Dubai Airshow opens with Emirates’ $15.1 billion deal with Boeing

Participants walk past aircraft on stationary display at opening day of Dubai Airshow on November 12. (AFP)
Updated 13 November 2017
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Dubai Airshow opens with Emirates’ $15.1 billion deal with Boeing

DUBAI: The biennial Dubai Airshow opened Sunday with hometown long-haul carrier Emirates making a $15.1 billion (SR56.63 billion) buy of American-made Boeing 787-10 Dreamliners, as the world’s biggest defense companies promoted their weapons amid heightened tensions between Saudi Arabia and Iran.
Other airlines also are taking part, but missing from the trade show this year is one of the region’s largest long-haul carriers, Qatar Airways, amid diplomatic fallout between Qatar and four Arab nations.
The Boeing announcement came after over an hour and a half of delays by Emirates amid rumors of a possible Airbus sale involving its A380 aircraft, a major workhorse for the airline. Journalists asked Emirates CEO and Chairman Sheikh Ahmed bin Saeed Al Maktoum about Boeing’s European competitor Airbus, specifically its A350.
“We were comparing the two apples,” he said, but found that the Boeing 787 is “the best option” for Emirates “given its maintenance and so on.”

The Boeing 787-10 typically lists for $312.8 million. Delivery will begin in 2022.
Chicago-based Boeing already has 171 787-10s on order. Among those waiting for the aircraft are Abu Dhabi-based Etihad. Boeing builds the 787 at its plant in North Charleston, South Carolina, which US President Donald Trump visited in February.
Last week, the US plane manufacturer secured an order valued at more than $37 billion at list price for 300 of its single-aisle and double-aisle planes during Trump’s visit to China. Trump also was present for the signing ceremony last month between Boeing and Singapore Airlines for 39 new aircraft, including 19 of the 787 Dreamliner, in a deal worth up to $14 billion.
Sheikh Ahmed made a point to say the deal will help create more jobs, long a mantra of Trump. The deal was signed in the presence of Dubai’s ruler, Sheikh Mohammed bin Rashid Al-Maktoum, who also serves as the UAE’s prime minister and vice president.
“The order will take Emirates’ total (number of) wide body aircraft of the Boeing to 204 aircrafts, units worth over $90 billion,” Sheikh Ahmed said. “This is a long-term commitment that supports hundreds of thousands of jobs, not only at Boeing but also throughout the aviation supply chain.”

The airline’s business has suffered under Trump’s travel bans affecting predominantly Muslim nations, as well as the recent ban on laptops in airplane cabins. Emirates said it slashed 20 percent of its flights to the US in the wake of the restrictions. That’s in turn hurt Dubai International Airport, the home of Emirates and the world’s busiest international travel hub.
Emirates is the world’s largest Boeing 777 operator, with 165 in service today.
The air show comes as the Qatar dispute is now in its fifth month with no resolution in sight. Saudi Arabia, the UAE, Egypt and Bahrain cut ties with Qatar in June over its ties with Iran and its support of Islamist groups, accusing the small Gulf state of supporting extremists, charges it denies. The Arab quartet cut direct flights with Qatar and closed their airspace to Qatari aircraft.

Qatar Airways previously had played a big role in the Dubai Air Show, reserving a large pavilion and displaying its latest aircraft to visitors.
At the start of the air show, Dubai-based Emirates, the Middle East’s largest carrier, unveiled new, state-of-the-art, first class private suites.
In an industry first, passenger suites in the middle aisle without windows will be fitted with “virtual windows” relaying the sky outside via fiber optic cameras on the plane. There’s also a video call feature in the suites that connects passengers to the cabin crew, as well as temperature control and various mood lighting settings.
Emirates President Tim Clark declined to say how much a ticket in the 40 square-foot (3.7-square-meter) private suite will cost. The private suites will be available on the airline’s Boeing 777.
In previous years, major Mideast carriers have flexed their spending power at the Dubai Air Show, including $140 billion in new orders announced in 2013 before the collapse of oil prices. Prices have rebounded recently to around $60 a barrel.
Regional tensions have spiked further since Lebanon’s Prime Minister Saad Hariri announced his resignation last week in a pre-recorded video on a Saudi television station from Saudi Arabia. His surprise resignation has raised questions about whether the kingdom forced Hariri to resign in order to wreck the government and pressure the Iranian-backed Hezbollah group.
Saudi Arabia also has tightened its blockade on Yemen after Iranian-allied rebels there launched a missile at the Saudi capital, Riyadh, last week. The Saudi-led war in Yemen, which began in March 2015, has killed at least 10,000 civilians and pushed millions to the brink of famine. The United Nations and aid groups warn that the blockade could bring millions of people closer to “starvation and death.”


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.