Saudi Aramco’s gigantic disinvestment programme is just around the corner. The country’s young and aggressive Crown Prince Muhammad bin Salman believes the company should be valued at the massive US $2 trillion. This is five times the foreign reserves of a country like India. A five percent disinvestment is meant to fetch a whopping $100 billion. But analysts want to peg the value at a much lower level on the assumption that global moves to decarbonize the energy system will have an adverse impact on Saudi Aramco.
The reverse side of the coin is equally scary. Should attempts at decarbonization gain speed, Saudi Aramco is quite capable of quickening the rate of production from its massive low-cost reserves in a race to burn them up before it is too late.
This however will massively disrupt the oil the market, pushing all other oil companies — including the likes of Shell and BP — to the brink. Even at this point, if the valuations turn out to be lower than expected, then it will have a spin-off impact on the valuation of reserves across the entire oil industry.
This is one disinvestment programme that everyone must keep track of with some trepidation.
When will demand for oil begin to decline?
Some oil industry commentators foresee demand for oil peaking at some point in the 2020s.
Shell’s former Chief Financial Officer Simon Henry said he expects oil demand to peak within the next five to fifteen years.
Goldman Sachs suggests the peak could come as soon as 2024.17 For an industry that has seen consistent demand growth throughout its 150 years of history – except in years of economic
recession – the price dynamics will be fundamentally disrupted whenever the peak occurs.