The legal change may mean little initially since the IPO has been put on hold while Aramco closes a deal to buy a majority stake in a local petrochemical company worth as much as $70 billion. But Khalid al-Falih, the Saudi oil minister, said that the kingdom remained “committed to the IPO of Saudi Aramco at a time of its own choosing when conditions are optimum.”
In 1933, Riyadh signed a concession deal with several American oil companies, and it was extended in 1939 to 60 years. When Saudi Arabia created the current form of Aramco in 1988, the royal decree stated that the company would enjoy the rights and privileges of the original deal.
The previous concession ended in 1999, leaving a legal vacuum. Since then, “Aramco in effect holds an evergreen concession to exploit the reserves of the kingdom in return for a stream of income in the form of taxes, royalties and dividends,” according to a report by the Oxford Institute for Energy Studies.
The legal changes were first reported by the Financial Times.