Is Saudi Aramco's Valuation Really US$2 Trillion?

The Saudi Arabian government claims that the valuation of the oil company Saudi Aramco reaches US$2 trillion, equivalent to Rp 26,600 trillion. This figure is almost three times the valuation of Apple Inc., which stands at US$719 billion or Rp 9,562 trillion. The Saudi Arabian government-owned oil company is also almost four times more expensive than Google Inc.'s valuation of US$581 billion, or approximately Rp 7,727 trillion.

According to Wood Mackenzie, Saudi Aramco's valuation is too high and is estimated to be only around US$400 billion, below Amazon.com. This represents a discounted price because Aramco's upstream business valuation is highly sensitive to taxes. Furthermore, the oil price remaining at US$53 per barrel and the emergence of fuel-less vehicles are lowering the oil company's prospects.

One of the objectives of the visit by the King of Saudi Arabia, Salman bin Abdulaziz, to several Asian countries, including Indonesia, is to seek potential investors for Saudi Aramco's planned initial public offering (IPO). The Saudi Arabian oil company will offer 5 percent of its shares to the public, with an estimated funding of US$100 billion, or Rp 1,330 trillion. If this happens, this amount would surpass the funds raised by the Chinese technology company, Alibaba.com, which in 2015 managed to raise US$25 billion from investors.