I was surprised to see that the Saudis are considering selling shares in Aramco - I wonder if the House of Saud is about to make a strategic retreat to their palaces on the Riviera?
[NB It is entirely possible I have been reading too much Robert Baer and watching too much Adam Curtis].
Best explanation I've read is an IPO boosts the Saidi treasury so it can last until 2025 under the current oil prices. Current projectIons without the IPO only show the treasury lasting until 2020 before Saudi Arabia has to issue debt to cover their spending. It seems unlikely foreigners will service Saudi debt without high interest rates and even so, Saudi would not be able to pay it back. If Saudi Arabia can make it to 2025, it seems highly likely the decade of cheap oil will have destroyed the fraking/tar-sands oil company holdouts in the U.S.
The House of Saud is one of cards, and they know it. Their social contract is one of regular, large oil payments to citizens, not patriotism. This social contract will die when the money does, and so too will the nation. Money can paper over a broken society, but it won't build the sort of national unity you need for a successful nation state.
Maybe the Aramco thing is just part of this fire sale to try and prop everything up on the hope that, in the long term, a rise in oil prices will come to their rescue?
Is frakking best looked at as a bunch of capital trying to hold out against low prices? Seems like it is a technology that won't be forgotten in just 10 years.
A lot of possible reasons - a bug out fund, paying for other people to do their fighting for them if a war kicks off with Iran, propping up their troubled economy, paying off Wahhabis...
[NB It is entirely possible I have been reading too much Robert Baer and watching too much Adam Curtis].