Saudi Aramco Plans World's Biggest IPO • Hacker News Board

Re: Saudi Aramco Plans World's Biggest IPO

#81

Post by velodrome » Thu, Aug 18, 2016, 1:19 AM UTC

makomk wrote: post #57

r00fus wrote: post #5

Earlier quoted context omitted.

Peak Oil, then?

Peak profits from oil. They're desperately trying to sell as much as possible before renwewables eat their lunch. This is why the free market cannot solve global warming by itself - we'd need to leave lots of oil in the ground and countries like Saudi Arabia have a huge amount of latitude to drop prices in order to ensure this doesn't happen. It's not enough to just be cheaper than oil, you need to be cheaper than an…

They're desperately trying to sell as much as possible before renwewables eat their lunch.

This is not the case. It may be in the next 10-20 years but the real reason is due to fracking. The fact is that the US / Canada has added additional supply to the market and no longer imports as much oil from OPEC.

http://www.drillingcontractor.org/wp-content/uploads/2012/04...

Re: Saudi Aramco Plans World's Biggest IPO

#82

Post by dgemm » Thu, Aug 18, 2016, 1:31 AM UTC

adventured wrote: post #46

toomuchtodo wrote: post #28

Earlier quoted context omitted.

And http://rameznaam.com/wp-content/uploads/2015/04/Nature-Clima... As soon as we hit $100/kWh in the next year or two, that oil is worthless [1] (Tesla will supposedly hit this target when the Gigafactory is at full capacity). Clean energy investments year over year: https://assets.bwbx.io/images/users/iqjWHBFdfxIU/iWfsqt_Qmf9... [1] https://flowcharts.llnl.gov/content/energy/energy_archive/en...

That oil will still be worth trillions for the next two decades. It won't be worthless until the global economy has moved very substantially off of oil. It won't even plunge toward worthless until demand begins to dramatically fall off, which isn't going to occur in the next two or three years. The Saudis will likely have time to liquidate a very large portion of Aramco and its oil assets before the market for oil dr…

It won't be worthless but it will be worth less.

Re: Saudi Aramco Plans World's Biggest IPO

#83

Post by mars4rp » Thu, Aug 18, 2016, 1:38 AM UTC

neptunespear wrote: post #72

Saudi Aramco's IPO would never have happened without Prince Mohammad bin Salman (Salman might be the king, and Mohammad bin Nayef might be the crown prince, but MbS is "Mr. Everything") consolidating power and courtiers. Okay, HN, crush my expectations. How is MbS not actually the liberal reformer that western media fawns over and says he is? Also, what odds do you you have on rival factions in the House of Saud gang…

The only thing I can imagine is more wahabisim, more madresa at Pakistan and other poor countries. More ISIS like terrorist groups and more terror, blood and fear for humanity.

Re: Saudi Aramco Plans World's Biggest IPO

#84

Post by lern_too_spel » Thu, Aug 18, 2016, 2:03 AM UTC

velodrome wrote: post #80

Innercode wrote: post #3

This may well be the biggest attempt ever to get out at the right time

The right time ? They should have done this in 2007, when oil was $150/bbl. I would say this is a move of desperation...

The only reason oil is so cheap right now despite much higher consumption than in 2007 is that Saudi Arabia specifically decided to massively increase production, breaking OPEC. They did this because they see the writing on the wall. Better that they get all the remaining money to be made from oil and cut out entirely the people who extract oil less cheaply from shale and other sources.

Re: Saudi Aramco Plans World's Biggest IPO

#85

Post by rrggrr » Thu, Aug 18, 2016, 2:06 AM UTC

andrewjl wrote: post #42

Analemma_ wrote: post #22

If it were possible to get in short on this (it's usually not, right after an IPO), that would be the best investment decision anyone's ever made. $2 trillion is ridiculous. Remember when PetroChina hit $1 trillion market cap in 2007, and it was supposed to be a huge milestone for publicly-traded state oil firms? Now they're at a little over a tenth of that. Every reason to expect that the same thing will happen here…

It's not so cut and dry. One reason Aramco is worth so much is that the cost to extract their remaining reserves (on a per barrel basis) are one third of costs in the U.S. A collapse of oil prices may decimate the energy industry in the developed world (which extracts from offshore or unconventional sources) and would mean Aramco becomes the only supplier. Now obviously they wouldn't be able to raise prices beyond a…

Even if their costs to remove are 1/3 lower its high sulfur and far from consumers, and its priced in dollars. Refining and logistics costs are high.

