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Illustration: Sarah Grillo/Axios
Saudi Aramco's troubled IPO plan is increasingly looking dead, or at least in a deep freeze, but the Saudis pushed back against those reports late last night.
Driving the news: Reuters, citing "four senior industry sources," reported yesterday that Saudi Arabia had called off the plan to sell about 5% of the company.
Why it matters: The kingdom had hoped to raise tens of billions of dollars through the IPO to help fund initiatives to diversify its oil-dependent economy away from crude oil sales.
But the plan to sell about 5% of the company has been beset with delays, indecision about an international listing venue, and related questions about the Saudis' appetite for the transparency that comes with going public.
Yes, but: Khalid Al-Falih, the Saudi energy minister, pushed back against yesterday's obits for the plan. "The Government remains committed to the IPO of Saudi Aramco at a time of its own choosing when conditions are optimum," he said.
One big question, via Axios' Dan Primack: The IPO's seeming demise, or at least deep freeze, could be good or bad news for the prospect of the Saudis bankrolling CEO Elon Musk's plan to take Tesla private.
The intrigue: The fate of the IPO appears to be bound up in a separate transaction — Aramco's potential purchase of a controlling stake in the petrochemical firm Saudi Basic Industries Corp. (SABIC) from the kingdom's sovereign wealth fund.
Randy Bell, director of the Atlantic Council's Global Energy Center, tells Axios that the delay is a good development...
"There has been tremendous skepticism in the analyst community about the IPO as it would have been hard for transparency and legal reasons. There were also concerns about meeting the target valuation."
"A delay suggests that Saudi leadership recognizes the challenge and is going to wait until they get it right to proceed. That should give the investor community more confidence in the country over the long run."
"If Aramco does not go public and the company maintains its independence from the Saudi government — as it has for almost 40 years — it will continue to benefit as the one major oil company that is not beholden to short-term financials."
Jim Krane of Rice University’s Baker Institute for Public Policy says that while the rationale behind the IPO — raising money to diversify the economy — remains sound, the plan itself turned out to be "flawed." In comments circulated to reporters, Krane says...
“The public saw it as a misguided sell-off of the national patrimony. Aramco executives worried that the company's vaunted autonomy and long-term planning would be sacrificed to meet short-term demands of shareholders."
Two items caught my eye that underscore the sheer scale of the resource demands and challenges that come with the U.S. shale boom...
Sand: A report from IHS Markit predicts "extreme" growth in sand needed for fracking operations in the country's major shale basins over the next 5 years, main due to expanded drilling and larger amounts needed per lateral foot of the wells.
Water: A new Wall Street Journal feature looks at a trend in water management. They report that young, private-equity backed companies are moving in to help oil-and-gas companies deal with huge wastewater volumes.
My colleague Amy Harder writes ... Colorado’s candidates for governor from each party, speaking at an industry event in Denver on Wednesday, both expressed opposition to a likely ballot initiative that would significantly curtail oil and gas production in the state.
Why it matters: The opposition shows the influence and large economic footprint of the oil and gas industry in Colorado despite intense environmental and local resistance to increased development. Colorado, an important political battleground, is America’s fifth-largest gas-producing and seventh-largest oil-producing state.
Driving the news: The initiative would increase a buffer zone between buildings and future drilling from 500 feet to 2,500 feet, and expand it to other "vulnerable" areas, which could encompass rural areas. It's waiting for final state approval to make the ballot; backers are confident they have needed signatures.
The intrigue: Polis’ position represents a nearly 180-degree turn. He helped fund a similar initiative in 2014, only to back off as he and Gov. John Hickenlooper, a Democrat, agreed to create a task force, which hasn’t put concerns to rest as wells continue to pop up around neighborhoods.
Go deeper: An important oil-and-gas fight in Colorado.
Axios' Andrew Freedman reports ... A Danish cargo container vessel is about to set out on a voyage that will be a milestone in the opening of Arctic waters to marine shipping — and it's a direct result of climate change.
Why it matters: The Arctic has been warming at least twice as fast as the rest of the globe, and sea ice has declined sharply since 1979. As the ice melts, Arctic shipping routes are becoming more attractive as an alternative to sailing through the Suez Canal.
The details: Danish shipping giant Maersk will send the first cargo container vessel unaided through the Arctic's Northern Sea Route, departing from Vladivostok this week and passing the Bering Strait on Sept. 1.
Read more of Andrew's piece in the Axios stream.
“I try, in my day to day work with Republicans, to... stay away from using the words ‘climate change.’”— Democratic Sen. Martin Heinrich of New Mexico
The context: That's part of a long interview with Heinrich on the new episode of Greentech Media's Political Climate podcast.
Why it matters: The comment underscores how some climate advocates tailor their message to try and widen support for climate-friendly energy initiatives.
Reality check: Ultimately, policies strong enough to ensure very deep, economy-wide emissions cuts will need to be openly based on the dangers of global warming.
Flashback: There's a years-long history of trying to advance climate policies with this tactic. Back in 2010, when sweeping climate legislation still had a faint pulse, then-Sen. John Kerry said this about his cap-and-trade plan:
“What we are talking about is a jobs bill. It is not a climate bill. It is a jobs bill, and it is a clean air bill. It is a national security, energy independence bill.”