Saudi oil minister calls for more work to cut global oil inventory

Saudi oil minister Khalid Al-Falih said that ‘Russia, Saudi Arabia and 24 other states that have been working on stabilizing the oil market.’ (AFP)
Updated 30 November 2017
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Saudi oil minister calls for more work to cut global oil inventory

TASHKENT, Kazakhstan: Saudi Arabian oil minister Khalid Al-Falih said on Saturday that more work was needed to reduce global oil inventories.
“There is a general satisfaction with the strategy of 24 countries that signed a declaration of cooperation,” he said after a meeting attended by his Russian, Uzbek and Kazakh counterparts.
Russia and Saudi Arabia are leading a deal between OPEC and non-OPEC producers to cut global oil production, with the aim of propping up oil prices.
“Everybody recognizes that (the) job is not done yet by any means, we still have significant amount of work to do to bring inventories down. Mission is not yet complete, more needs to be done,” he added.
He said members of the global pact he had spoken with have expressed the same views.
“This is the same sentiment I’ve heard yesterday from (Kazakh) President (Nursultan) Nazarbayev, this is the same sentiment I’ve heard from all the oil producing members of the Asia energy ministers’ round table,” he said.
Officials from Malaysia, Ecuador, Nigeria and Libya have had also given him similar feedback, Falih said.
“All committed to working with other producers and supporting the agreement,” the Saudi oil minister added.


Abu Dhabi’s aviation ambitions up in the air

Updated 2 min 33 sec ago
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Abu Dhabi’s aviation ambitions up in the air

QUOTE: “The market demographics and the economics of hubbing (still) make airports in the Gulf very attractive.” Andrew Charlton, Aviation Advocacy

The inaugural non-stop Qantas flight between Perth and London earlier this month may have been hailed as the future of aviation by the airline industry, but it’s unlikely to have prompted much celebrating in Abu Dhabi.

The prospect of ultra-long haul flights, which reduce journey times by cutting out the need for stopovers, strikes at the heart of the business model of the likes of Dubai and Abu Dhabi, which have sprung to prominence in recent years as major transit centers for global air travel.

“The Gulf airports burst onto the scene as the airframe technology changed and the long-haul hubbing model was created,” Andrew Charlton, the managing director of consulting firm Aviation Advocacy.

“The Qantas flights from Perth show that the technology is again changing; in the end, the technology always wins.”

Mr. Charlton cautioned that the impact in the short-term on Abu Dhabi and other hubs would be minimal, noting that ultra-long haul would not be available to most passengers.

What’s more, “the market demographics and the economics of hubbing (still) make airports in the Gulf very attractive,” he said.

But ultra-long haul travel is just the latest in a series of issues impacting Abu Dhabi’s aviation strategy, with progress slowing in the wake of lower oil prices and operational issues at Etihad, the emirate’s flag-carrier.

The high-profile Midfield Terminal at Abu Dhabi International Airport, designed to expand capacity to 45 million passengers per year (a downgrade from original plans), has faced numerous delays, with its expected opening date pushed back from late-2017 until the end of 2019.

The increase in capacity, designed to coincide with the growth of Etihad Airways, no longer seems as urgent a priority, as the emirate cuts back on spending in the wake of lower oil revenues. Etihad’s international expansion strategy, launched in 2017, is now very much on hold.

Etihad’s strategy of acquiring a series of stakes in global airlines, in a bid to transform itself into a global rival to the likes of Dubai’s Emirates, hit the buffers last year, with the bankruptcy of Alitalia and Air Berlin, two of its largest interests. Etihad subsequently sold its stake in European regional carrier Darwin Airline, with rumors earlier this month that it may also look to offload its stake in Virgin Australia, after the latter canceled its last route to Abu Dhabi earlier last year.

Etihad did not respond to a request for comment.

The loss of Etihad’s international subsidiaries has taken its toll on Abu Dhabi’s passenger traffic. Abu Dhabi Airports has not released traffic figures for 2017, but passenger numbers for the 11 months to the end of November fell 3.7 percent year on year to 21.5 million.

That trend appears to have deepened so far this year; Abu Dhabi Airports last week announced an 11 percent drop in passenger traffic for the first quarter of the year, falling to 5.5 million, with aircraft movements dropping 15 percent to 35,788.

The drop in cargo was even more pronounced, falling 25 percent year on year to 142,492 metric tons.

Traffic through the emirate is “likely to see further reductions,” said John Strickland, director of JLS Consultancy.

Earlier this month, Etihad announced it was cutting flights to Edinburgh and Perth in Australia, as part “of several adjustments that we are making to our network in 2018 in order to improve system profitability,” an Etihad spokesman said at the time. This followed the axing of its Dallas route late last year.

Mr. Charlton said that Abu Dhabi’s hub strategy remains solid for the moment, but that the loss of Alitalia and Air Berlin “certainly slows things down.”

Abu Dhabi Airports did not respond to a request for comment.

“We are continuously working toward fortifying Abu Dhabi International Airport’s presence as a key airport hub within the region, by enhancing our existing network and connecting with new and wider markets globally,” said Saoud Al Shamsi, the Acting chief commercial officer of Abu Dhabi Airports, in a statement coinciding with the Arabian Travel Market exhibition in Dubai.

“We are optimistic about the sector’s performance in the coming years that will continue to be key in our efforts to implement enhancements to our services.”