Saudi Arabia's US$2 trillion Aramco vision runs into market reality

Analysis based on oil reserves and cash-flow projections suggests the oil producer may be a fifth of that amount


SAUDI Arabia has said oil giant Saudi Aramco is worth more than US$2 trillion, enough to consume Apple Inc twice, and still have room for Google parent Alphabet Inc.

The kingdom may have to settle for less. A lot less.

Industry executives, analysts and investors told Bloomberg their analysis - based on oil reserves and cash-flow projections under different tax scenarios - suggests Aramco is worth no more than half, and maybe as little as a fifth, of that amount.

This means Saudi Arabia would earn a fraction of the US$100 billion implied by its valuation if it sells 5 per cent to the public in 2018, as planned.

For example, Wood Mackenzie came up with a rough valuation of Aramco's core business...

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