Saudi Arabia, OPEC's leading oil producer, is not only pushing Saudi Aramco's IPO, but is also shifting the dynamics of oil and gas power within its borders. Over the last few days, the media has reported extensively on the impact of the Ministry of Energy, Minerals and Mining's split on the country's oil strategy. In fact, Saudi Arabia's long-term strategy for oil exports and oil production is unlikely to change dramatically as market fundamentals have cornered the oil empire. The media have also focused on the implementation of the IPO of Aramco as a reason for the changeover. Saudi Arabia is reportedly ready for the first phase of its IPO this year. However, one element of these changes that has not been explored is the internal Saudi power structure, in which Khalid Al Falih, Saudi Minister of Energy and chairman of Aramco, plays a central role. For international media, Al Falih is the main representative of the kingdom, not only in terms of OPEC, but also as a mediagenic personality, familiar with international diplomacy and business relations. His power position, which has so far been fully supported by Saudi Crown Prince Mohammed bin Salman, has been dramatically reduced. Last week's division of Al Falih's main power base, the Ministry of Energy, Minerals and Mines, was evidence of cracks in its seizure of power. Today's announcement that Al Falih has been replaced as chairman of Saudi Aramco, the second downgrade in a week, confirms a significant shock.
Officially, Al Falih is replaced by Yasir Al Rumayyan, chief of sovereign wealth, fund and part of the inner circle of MBS. Saudi officials have stated that Al Rumayyan's appointment as chairman is a step forward in support of the entire IPO process, while clearly separating the Department of Energy (Khalid Al Falih) from the Aramco power plant. Saudi Arabia's official position is that Al Rumayyan is an integral part of the preparations for the IPO. Of course, no discord or power plays are mentioned at the highest level of Saudi leadership.
It is no secret that the Saudi Crown Prince considers an IPO by Aramco to be the cornerstone of his reign. MBS has made efforts in recent years to support the IPO in a uniform manner. Conservative forces within the Saudi royal environment, and in particular within the royal court, the Department of Energy's Energy Department and Aramco, have clearly opposed a hasty IPO process. There were rumors that Al Falih and other MBS had warned that the IPO should be rethinked or its goals reconsidered. These disagreements were largely kept under control by the Saudi leadership. Related: The Saudi Keystone to the East is Real
The recent transformation of Aramco, the Department of Energy, and other major government houses, such as the Saudi State Fund PIF, to The Appointment of a Chief of the Royal Court (Fahad Al Essa) and Chairman of the National Anti-Corruption Commission, Mazen Al Kahmour, is a clear sign of the increasing power of MBS. All newly appointed heads and ministers (including new mineral minister Al-Khorayef, who is a former top manager of the Al-Khorayef group ̵
It seems again that MBS and its supporters, who are all behind the IPO of Aramco and the diversification of the Saudi economy, are stepping up efforts to gain full control of the kingdom. Any objection to the objectives set by MBS or the suspicion that the success of the IPO of Saudi Vision 2030 / Aramco may be restricted or even jeopardized must be completely eliminated or deleted. In the next few weeks, the kingdom will surely move more and more towards a new era. Old structures are dismantled, MBS consolidates its position and gradually reduces the potential opposition.
This strategy has been clear since 2017, as a fight against corruption high-ranking kings, businessmen and brokers behind gold-plated bars in the EU put Ritz in Riyadh. The latter happened shortly after the Davos in the Desert 2017 or the Future Investment Initiative 2017 (FII2017). The killing of Khashoggi FII2018 was a big media problem, but MBS and his plans survived. The current transformation should and can be seen in the light of FII2019 coming very soon. The main story will be a new future for Saudi Arabia, based on success stories such as the PIF and Aramco flotation, all of which are credited to MBS. The media should now focus fully on MBS, with those like Khalid Al Falih becoming increasingly unimportant. The continuing struggle on the oil price market, which began under Al Falih, did not bring any of the additional revenue hoped for by the Kingdom. This time, young talent is needed to support the success of Aramco's IPO saga. The goals have been set and anyone who opposes them will be removed. The removal of Al Falih from the Aramco rudder questions the future of the oil giant. It is a gamble as it breaks with a decade-long tradition in which the Secretary of Energy was also the head of Aramco. There remains the possibility of conservative forces resisting within the government, but every day MBS consolidates its power.
By Cyril Widdershoven for Oilprice.com
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