Saudi Arabia steps up oil diplomacy ahead of OPEC meeting

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Saudi Energy Minister Khalid al-Falih. (AFP)
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Updated 22 November 2017
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Saudi Arabia steps up oil diplomacy ahead of OPEC meeting

VIENNA: Saudi Energy Minister Khalid Al-Falih and his staff are busy these days. The minister and some of his aides are in continuous talks with global producers to convince them to attend the meeting of OPEC in Vienna on Nov. 30.
Saudi officials are inviting more African, Latin American and Central Asian countries to attend the meeting, sources told Arab News. The list of invitees includes producers such as Colombia, Egypt and Indonesia. “Not all those who are invited will attend but many have shown interest in attending the meeting as observers only,” a source said.
Saudi Arabia and Russia are leading global efforts to extend the current agreement to curtail production of 24 countries by 1.8 million barrels a day to rebalance the oil market and bring global inventories back to their five-year average. The agreement, which will expire in March, has helped to raise oil prices in the past few days to levels not seen since 2015.
The Saudi OPEC governor and Saudi national representative at OPEC are in communication with many countries to invite them to the meeting. They are traveling extensively to meet officials and other producers. Saudi Arabia is the president of OPEC’s ministerial conference this year.
“The Saudis are looking at ways to surprise the market at the meeting and by bringing many producers to it they are hoping to show the market that more producers are supporting the agreement,” a source said. “If some of those attending are willing to participate in the agreement then that would support oil prices.”
So far, the Saudi energy minister has brought two central Asian producers to attend the next meeting: Uzbekistan and Turkmenistan. Since October, the minister has also made trips to four countries that are part of the agreement to deliver letters from King Salman to the heads of states: Iraq, Malaysia, Algeria, and Kazakhstan.
Adding more countries to the agreement will help to reduce the burden on existing ones as the total amount of cuts will be distributed among a bigger number of producers, one of the sources said.
OPEC is expected to agree an extension of the cut as storage levels remain high despite recent drawdowns, although there are doubts about the willingness of some participants to continue to restrain output.
Many countries are showing support for extending the agreement. UAE and Iran are the latest two countries to express their support.
UAE Energy Minister Suhail Al-Mazrouei said on Nov. 20 that he sees the logic for extending the agreement and ministers are now focusing on the extension and not on increasing the amount of cuts in the agreement.
Iran’s oil minister Bijan Zanganeh said on the same day that the majority of OPEC nations favors the extension of the agreement.
Oil markets were tepid on Nov. 20 as traders were reluctant to take on big new positions before the OPEC meeting at the end of the month.
“The market expectation is for an extension through 2018, created by OPEC comments early this fall,” US bank Morgan Stanley said on Nov. 20 in a note to clients. “There is increased risk that OPEC delays the extension decision,” it said.


Emirates, South African Airways expand codeshare deal

Updated 18 December 2018
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Emirates, South African Airways expand codeshare deal

  • Deal will improve connectivity between Dubai and Southern Africa
  • Emirates has been flying to South Africa since 1995 and the first codeshare agreement with SAA was signed in 1997

LONDON: Dubai’s flagship airline Emirates is to expand its codesharing agreement with South African Airways (SAA), aiming to improve connectivity between the emirate and locations across Southern Africa.

The expansion of the agreement will support the African airline’s turnaround plan which aims to make a profit by 2021.

SAA is grappling with financial difficulties, having posted a string of losses and forced to rely on government support. Having failed to make a profit since 2011, it is cutting staff numbers and looks to reduce its route network.

“It’s clear that SAA is struggling to survive and so it makes sense for them to coalesce their operations with the powerhouse that is Emirates as opposed to competing head to head, because they simply won’t cut it against them,” said aviation analyst Saj Ahmad at Strategic Aero Research.

“The deal also opens up the possibility of Emirates deploying more flights to places like Cape Town and Johannesburg as well as codesharing on other SAA-regional flights to points that Emirates doesn’t serve.”

Emirates has been flying to South Africa since 1995 and the first codeshare agreement with SAA was signed in 1997.

Under this deal, SAA is able to offer its customers seats on flights operated by Emirates between South Africa and Dubai. This currently includes four daily flights from Johannesburg, three daily flights from Cape Town and one daily flight from Durban.

The new agreement will see this codeshare expand across the airlines’ networks.

“We have seen great success with the codeshare agreement, having enabled greater connectivity to both SAA and Emirates customers, by offering more choice, flexibility and ease of connections to a wide range of cities via Dubai and across more points in Southern Africa,” said Tim Clark, president of Emirates Airline.

“Increasing the scope of our agreement underpins the strong bonds we share with SAA and our belief that this enhanced partnership will enable further success and gain to the airlines and their customers,” he said.

SAA CEO Vuyani Jarana said: “Our route network and that of Emirates complement one another. The expansion of our partnership will further strengthen key focus areas of the implementation of our turnaround plan.”

The agreement will include the two airlines working to improve connecting times via Johannesburg, to make it easier for people to catch flights to popular regional destinations.