The Saudi government said Monday it has amended its concession agreement with Saudi Aramco, in its latest step toward the long-delayed initial public offering of the state-owned oil giant.
"The amended concession updates the concession terms and reconfirms Saudi Aramco's exclusive right to develop the kingdom's hydrocarbon resources," the Ministry of Energy, Industry and Mineral Resources said in an email Monday,
Over the last 80 years, Aramco has held the only concession in Saudi Arabia to explore and develop oil and natural gas in the kingdom. The revised concession replaces an agreement going back to 1988 when Aramco was nationalized by royal decree. It produces all of the kingdom's oil and gas except for the Partitioned Neutral Zone which is shared by Saudi Arabia and Kuwait.
Although the ministry would not provide details on the changes to the concession, it said these were among "several important steps undertaken to prepare Saudi Aramco for being listed." These steps include issuing a new hydrocarbons law and slashing Aramco's tax rate from 85% to 50%.
The changes come just a week after the government was forced to rebut suggestions the long-mooted IPO had been canceled. These changes underscore the government's commitment to Aramco's proposed IPO, reiterating a position that the IPO will happen "when conditions are optimum, at a time of its choosing," it said in the statement.
However, the amendments are unlikely to mean any real changes for Aramco or Saudi oil policy.
"Frankly, since the oil in the ground is owned by the state, playing around with concession terms is largely academic. Whoever produces the oil will pay the same taxes and be subject to the government's production policy," said a former adviser to Aramco. -- Adal Mirza, adal.mirza@spglobal.com
-- Edited by Keiron Greenhalgh, newsdesk@spglobal.com