Hawk aircraft assembly line could play bigger role in Saudi Arabia

BAE Systems reported rising sales and profits in the first half of 2017 as it hopes for further orders for its Typhoon fighter jet to Gulf countries. (Reuters)
Updated 03 August 2017
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Hawk aircraft assembly line could play bigger role in Saudi Arabia

LONDON: A Hawk aircraft assembly line established by British defense giant BAE Systems could be used to bring more aircraft manufacturing to Saudi Arabia.
It comes as defense contractors seeking orders in the Kingdom come under increased pressure to contribute to Vision 2030, the economic diversification strategy being driven by Crown Prince Mohammed bin Salman, deputy premier and interior minister.
The world’s third-largest defense company is supplying its latest batch of 22 Hawk training jets to the Kingdom, under a deal agreed two years ago following an earlier order for 18 of the aircraft.
The final assembly of the planes, which are used to train fighter pilots, will be done in Saudi Arabia, with the first deliveries expected in the third quarter of the year.
“As part of the Hawk batch-two contract, we agreed to establish a final assembly line for Hawk in Saudi Arabia,” said BAE Systems’ international managing director, Guy Griffiths.
“I think it would be self-evident that having established that facility and built 22 Hawk aircraft through it, it would be a great shame if it wasn’t then used for final assembly of other aircraft.”
Saudi Arabia is investing heavily in developing its domestic defense industry as the ongoing war in Yemen drives military spending.
At the same time, the Kingdom aims to create skilled jobs in areas such as aeronautical manufacturing.
“This is all driven by Vision 2030,” said Griffiths. “In every negotiation that’s conducted, whether with us or other defense suppliers, a key component beyond the price and specifications of the product is what is the industrial, training, development and technology transfer contribution that goes with this order? It’s probably the most preeminent part of every negotiation.”
BAE Systems this year delivered the final four aircraft of the 72 planes under its Salam Typhoon program in Saudi Arabia.
It also has a Typhoon support program, and agreed an additional 20,000 flying hours under a contract amendment signed in April.
The company said it had also delivered the first two of 12 Typhoons on order to Oman. The remaining deliveries to Oman are scheduled for the second half of 2017 and 2018.
BAE Systems reported an 11 percent rise in first-half earnings of £945 million ($1.25 billion) on Wednesday, beating analyst estimates.
The earnings were the first to be presented by new Chief Executive Charles Woodburn, who took over from Ian King in July.
The former oil industry executive, who worked for Schlumberger for 15 years, served as chief operating officer at BAE Systems for more than a year before taking up his new role.
He said his leadership will be marked by “evolution, not revolution,” adding: “It’s clear we have the right strategy that harnesses our strengths, so we’ll continue to stay the course.”


‘Get prices down’ Trump tells OPEC

Updated 20 September 2018
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‘Get prices down’ Trump tells OPEC

  • Trump highlights US security role in region
  • Comments come ahead of oil producers meeting in Algeria

LONDON: US president Donald Trump urged OPEC to lower crude prices on Thursday while reminding Mideast oil exporters of US security support.
He made his remarks on Twitter ahead of a keenly awaited meeting of OPEC countries and its allies in Algiers this weekend as pressure mounts on them to prevent a spike in prices caused by the reimposition of oil sanctions on Iran.
“We protect the countries of the Middle East, they would not be safe for very long without us, and yet they continue to push for higher and higher oil prices!” he tweeted.
“We will remember. The OPEC monopoly must get prices down now!”
Despite the threat, the group and its allies are unlikely to agree to an official increase in output, Reuters reported on Thursday, citing OPEC sources.
In June they agreed to increase production by about one million barrels per day (bpd). That decision was was spurred by a recovery in oil prices, in part caused by OPEC and its partners agreeing to lower production since 2017.
Known as OPEC+, the group of oil producers which includes Russia are due to meet on Sunday in Algiers to look at how to allocate the additional one million bpd within its quote a framework.
OPEC sources told Reuters that there was no immediate plan for any official action as such a move would require OPEC to hold what it calls an extraordinary meeting, which is not on the table.
Oil prices slipped after Trumps remarks, with Brent crude shedding 40 cents to $79 a barrel in early afternoon trade in London while US light crude was unchanged at about $71.12.
Brent had been trading at around $80 on expectations that global supplies would come under pressure from the introduction of US sanctions on Iranian crude exports on Nov. 4.
Some countries has already started to halt imports from Tehran ahead of that deadline, leading analysts to speculate about how much spare capacity there is in the Middle East to compensate for the loss of Iranian exports as well as how much of that spare capacity can be easily brought online after years of under-investment in the industry.
Analysts expect oil to trend higher and through the $80 barrier as the deadline for US sanctions approaches.
“Brent is definitely fighting the $80 line, wanting to break above,” said SEB Markets chief commodities analyst Bjarne Schieldrop, Reuters reported. “But this is likely going to break very soon.”