Aramco Could Lose $500b as Climate Change Accord Impacts IPO

While Crown Prince Mohammed bin Salman is pushing Saudi Aramco to add value to $2 trillion to prepare for its IPO next year, a Washington-based research group has revealed that policies to reduce global warming may lower the company’s value by 40%.

The Oil Change International Research Organization reported that policies designed to comply with the Paris Climate Agreement —which aims to keep global warming below 2° C— could reduce the value of Aramco stocks, Middle East Monitor reported.

“The New York and London stock exchanges are competing to list Aramco shares, but I do not think they give enough attention to the potential for an increase in oil price risk and climate risk to investors,” said Greg Muttit, a senior advisor of the Oil Change Corporation, according to the Financial Times newspaper, which indicated that Aramco refused to comment on these forecasts.

The Saudi Crown Prince, is currently leading a plan to restructure the Saudi economy by 2030 and the Aramco IPO is a key issue within that plan. Analysts have estimated the Saudi oil giant’s value between $880 billion and $1.1 trillion.

Yet even if Aramco misses its target of $1 trillion, the company is may still be able able to achieve $50 billion of equity sales, which would making it the largest IPO in the world.