As oil rises and shale booms, Emirates is going back to Houston with the A380

The Bayou City is the capital of the American oil business, some would say the global energy industry. (AP Photo)
Updated 06 March 2018
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As oil rises and shale booms, Emirates is going back to Houston with the A380

HOUSTON: The traditional way to check the health of the global oil business is to look up the price of a barrel of Brent crude on international markets; the other way is to check out the flight from Dubai to Houston in Texas.
The Bayou City is the capital of the American oil business, some would say the global energy industry. It first grew out of a need to get Texas oil to global markets, providing the right kind of port facilities on the Texas coast to ship crude to the rest of the US and beyond.
It had another boost when the port at nearby Galveston was destroyed by the 1900 hurricane, still the biggest killer hurricane in American history. Hurricanes are a fact of life in these parts, as the world was reminded of by the devastation of Hurricane Harvey last year.
Houston received yet more business when technology allowed offshore oil to be recovered from the Gulf of Mexico, and since the turn of the century it has been mission control for the US shale business, which has revolutionized the global oil industry.
The city is close to the Eagle Ford shale oil field in west Texas, one of the original areas where fracking techniques were perfected to allow oil to be driven from previously unexploitable rocks. Now Houston serves as operational and financial headquarters for the whole of the US shale industry, even those operations much further north in Nebraska and North Dakota. These fields have enabled the US to overtake Saudi Arabia to become the second-largest oil producer, with the biggest, Russia, in its sights sometime in the next two years.
Houston’s central place in the oil business persuaded Emirates Airline in late 2014 that it was a suitable case for the A380 treatment, and the Dubai airline began a daily flight with the double-decker plane late that year, flying more than 500 passengers on the 16-hour trip.
By summer of 2016, the oil price decline had continued, affecting the whole of the global business but hitting US shale men especially hard. Emirates decided to scale back to Boeing 777s, which carry about 150 fewer passengers.
The slow but steady recovery in the oil price last year, and booming prospects for shale in particular, has now persuaded Emirates to reinstate the A380. The airline announced last month it would be resuming A380 flights to George Bush Intercontinental Airport from next June.
The bigger plane is certainly needed, if a recent flight is anything to go by. Last Sunday’s EK211 was packed to the aisles. Economy class was further proof of the appeal of Emirate’s strategy as a connector hub between south Asia and north America, and also evidence of the American airlines’ short-sightedness in virtually deserting this market.
First and business class were also 100-percent full, mainly with oil industry executives and financiers heading to the CERAWeek by IHS Markit meeting, even in Houston the “oil man’s Davos.” With Emirates providing the only direct link between the Arabian Gulf and Houston, the airline looks set to clean up — as long as the oil price stays roughly where it is.


SNC-Lavalin writes down $910m in oil assets amid Saudi trade doubts

Updated 2 min 58 sec ago
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SNC-Lavalin writes down $910m in oil assets amid Saudi trade doubts

LONDON: Canadian engineering firm SNC-Lavalin has written down $910 million in oil and gas assets amid continuing uncertainty over trade relations with Saudi Arabia.
The Canadian engineering giant had picked up a string of major contracts in the Kingdom before a diplomatic dispute between the two countries last summer clouded the outlook for future orders.
The firm said on Friday that near-term prospects for the business were worsening in the face of rising trade challenges in the Kingdom.
“We disclosed back in August the potential effects of the Canadian- Saudi issue, and I think that in itself doesn’t affect the work we do today and the backlog we have,” said SNC-Lavalin CEO Neil Bruce in a video presentation accompanying the company’s full year results. “But it does put a lot of uncertainty into the future prospects because Saudi have been pretty clear that they are looking wherever they choose to maybe omit us from bidding things that traditionally we would have bid,” he said.
The writedown contributed to a C$1.6 billion ($1.2 billion) fourth-quarter loss at the contractor. The engineering company also faces headwinds in Latin America, where it reported a
C$346 million loss related to what analysts understand to be Chilean state-run miner Codelco’s Chuquicamata copper mine.
As a result, SNC-Lavalin expects lower annual revenue from its metals and mining business.
Closer to home, the company is also in the middle of a political crisis that has enveloped Canadian Prime Minister Justin Trudeau, leading to the recent resignation of one of his key aides and a minister, Reuters reported.
The crisis follows allegations that Trudeau’s officials pressured a former minister to allow SNC to escape with a fine and avoid a trial over charges of bribing
Libyan officials.
Saudi Arabia has been a lucrative market for the Canadian engineering giant.
Last April the contractor was appointed by Saudi Aramco to install additional facilities for a major gas processing facility in the Kingdom’s Eastern Province.
The following month it also bagged a contract for a major district cooling plant in Makkah.