SAMA to launch virtual riyal for banks

Updated 06 October 2017
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SAMA to launch virtual riyal for banks

JEDDAH: The Saudi Arabian Monetary Agency (SAMA) will implement a pilot project to issue a virtual/digital currency that will be traded exclusively among banks to avoid any economic impact, SAMA Governor Ahmed Al-Khulaifi has revealed.
SAMA will also study the positive aspects of the practice and consider whether or not it will continue.
Al-Khulaifi ruled out any plan to issue a digital currency for trading between individuals and companies, adding that the Saudi banknotes currency will be dispensed with the coins.
Quoted by Al-Hayat daily, Al-Khulaifi said in a press conference at SAMA headquarters in Riyadh on Wednesday that "The Saudi Riyals banknotes currency will be dispensed and one Riyal category will be issued into coins instead in the next stage."
He also confirmed that SAMA "provided all equipment needed for the issuance and circulation of the Riyal coins as it will be available at the headquarters of the agency, its branches and the entire banking sector."
Al-Khulaifi was surprised by the decline experienced by the Saudi riyals in futures exchange. He said he sees no reason for that as he described liquidity in the banking system as good.
He pointed out that "private consumption expenditure exceeded trillion riyals last year, an increase of 5 percent compared to 2015, while government consumption expenditure amounted to SAR16 billion."
He also disclosed that the average per capita private consumption amounted to SAR33,000 last year.
He described SAMA's reserve assets as "still good, it amounted to SAR1.8 trillion in August. They cover more than 30 months of Saudi imports of goods and services and account for more than 70 percent of GDP."


Asia’s refining profits slump as Mideast exports surge

Updated 23 February 2019
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Asia’s refining profits slump as Mideast exports surge

  • Since 2006, the Asia-Pacific has been the world’s biggest oil-consuming region, led by industrial users South Korea and Japan along with rising powerhouses China and India
  • However, overbuilding of refineries and sluggish demand growth have caused a jump in fuel exports from these demand hubs

SINGAPORE: Asia’s biggest oil consumers are flooding the region with fuel as refining output is exceeding consumption amid a slowdown in demand growth, pressuring industry profits.
Since 2006, the Asia-Pacific has been the world’s biggest oil-consuming region, led by industrial users South Korea and Japan along with rising powerhouses China and India.
Yet overbuilding of refineries and sluggish demand growth have caused a jump in fuel exports from these demand hubs.
Compounding the supply overhang, fuel exports from the Middle East, which BP data shows added more than 1 million barrels per day (bpd) of refining capacity from 2013 to 2017, have doubled since 2014 to around 55 million tons, according to Refinitiv.
Car sales in China, the world’s second-biggest oil user, fell for the first time on record last year, and early 2019 sales also remain weak, suggesting a slowdown in gasoline demand.
For diesel, China National Petroleum Corp. in January said that it expected demand to fall by 1.1 percent in 2019. That would be China’s first annual demand decline for a major fuel since its industrial ascent started in 1990.
The surge in fuel exports combined with a 25 percent jump in crude oil prices so far this year has collapsed Singapore refinery margins, the Asian benchmark, from more than $11 per barrel in mid-2017 to just over $2.
Combine the slumping margins with labor costs and taxes and many Asian refineries now struggle to make money.
The squeezed margins have pummelled the stocks of most major Asian petroleum companies, such as Japan’s refiners JXTG Holdings Inc. or Idemitsu Kosan, South Korea’s top oil processor SK Innovation, Asia’s top oil refiner China Petroleum & Chemical Corp. and Indian Oil Corp., with some companies dropping by about 40 percent over the past year. Jeff Brown, president of energy consultancy FGE, said the surge in exports and resulting oversupply were a “big problem” for the industry.
“The pressure on refinery margins is a case of death by a thousand cuts ... Refinery upgrades throughout the region are bumping up against softening demand growth,” he said.
The profit slump follows a surge in fuel exports from China, India, Japan, South Korea and Taiwan. Refinitiv shipping data shows fuel exports from those countries have risen threefold since 2014, to a record of around 15 million tons in January.
The biggest jump in exports has come from China, where refiners are selling off record amounts of excess fuel into Asia.
“There is a risk for Asian market turmoil if (China’s fuel) export capacity remains at the current level or grows further,” said Noriaki Sakai, chief executive officer at Idemitsu Kosan during a news conference last week.
But Japanese and South Korean fuel exports have also risen as demand at home falls amid mature industry and a shrinking population. Japan’s 2019 oil demand will drop by 0.1 percent from 2018, while South Korea’s will remain flat, according to forecasts from Energy Aspects.
In Japan, oil imports have been falling steadily for years, yet its refiners produce more fuel than its industry can absorb. The situation is similar in South Korea, the world’s fifth-biggest refiner by capacity, according to data from BP.
Cho Sang-bum, an official at the Korea Petroleum Association, which represents South Korean refiners, said the surging exports had “triggered a gasoline glut.”
That glut caused negative gasoline margins in January.