ASSESSMENTS

Will Saudi Aramco Fall Prey to a Prince's Politics?

Jan 3, 2018 | 09:00 GMT

A Saudi Aramco oil facility in Dammam, about 450 kilometers east of Riyadh.

A Saudi Aramco oil facility in Dammam, about 450 kilometers (280 miles) east of Riyadh. The company may not retain its competence, efficiency and skilled internal management for long.

(HASSAN AMMAR/AFP/Getty Images)

Highlights

  • Crown Prince Mohammed bin Salman hopes that his push for greater transparency and an initial public offering of Saudi Aramco will boost the massive firm's efficiency.
  • However, his consolidation of power and plans for reform risk undermining the unusual independence and competence that historically have made the national oil company more competitive than its peers.
  • If Saudi Aramco does not preserve its apolitical and technocratic nature, it will have difficulty addressing the many challenges looming ahead.

It's no secret that the engine of Saudi Arabia's massive economy is its energy giant, the Saudi Arabian Oil Co. The company produces nearly all of the kingdom's oil and natural gas, which accounted for 63 percent of the government's revenue last year even amid stubbornly low oil prices and an attempt to diversify away from the energy sector. But a lesser-known (and perhaps more interesting) aspect of the firm is its competence, efficiency and skilled internal management -- characteristics that are rarely found in most national oil companies. The firm may not retain these unique traits for much longer, though. Crown Prince Mohammed bin Salman has begun driving fundamental changes in the kingdom's leadership and oil industry that could blunt Saudi Aramco's edge over its less effective peers in the long run, especially amid the new challenges arising as the company grows into an integrated multinational firm....

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