Tuesday, April 05, 2016

Looking for someone to carry the bag

Saudi Arabia has seen the writing on the wall, and is planning to get out of the oil industry:

Saudi Arabia is planning to establish a $2tn (£1.4tn) sovereign wealth fund by selling off its state petroleum assets in preparation for a world beyond oil.

Greenpeace said it was a pivotal moment akin to Switzerland abandoning banking, but others claimed Riyadh had long wanted to diversify its economy and spread its wealth though it had failed to do so.

If the fund was built up to $2tn, it would be more than double Norway’s sovereign wealth fund, regarded as the largest in the world by assets.

The move was revealed by the country’s powerful deputy crown prince, Mohammad bin Salman, and would mean the desert kingdom using its public investment fund (PIF) to buy up strategic financial and industrial assets abroad.

Or, more cynically, they're looking for someone to carry the bag. With climate change getting worse and worse, fossil fuels have no future, which means that countries dependent on them, like Saudi Arabia, have no future either. So they're looking for a sucker to pay good money for their soon-to-be-valueless assets and take the hit when they collapse in value. The question is whether they'll find anyone...