Aramco IPO ... more delays NOW CANCELED

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Saudi Arabia’s Annual Net Exports (Gb/year, total petroleum liquids) and what I call the ECI Ratio (Export Capacity Index, i.e., the ratio of production to consumption) by Year, 2005 to 2017, BP data:

2005:  3.2 (Gb/year), 5.0 (ECI Ratio)

2006:  3.1, 4.7

2007:  2.9, 4.3

2008:  2.9, 4.1

2009:  2.5, 3.3

2010:  2.5, 3.1

2011:  2.8, 3.4

2012:  3.0, 3.4

2013:  2.9, 3.3

2014:  2.8, 3.1

2015:  3.0, 3.1

2016:  3.1, 3.2

2017:  2.9, 3.1

Est. post-2005 Saudi CNE (Cumulative Net Exports) based on 2005 to 2017 rate of decline in ECI Ratio:

ECI Ratio declined at 4.0%/year, implying that ECI Ratio hits 1.0, and thus zero net exports, around the year 2045.  

Est. post-2005 Saudi CNE (based on 2005 to 2017 data) = 3.2 Gb/year (net exports at apparent export peak) X 40 years (est. number of years to zero net exports) X 0.5 (area under a triangle) less 3.2 Gb (net exports at peak) = Approx. 60 Gb.

CNE Cumulative Net Exports 2006 to 2017 inclusive were about 35 Gb, implying that Saudi Arabia has already shipped more than half of their estimated post-2005 CNE.

Saudi Arabia shipped 5% of estimated post-2005 CNE in 2006, and they shipped 10% of remaining estimated post-2005 CNE in 2017, even though the respective annual volumes were about the same, which of course is an accelerating rate of depletion. In this 12 year time period (2006 to 2017 inclusive), Saudi Arabia shipped about 58% of estimated post-2005 CNE. 

Note that given a finite remaining volume of Saudi CNE, it’s not whether, but to what degree, that we are seeing an accelerating rate of depletion in remaining Saudi CNE. 

Note that their population increased from 25 million in 2005 to 33 million in 2017, as their total liquids consumption increased from 2.2 million bpd in 2005 to 3.9 million bpd in 2017.  Their net exports fell relative to 2005, even as production increased, because the increase in their consumption outpaced the increase in production.  

Note that the ECI Ratio extrapolation for Saudi Arabia in effect assumes a perpetual rate of increase in production.  Given an inevitable production decline, their net export decline rate will really kick into high gear once they see a sustained production decline.  

In any case, if we divide estimated post-2005 CNE at the end of 2005 by 2005 population and estimated remaining post-2005 CNE at the end of 2017 by 2017 population, estimated post-2005 Saudi CNE at the end of 2005 were 2,400 BO per capita and remaining estimated post-2005 CNE at the end of 2017 were 800 BO per capita.   

For the sake of argument, if we assume that the Saudis sell their remaining CNE for about $75 per barrel, they would generate about $60,000 per capita from selling their remaining estimated total volume of CNE.  

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On 8/22/2018 at 11:22 PM, Rodent said:

YES. Aramco IPO a no-go. Saudi Arabia/Aramco properly managed market expectations here, first hinting there were many hoops to jump through, then hinting at a delay, then insisting there was no delay, then hinting it would only be private, then denying that, then suggesting more delays, and so on. Now everyone reads this news and says to themselves, "SEE, I KNEW IT!" People feel vindicated, and not disappointed, because everyone would like to believe that they knew all along these plans were dead in the water.

Way to go KSA!

I have always been telling of petrodollar theory and I never believed even once that KSA can ever put out the reserve figure. So, simply due to the secrecy of reserve figure, I was 100% confident of no-IPO scenario

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