According to Alexei Kutrin, speaking at the SPIEF economic forum this week, “The oil sector should be fully privatized in the next 7-8 years. No state companies are required there now as the statehood brings more harm than benefit to those companies.”
He added that oil companies are able to deal with business issues without assistance from the state.
The Saudi Arabian Oil Co., or Aramco, with an estimated value of over $2 trillion, is going public.
The exact value of the nationally-owned company has never been officially provided by Saudi Arabia, but because of the upcoming partial privatization — a move to prepare the country for a post-oil era — the book value might soon be public.
Oil revenue, which accounts for 90 percent of Saudi Arabia’s export earnings, and half its GDP, has decreased in recent years, and this decrease has resulted in an almost $200 billion budget shortfall.
Prince Mohammad bin Salman of Saudi Arabia plans to sell “less than 5 percent” of Aramco, and begin a phase of investment-generated earning.
That 5 percent equates to around $100 billion — the largest public offering in history, much larger than Alibaba, which has held the record since 2014 for its $25 billion IPO.
A phenomenon known as “jingle mail,” where home-owners faced with mortgages they cannot pay mail their keys back to the bank, may be taking place in Alberta’s slumping economy, concerning the Canadian federal government.
The name of the game is “strategic default” — where those who have recently bought houses but have not paid for them find walking away more attractive than trying to pay off the rest of their investment.
The number to watch for is 20 percent, according insolvency experts. When high-end house prices drop that much, people start to consider the option.
This is because the downpayment on a house is also usually around 20 percent and, unlike all other Canadian provinces, the home owners often suffer no liability when they take this course since non-recourse residential mortgages are so common in Alberta. Lenders cannot take the home owner to court to seize their other assets.
The peak for housing prices in Alberta was in 2014, so many new house buyers are now under water. Their mortgages are higher than house appraisals for the houses purchased during the industrial boom that has now passed.
Since 2014, oil prices have plummeted and many Albertans who had been taking home above-average incomes are now without job prospects in their fields.
Jingle mail also was sent in the province in the 1980s when a trend of leaving Alberta for work in other provinces began.
This time, according to bankers, it has started in towns like Grande Prairie and Fort Mac, where many people are involved in servicing the oil and gas industry in one way or another.
By Andy Stern