Saudi Shura Council Asks Capital Markets Authority to Study Aramco IPO

The Shura Council meets on Tuesday. (SPA)
The Shura Council meets on Tuesday. (SPA)
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Saudi Shura Council Asks Capital Markets Authority to Study Aramco IPO

The Shura Council meets on Tuesday. (SPA)
The Shura Council meets on Tuesday. (SPA)

Saudi Shura Council called on Tuesday for a study of the effects the Aramco IPO will have on the local stock market to protect it from the concentration of liquidity in the company.

During a meeting, chaired by Deputy Chairman Mohammed al-Jafri, the Council called on the Capital Markets Authority (CMA) to develop the mechanism for compensating the affected shareholders as a result of violations of the financial market system and its regulations.

The Council adopted its decision after listening to the Finance Committee's view on the comments and opinions of the members on CMA's annual report for the last financial year.

In its decision, the Council called for intensifying the Authority's efforts to raise investor confidence, bolster opportunities to attract investments and stimulate the owners of family businesses by clarifying the financial benefits of listing their companies in the market.

The Shura stressed the importance of identifying the effects of low cash in the capital market and reducing its impact on the future activity of the financial market and studying the effects of Aramco IPO in the local stock market.

The Council endorsed the Committee's view that the size of Aramco's offering, which is 5 percent of its shares, represents the largest IPO in history in terms of financial value.

The local market is not expected to absorb an initial offering of this size, confirming that foreign investors entering the financial market will contribute in introducing new liquidity into the economy that could be channeled to stimulate growth in other promising sectors.

An additional recommendation by Council member Khalid al-Aqeel stating that "Saudi companies and individuals are entitled to the largest share of the IPO in Saudi Aramco" was not approved.

The Council also called for the Institute of Public Administration to design and implement programs to train public workers involved with the implementation of the "National Transformation Program 2020" and the realization of Vision 2030.



BP Warns of 4th Quarter Profit Hit as Production and Refining Margins Fall

Logo of British Petrol BP is seen at a petrol station in Pienkow, Poland, June 8, 2022. REUTERS/Kacper Pempel/File Photo
Logo of British Petrol BP is seen at a petrol station in Pienkow, Poland, June 8, 2022. REUTERS/Kacper Pempel/File Photo
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BP Warns of 4th Quarter Profit Hit as Production and Refining Margins Fall

Logo of British Petrol BP is seen at a petrol station in Pienkow, Poland, June 8, 2022. REUTERS/Kacper Pempel/File Photo
Logo of British Petrol BP is seen at a petrol station in Pienkow, Poland, June 8, 2022. REUTERS/Kacper Pempel/File Photo

BP warned on Tuesday that lower production, weak refining margins and sluggish trading would see its profit in the fourth quarter of 2024 fall from the previous three months.
Since taking the helm a year ago, CEO Murray Auchincloss has scaled back the firm's energy transition strategy in an effort to boost profits and regain investor confidence as BP's share lags behind its competitors, Reuters reported.
A capital markets event previously scheduled for Feb. 11 in New York will instead take place on Feb. 26 in London, BP said, as Auchincloss is recovering from a planned medical procedure.
BP said the drop in refining margins and a higher impact from turnaround and maintenance activity would result in a quarter-on-quarter drop in profit of up to $300 million, while realizations in its oil production and operations unit could lead to a further reduction of $200 million to $400 million. It also expects a drop in upstream production.
The company's third quarter underlying replacement cost profit, the company's definition of net income, was $2.27 billion, already the weakest since the fourth quarter of 2020, when profits collapsed during the pandemic.
Global demand for gasoline and diesel has fallen short of expectations, while the launch of new oil refineries in Asia and Africa has resulted in oversupply.
Last week, Shell warned of weakness across multiple divisions, while Exxon Mobil signaled a $1.75 billion drop in fourth-quarter earnings.
BP, which will release fourth quarter results on Feb. 11, expects its net debt at end-December to have fallen from the end of the previous quarter. Exploration write-offs are seen falling by $100 million to $200 million.