Saudi Aramco, the largest oil company in the world and listed on the local stock exchange, recovered two trillion dollars during trading on Wednesday, October 6, 2021, and thus its financial value outperformed the five largest Arab economies, namely Saudi Arabia, the UAE, Qatar, Egypt and Iraq, according to the "Forbes" classification.
Aramco has continued to achieve more profits since the beginning of this year, as Aramco's net income in the first half of this year amounted to 176.9 billion Saudi riyals ($ 47.2 billion), an increase of 103% over the same period in 2020.
According to the Saudi “Al-Eqtisadiah” newspaper, “The market value of Saudi Aramco reached, during trading on Wednesday, October 6, in the Saudi stock market, $2.026 trillion.
She added that, according to the monitoring of the economic reports unit in the newspaper, Saudi Aramco surpassed Google ($1.783 trillion) to become the third largest listed company in the world in terms of market value, after it was fourth.
The newspaper confirmed that Apple and Microsoft are ahead of Saudi Aramco, with a market value of $2.333 trillion and $2.17 trillion, respectively, noting that the rise in Saudi Aramco shares coincided with the jump in oil prices, exceeding $83 a barrel, the highest crude levels since October. 2018.
And based on the data of the financial market company "Tadawul", which operates the Saudi Stock Exchange, this is the first time that the company has regained the levels of two trillion dollars since December 2019, with the beginning of its listing on the market.
IPO
In August 2021, Amin Nasser, Aramco's CEO, was optimistic about the company's performance in the remaining months of 2021.
Al-Nasser said, in press statements, that the company's results for the second quarter reflect a strong return to global energy demand, and that there is increasing confidence that the next phase will be better.
Al-Nasser added that the company entered the second half of 2021 and is more flexible and able to adapt, especially with the strengthening of the global recovery, as the easing of Corona restrictions, the availability of vaccines, stimulus measures, and the return of economic activity contributed to achieving these results.
Economist Ali Hussein Al-Enezi believes that the plan to offer part of Aramco for public subscription made the company close to the Saudi citizen, and there was an evaluation of this company in global markets through the supply and demand for shares.
In his interview with "Al-Khaleej Online", Al-Enezi indicates that the Saudi citizen has become linked to this company, which organizes production for the largest strategic commodity in the world, and which generates huge financial returns on Saudi Arabia, as well as the citizen is the owner of shares in this company, and the rise and fall of shares affects the wealth of citizens in a way or another.
The Saudi government listed the company’s shares on December 10, 2019, at an offering price of 32 riyals ($8.53), valuing the company at $1.706 trillion.
The listing came after the government offered a share of the company to the public in the largest initial public offering in history, after it raised $25.6 billion, surpassing the Chinese company "Ali Baba".
The Saudi government's move came as part of its economic reform program aimed at diversifying sources of income away from oil, which was launched in 2016, and includes the sale of many government assets and the offering of several government companies for subscription.
In the second quarter of this year 2021, Saudi Aramco achieved the highest quarterly net profit since its listing in the Saudi market at the end of 2019, as the second quarter net profit grew by 287.8% to reach 95.47 billion riyals.
How are the profits made?
Aramco is one of the most important oil companies in the world, and it has a concession to extract 10 million barrels of oil, as well as billions of cubes or metric tons of natural gas, according to economist Ali Hussein Al-Anzi.
Al-Enezi considered that "the ingredients for that success came from Saudi Arabia's prudent policy in managing the oil price file through OPEC and through its Russian partners, so there was a balance in oil prices and a very great control over these prices, so that they are good for either the consumer or the producer."
While the Saudi expert in the field of energy, Engineer Imad bin Ramal, believes that the most important factors that help Aramco achieve net profits and high at this level are the low cost of producing a barrel of oil globally at a value of $4, and the proximity of Saudi crude fuel to the layers close to the ground. This facilitates the extraction of oil.
In his interview with Russian Sputnik, Bin Ramal explains that the company is working according to a strategic plan that enables it to line up at the forefront of the largest international companies, in addition to its entry into gas production and the petrochemical industry, and the latter adds $15 to the profits of producing one barrel of oil.
Aramco and the Arab economy
With Aramco exceeding $2 trillion, it has surpassed the total gross domestic product of Saudi Arabia, the UAE, Egypt, Iraq and Qatar, which amounts to $1.957 billion, according to Forbes magazine estimates.
While the gross domestic product of the Arab countries combined during the year 2020 amounted to about 2.39 trillion dollars, according to data of the International Monetary Fund and Arab statistical bodies.
In this context, Al-Enezi asserts that Aramco has surpassed the five largest Arab economies and dozens of small economies, as it is one of the largest companies and owns the largest franchise rights in the world and its value is equivalent to whole countries.
In its report, Forbes expected that Saudi Arabia would maintain its first position among the largest Arab economies in 2021, as current figures so far indicate that the Saudi gross domestic product will reach $804.9 billion.
Forbes relies on its classification on the gross domestic product as a measure of the performance of economies, and if Saudi Arabia continues to perform, it is expected to come first for the year 2021 for the second year in a row as the strongest economy at the Arab level.
The Saudi GDP, in current figures, amounted to $804.9 billion this year, compared to $701.5 billion in 2020, which witnessed many major obstacles caused by the Corona pandemic and the collapse of oil markets globally.
According to the Forbes classification, which was based on International Monetary Fund estimates, the UAE advanced to the second place in the Arab list in 2021, where the total gross domestic product is expected to reach $401.5 billion, after it reached $354.3 billion in 2020.
As for Egypt, it fell one rank this year compared to the previous year, to rank third, with a gross domestic product of $394.3 billion in 2021, compared to $361.8 billion in 2020.
Iraq still ranks fourth, with a gross domestic product of $190.7 billion in 2021, compared to $172.12 billion in 2020.
As for Qatar, it ranked fifth for the year 2021, with a gross domestic product of $166 billion, compared to $146.1 billion in 2020.
It should be noted that Aramco is one of the most important companies in the world in terms of financial value, and the state owns most of the shares in it. Saudi Aramco contributes about 12.5% of global oil production, according to an annual report of the company dating back to 2016, and it has 261.1 billion barrels of oil in proven reserves.
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