Challenges ahead as KSA looks to long-term OPEC-Russia oil deal

An oil pump is seen operating in the Permian Basin near Midland, Texas, US. (REUTERS/Ernest Scheyder/File Photo)
Updated 29 March 2018
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Challenges ahead as KSA looks to long-term OPEC-Russia oil deal

NEW YORK: The potential deal between the Organization of the Petroleum Exporting Countries (OPEC) and Russia — announced by Crown Prince Mohammed bin Salman — is a game-changer in the global energy industry.
But it faces hurdles before it can be implemented and maintained according to the ambitious schedule outlined in New York.
Daniel Yergin, an energy expert and author of the Pulitzer Prize-winning history of oil “The Prize,” told Arab News that the possible deal “represents a realignment that reflects the new realities of oil and international relations.”
The crown prince said that the Kingdom and Russia were in talks to extend an agreement on output — sealed in Vienna in late 2016 on a temporary basis — to a longer-term pact of 10 to 20 years.
“We are working to shift from year-to-year agreement to a 10 to 20-year agreement. We have agreement on the big picture, but not yet on the detail,” the crown prince said.
If the deal goes through, it will put in place a new force in the global oil industry, with two of the top three producers, Saudi Arabia and Russia, acting in unison. With around 40 percent of the world’s output between the two producers and the rest of OPEC, the alliance would be a dominant force in the energy industry, able to control supply and — crucially — the price of oil for the next two decades.
But it is by no means a done deal. Ellen Wald, an expert on Saudi energy and author of the forthcoming book “Saudi Inc. The Arabian Kingdom’s Pursuit of Profit and Power,” said: “It would be impossible to extend the current production deal for 10 to 20 years because nobody knows what market conditions will be in the future.”
“What they must be referring to is a discussion on making Russia what amounts to a de facto OPEC member for a certain number of years,” she added.
But there are economic, financial and geopolitical challenges ahead before such a deal — likely to form the centerpiece of negotiations at the next OPEC meeting in Vienna in June — can be clinched.
The current arrangement — dubbed the “Vienna Alliance” by oil experts — has been credited with getting the price of crude back from the doldrums of 2014 and 2015. From a high of more than $100 a barrel after the global financial crisis, the price of a barrel of crude fell below $30 in early 2016.
The agreement on output helped stabilize that price last year, with a sustained recovery coming in the second half of the year as it looked as though the deal was going to hold longer than a few months. Brent crude was trading in New York yesterday close to the $70 a barrel level seen as the “Goldilocks” level — not too cheap and not too expensive — to balance the demands of global producers and consumers.
But the problem is that OPEC is not a cartel that can arbitrarily set the price of oil. It is an organization that has to serve the interests of its members, and the 14 nations — possibly increasing with the inclusion of Russia and other independent producers — that comprise OPEC are subject to the imperatives of their own domestic economic needs as well as the global market.
It has been an achievement — largely credited to Saudi Arabia’s Energy Minister Khalid Al-Falih — to get OPEC and Russian to coordinate supplies over the past 12 months. Maintaining that delicate relationship over decades would be much more difficult.
With global consumption just below 10 million barrels a day, it would only require one member to “go rogue” with a production surge to upset the delicate balance and cause another price collapse.
But perhaps the most serious barrier to any long-term deal is the fact that the global oil market is no longer a two-horse race. American shale producers have turned the international energy market on its head through sophisticated technology that has wrung oil from fields long regarded as impossible to exploit commercially.
The US is now the second largest oil producer, and with the shale industry in full boom, looks certain to overtake Russia and the world’s biggest sometime soon.
This is where the geopolitical challenge emerges. One American energy financier at the Saudi-US CEO Forum in New York explained: “It might be good for Saudi Arabia and the oil price, but it is a strategic play that might not go down well with American producers. It would add a long-term geopolitical element to the oil market that maybe we would not welcome.”
He also pointed to the difficulties of maintaining such a long-term relationship between OPEC and Russia. “There are so many variables. It is not just Saudi Arabia, but all the members of OPEC, which is a mixed bag. Is it in the interests of Venezuela or Iraq to go along with such a deal? And you cannot easily predict how Russia will be thinking in 10 weeks from now, let alone 10 years.”
Yergin said: “We’ve been calling this OPEC and non-OPEC agreement the ‘Vienna Alliance’. Now it looks like an effort to turn it into a lasting alliance.”


