Speaking with MEES, AGSIW Senior Resident Scholar Karen E. Young commented on Saudi Aramco’s initial public offering, saying there is a trend of “management consultants advising Gulf states to sell-off state oil company assets. [National oil companies] are getting similar advice across the region for a couple of reasons: they share advisors, and from a transaction perspective, it’s fairly straight forward. It’s an easy way to generate investor interest and a new revenue stream and it takes nothing away from the original revenue source – the oil.” She additionally noted, “The sell-off has begun with energy assets because they are within organizations that are probably best institutionalized to handle the transactions, the assets are linked to the source of government revenue, but do not risk a wholesale threat to sovereignty. It’s a safe and lucrative place to start with privatizations.”

Young also commented on the Saudi government’s promise to adjust Aramco’s taxation to bring in investors: “I think the fact that Aramco has suggested this tax reform suggests that there is not a lot of guidance from the state on how it views the company after its partial sale.” She continued, “There are clearly some tensions in how the state will relinquish even partial ownership and this tax flexibility based on increased tax revenue in times of high oil prices suggests a way to sweeten the deal in favor of the government. As an investor, however, this tax proposal introduces another layer of complexity in the state-firm relationship, making further revenues less accessible to the investor. It also politicizes the state’s interest in the oil company, creating incentives – beyond existing ones – for Saudi Arabia to move to support oil prices in times of fiscal deficit.”