax Media, Inc.

NEWSMAX.COM
MONEYNEWS.COM
© Newsmax Media, Inc.
All Rights Reserved
NEWSMAX.COM
MONEYNEWS.COM
© Newsmax Media, Inc.
All Rights Reserved