KSA to diversify oil economy to slow climate change

Updated 11 November 2015
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KSA to diversify oil economy to slow climate change

OSLO: Saudi Arabia, the world's largest crude oil exporter, plans to diversify its economy to help combat climate change in a move that could reduce expected carbon emissions by up to 130 million tonnes a year by 2030, the government said on Tuesday.
Saudi Arabia is the last of the Group of 20 major economies to submit a plan to the United Nations before a summit in Paris from Nov. 30-Dec. 11 about ways to slow global warming.
It said it was aiming "to achieve mitigation co-benefits ambitions of up to 130 million tons of carbon dioxide equivalent avoided by 2030 annually through contributions to economic diversification and adaptation."
The Kingdom did not give details of its emissions.
The mere submission of a plan by Saudi Arabia, which says its economy is threatened by a global shift from fossil fuels to renewable energies, is a positive sign for Paris.
"Thanks Saudi Arabia," Christiana Figueres, head of the UN Climate Change Secretariat, wrote in a Tweet, saying it was the 158th such national plan meant to combat heat waves, floods, droughts, downpours and rising sea levels.
Saudi Arabia said its plan was based on a main scenario in which it would diversify the economy with a "robust contribution" from export earnings from oil.
Earnings would be channeled into lower emission sectors "such as financial services, medical services, tourism, education, renewable energy and energy efficiency technology to enhance growth," it said.
An alternative scenario, not planned for now, would involve using more oil at home to fuel carbon-intensive industries such as petrochemicals, cement, mining and metal production, it said, thereby increasing domestic rather than overseas emissions.
It said it aims to use energy more efficiently and invest in solar, wind and geothermal power.
Saudi Arabia said in April it aimed to save the equivalent of 1.5 million barrels of oil a day through efficiency measures, limiting domestic consumption to sell more oil abroad.
Saudi Arabia's climate plan says it aims to build a plant capturing and using 1,500 tons of carbon dioxide a day for use in other petrochemical plants. It would operate a pilot plant at the Othmaniya oil reservoir.
The Kingdom has previously launched a pilot project to use solar energy to desalinate energy intensive seawater.
The government would also encourage investments in natural gas. It would seek to adapt to climate change, with measures ranging from reducing desertification to improving public transport.


OPEC cut ‘biggest in almost 2 years’

Updated 58 min 42 sec ago
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OPEC cut ‘biggest in almost 2 years’

  • OPEC said in a monthly report its oil output fell by 751,000 barrels per day (bpd) in December to 31.58 million bpd
  • OPEC expects 2019 global oil demand growth to slow to 1.29 million bpd from 1.5 million in 2018

LONDON: OPEC said on Thursday it had cut oil output sharply in December before a new accord to limit supply took effect, suggesting producers have made a strong start to averting a glut in 2019 as a slowing economy curbs demand.
The Organization of the Petroleum Exporting Countries said in a monthly report its oil output fell by 751,000 barrels per day (bpd) in December to 31.58 million bpd, the biggest month-on-month drop in almost two years.
Worried by a drop in oil prices and rising supplies, OPEC and its allies, including Russia, agreed in December to return to production cuts in 2019. They pledged to lower output by 1.2 million bpd, of which OPEC’s share is 800,000 bpd.
The reduction in December means that should OPEC fully implement the new Jan. 1 cut, it will avoid a surplus that could weaken prices. Oil slid from $86 a barrel in October to below $50 in December on concerns of excess supply.
OPEC expects 2019 global oil demand growth to slow to 1.29 million bpd from 1.5 million in 2018 although it was more upbeat about the economic backdrop than last month and cited better sentiment in the oil market, where crude is back above $60.
“While the economic risk remains skewed to the downside, the likelihood of a moderation in monetary tightening is expected to slow the decelerating economic growth trend in 2019,” OPEC said.
“This has recently been reflected in global financial markets. The positive effect on market sentiment was also witnessed in the oil market,” it said.
The supply cut was a policy U-turn after the producer alliance known as OPEC+ agreed in June 2018 to boost supply amid pressure from US President Donald Trump to lower prices and cover an expected shortfall in Iranian exports.
OPEC changed course after the slide in prices starting in October. A previous OPEC+ supply curb starting in January 2017 — when OPEC production fell by 890,000 bpd according to OPEC figures — got rid of a glut formed in 2014-2016.
In a sign of excess supply, OPEC’s report said oil inventories in developed economies had stayed above the five-year average in November.
The biggest drop in OPEC supply last month came from Saudi Arabia and amounted to 468,000 bpd, the survey showed.
Saudi supply in November had hit a record above 11 million bpd.
The Kingdom told OPEC it lowered supply to 10.64 million bpd in December and has said it plans to go even further in January by delivering a larger cut than required under the OPEC+ deal.
The second-largest was an involuntary cut by Libya, where unrest led to the shutdown of the country’s biggest oilfield.
Output from Iran posted the third-largest decline, also involuntary, as US sanctions that started in November discouraged companies from buying its oil.
Iran, Libya and Venezuela are exempt from the 2019 supply cut deal and are expected by some analysts to post further falls, giving a tailwind to the voluntary effort by the others.
OPEC said in the report that 2019 demand for its crude would decline to 30.83 million bpd, a drop of 910,000 bpd from 2018, as rivals pump more and the slowing economy curbs demand.
Delivering the 800,000 bpd cut from December’s level should mean the group would be pumping slightly less than the expected demand for its crude this year and so avoid a surplus. Last month’s report had pointed to a surplus.
The figures for OPEC production and demand for its crude were lowered by about 600,000 bpd to reflect Qatar’s exit from the group, which now has 14 members.