• Saudi Aramco has its oil rights cut from perpetual to 40 years as part of reported power struggle

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      Patrick Lavery

      Combustion Industry News Editor

The Financial Times has reported that Saudi Aramco, the state-owned energy company which has been preparing for a huge flotation on a stock market, has had its ‘in perpetuity’ oil rights in the country cut to 40 years. As the FT sees it, the move is a reflection of a power struggle within the kingdom, as rival factions within the royal family jostle with each other. But it is officially a part of the preparation for the initial public offering of shares, with energy minister Khalid al Falih (a former chief executive of Saudi Aramco) stating that the new contract is “one of several important steps undertaken to prepare Saudi Aramco for being listed”. Reports have been mounting in recent months that the flotation may not go ahead, and Mr Falih’s claim that the government is planning on proceeding with it “when conditions are optimum, at a time of [our] choosing” seems to indicate that conditions are not optimum now and it is unclear when they will be. The 40 year concession is twice as long as most other oil companies enjoy throughout the rest of the world, but it may still act to increase oil output from the country in the medium term.