Re: Saudi Aramco Plans World's Biggest IPO

#86

Post by rrggrr » Thu, Aug 18, 2016, 2:11 AM UTC

Contrarian view. The IPO forces oil producing states to cut production and raise prices or watch the market value global oil (For which the Saudi holdings are proxy) at discounts that will wreak havoc on sovereign and corporate balance sheets. This is a game of chicken.

Re: Saudi Aramco Plans World's Biggest IPO

#87

Post by tw04 » Thu, Aug 18, 2016, 2:29 AM UTC

Gibbon1 wrote: post #67

adventured wrote: post #46

Earlier quoted context omitted.

That oil will still be worth trillions for the next two decades. It won't be worthless until the global economy has moved very substantially off of oil. It won't even plunge toward worthless until demand begins to dramatically fall off, which isn't going to occur in the next two or three years. The Saudis will likely have time to liquidate a very large portion of Aramco and its oil assets before the market for oil dr…

> (by some estimates, they'll be a net oil importer by 2030-2035). That's kind of a 'funny' observation. Saudi Arabia can't ever be an oil importer since the only thing they have to exchange for oil is oil.

I'm fairly certain the rest of the world would be happy to exchange cash for oil or oil for cash.

Re: Saudi Aramco Plans World's Biggest IPO

#88

Post by tw04 » Thu, Aug 18, 2016, 2:36 AM UTC

nostromo wrote: post #35

If the Saudi government thought that the company was a good investment, they would invest in it themselves and reap all the rewards, even if it meant they had to print currency to do so. In other words, they'd continue doing what they've done all along. Instead this seems like an "exit" event. A way to sell at the top and use the funds from the greater fools for other means.

It's a way to diversify their investments for the long-term health of their country. They need other sources of income...

Re: Saudi Aramco Plans World's Biggest IPO

#89

Post by lern_too_spel » Thu, Aug 18, 2016, 2:47 AM UTC

velodrome wrote: post #81

makomk wrote: post #57

Earlier quoted context omitted.

Peak profits from oil. They're desperately trying to sell as much as possible before renwewables eat their lunch. This is why the free market cannot solve global warming by itself - we'd need to leave lots of oil in the ground and countries like Saudi Arabia have a huge amount of latitude to drop prices in order to ensure this doesn't happen. It's not enough to just be cheaper than oil, you need to be cheaper than an…

They're desperately trying to sell as much as possible before renwewables eat their lunch. This is not the case. It may be in the next 10-20 years but the real reason is due to fracking. The fact is that the US / Canada has added additional supply to the market and no longer imports as much oil from OPEC. http://www.drillingcontractor.org/wp-content/uploads/2012/04...

makomk is right. US crude production is dropping since Saudi Arabia increased supply to drop oil prices below what the other suppliers can support. https://ycharts.com/indicators/us_crude_oil_field_production

Re: Saudi Aramco Plans World's Biggest IPO

#90

Post by paulddraper » Thu, Aug 18, 2016, 2:57 AM UTC

codecamper wrote: post #73

tcoppi wrote: post #71

Earlier quoted context omitted.

There are other uses for oil besides gasoline that are not going to be displaced anytime soon. Jet fuel, home heating(could be if solar gets exceptionally cheap, but unlikely anytime soon), asphalt, plastics, etc. Those uses alone probably can't support oil at even its current depressed prices, but it will hardly be worthless for decades to come.

heating with oil is expensive. solar panels actually can heat well. just heat a block of concrete. the concrete is the battery. electrodacus is doing this now.

Solar panels heat well in sunny weather. Which is the opposite of when you need heat :)