According to London Bloomberg News on August 28, a person familiar with the matter said that Saudi Arabia has approved 40 years of concession rights from its state-owned oil company to exploit the Kingdom’s oil and gas reserves as Saudi Aramco is preparing for an initial public offering.
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This agreement replaces the guidelines that were agreed upon when the Kingdom initially agreed to let the company drill for oil since 1933. Saudi Aramco declined to comment, the source said, asking not to mention internal issues.
Since Saudi Aramco completed the acquisition of a local petrochemical company with a majority stake of up to $70 billion, the initial public offering (IPO) has been shelved, and this legal change may not be meaningful at first. But Saudi oil minister Khalid al Falih said last week that Saudi Arabia is still “committed to Saudi Aramco’s initial public offering” when conditions are at its best.
Falih said Riyadh re-issued “long-term exclusive concessions” to state-owned companies as part of the preparations for the initial public offering (IPO). Another person familiar with the matter said that the new 40-year concession includes a 20-year extension and will be extended for another 20 years.
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