Saudi Public Investment Fund looks for more global alliances

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Public Investment Fund Managing Director Yasir Al-Rumayyan pictured at the Future Investment Initiative in Riyadh. (AFP)
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Updated 25 October 2017
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Saudi Public Investment Fund looks for more global alliances

RIYADH: Saudi Arabia’s Public Investment Fund (PIF) is looking for further international partnerships as part of its ambitious aim to become the largest sovereign wealth fund in the world.
Yasir Al-Rumayyan, PIF managing director, said that global investment alliances would be a central part of a four-legged strategy.
He was speaking as PIF formally announced a $20 billion alliance with the US investment fund BlackRock to put money into what he called “conventional investment” like infrastructure and large-scale construction projects, and on top of the $45 billion agreed with Japan’s SoftBank.
“We will continue to see partnerships with the rest of the world, and conventional investments will not go away,” he said at the opening session of a major conference hosted by the PIF in Riyadh, the Future Investment Initiative.
He added that PIF is targeting annual returns of between 3 and 9 percent across its portfolios in the long term.
“PIF is a long-term fund. We are looking beyond cyclicality,” he said.
Al-Rumayyan spelled out the rest of the strategy. “We want to grow and diversify revenue across all investments. We want to localize the economy of Saudi Arabia for the future employment of citizens, and we want to expand in new sectors, like waste management, real estate and entertainment.”
Panelists included the CEO of Saudi Aramco, Amin Nasser, BlackRock Chairman Larry Fink, IMF Managing Director Christine Lagarde and Victor Chou, CEO of First Eastern Investment Group.
They were quizzed on their outlook for investment returns as individuals and states worldwide grapple with how to ensure sufficient retirement funds during an extended period of low growth across global economies.
Al-Rumayyan said that some assets could reach annual returns in the low teens.
“We don’t want to be a sitting duck to be shot down by only being in conventional investments. We want to go beyond — that is what Vision 2030 is all about,” he said.
He also revealed that he wants the Future Investment Initiative to become an annual event, which would help the Kingdom prepare for the future.
Questioned on the long-term prospects for the oil economy in the face of the renewable and alternative fuels industry, Nasser said it would take decades for the oil and gas industry to be significantly affected by these changes.
BlackRock’s Fink warned: “Long-term growth rates are decelerating quite rapidly and this is going to  present pension funds with bigger liability issues  —  but this is also one of the reasons we have to address this issue of retirement today with expected returns — whether it’s 4, 6 or 8 (percent).
“It means you have to put money away sooner to get to the expected pool of money you want in retirement.”
Asked about his own forecasts for what was possible and realistic as an investment return, he said: “The BlackRock Investor Institute came out with a 10-year forecast of 4 per cent with a balanced portfolio. I tend to think it will be closer to 6 percent.  We’re in a world of low inflation.”
Hundreds of the biggest names in global business are attending the event in Riyadh, which concludes tomorrow.


Libya’s National Oil against paying ‘ransom’ to reopen El Sharara field

Updated 14 December 2018
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Libya’s National Oil against paying ‘ransom’ to reopen El Sharara field

  • Ransom payment would set dangerous precedent
  • NOC declared force majeure on exports on Monday

BENGHAZI: Libya’s state-owned National Oil Corp. (NOC) said it was against paying a ransom to an armed group that has halted crude production at the country’s largest oilfield.
“Any attempt to pay a ransom to the armed militia which shut down El Sharara (oilfield) would set a dangerous precedent that would threaten the recovery of the Libyan economy,” NOC Chairman Mustafa Sanalla said in a statement on the company’s website.
NOC on Monday declared force majeure on exports from the 315,000-barrels-per-day oilfield after it was seized at the weekend by a local militia group.
The nearby El-Feel oilfield, which uses the same power supply as El Sharara, was still producing normally, a spokesman for NOC said, without giving an output figure. The field usually pumps around 70,000 bpd.
Since 2013 Libya has faced a wave of blockages of oilfields and export terminals by armed groups and civilians trying to press the country’s weak state into concessions.
Officials have tended to end such action by paying off protesters who demand to be added to the public payroll.
At El Sharara, in southern Libya, a mix of state-paid guards, civilians and tribesmen have occupied the field, camping there since Saturday, protesters and oil workers said. The protesters work in shifts, with some going home at night.
NOC has evacuated some staff by plane, engineers at the oilfield said. A number of sub-stations away from the main field have been vacated and equipment removed.
The occupiers are divided, with members of the Petroleum Facilities Guard (PFG) indicating they would end the blockade in return for a quick cash payment, oil workers say. The PFG has demanded more men be added to the public payroll.
The tribesmen have asked for long-term development funds, which might take time.
Libya is run by two competing, weak governments. Armed groups, tribesmen and normal Libyans tend to vent their anger about high inflation and a lack of infrastructure on the NOC, which they see as a cash cow booking billions of dollars in oil and gas revenues annually.