How Saudi women are getting ahead of men as STEM graduates

Dr. Fatima Alakeel, cybersecurity expert. (AN photo)
Updated 20 March 2019
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How Saudi women are getting ahead of men as STEM graduates

  • ‘Securing a job after the degree remains the challenge,’ says Dr. Fatema Alakeel of King Saud University in Riyadh
  • ‘Saudi women are ambitious,’ says one graduate. ‘We are acquiring high degrees and seeking successful careers’

DUBAI: More and more girls in Saudi Arabia are opting for an education in science, technology, engineering and maths (STEM), and now the challenge is finding them employment, said Dr. Fatima Alakeel, a cybersecurity expert and faculty member at King Saud University (KSU) in Riyadh.
“In the Kingdom, STEM-related jobs are limited at the moment, as the economy is primarily oil-based and there are few technical jobs available,” said Alakeel, who is also the founder and CEO of the non-profit Confidentiality, Integrity & Availability Group (CIAG), which focuses on information security training and research in Riyadh.
According to a government report on the labor market situation in the third quarter of 2018, more than 30 percent of Saudi women aged between 15 and 65 are unemployed.
Among them, the highest rate of unemployment is among 20-24-year-olds (more than 70 percent) and among 25-29-year-olds (55 percent).
According to the report, there are 923,504 Saudi jobseekers, of whom 765,378 are women (82.2 percent).
“We have more girls in STEM education compared to Western countries,” said Alakeel, who completed her doctoral degree in computer science in the UK at the University of Southampton in 2017.
According to a report prepared by the Saudi Education Ministry, girls accounted for 57 percent of undergraduates for the year 2015-2016 in the Kingdom.
That same year, women outnumbered men in graduating with a bachelor’s in biology, information technology (IT), mathematics and statistics, and physics.
According to a survey Alakeel recently conducted on social media, “almost 80 percent of (Saudi) girls were keen to study STEM, but securing a job after the degree remains the challenge,” she said.
Maha Al-Taleb, 22, graduated earlier this year with a degree in technology from KSU, specializing in IT networks and security.
“It’s common for girls in the Kingdom to opt for STEM education,” said Al-Taleb, who now works in a public sector company in Riyadh as a junior information security analyst.
“Saudi women are ambitious. We’re acquiring high degrees and seeking successful careers. I don’t know why the world assumes that Saudi women are a backward tribal species who have no say in these matters. This entire perception is flawed.”
Al-Taleb got a job offer immediately after university, but realizes that not all her peers are as fortunate. Women “are facing problems in securing jobs, not because companies don’t want to hire us, but because employment for Saudi youths is a major challenge,” she said.
“In today’s Saudi Arabia, parents are encouraging their daughters to get a degree not just in the Kingdom; they also want them to go to Western universities. It has become a common phenomenon. Things have changed. Women are a crucial part of the nation’s development process.”
Not all women graduating in the Kingdom are as lucky, among them Razan Al-Qahtani. “It has been several months since I graduated, yet I haven’t been able to find a job. It has been a struggle so far,” said the 25-year-old IT graduate. “We have more talented and qualified girls, especially in the field of technology, but there are few jobs available. It’s a difficult situation, but we’re hopeful things will change very soon.”
Al-Qahtani expressed confidence that the Kingdom’s Vision 2030 reform plan will bring opportunities for qualified Saudis.
As part of Vision 2030, the government has committed to raise employment among Saudi women.
Alakeel said the government is working hard to find a solution, and it is only a matter of time until more such jobs are on offer.
“As per Vision 2030, there will be more jobs, including technical jobs, available in the country. Once we have more jobs, women will eventually get their due share,” she added. According to Alakeel, female empowerment and promotion to leading roles have made huge progress in Saudi Arabia, and this may affect existing STEM job opportunities.
“We’re glad to see Her Royal Highness Princess Reema bint Bandar Al-Saud becoming the first female ambassador of the country. It only suggests change is on the way,” Alakeel said.
Al-Taleb expressed pride in the way her parents have supported her, saying: “My father isn’t educated and my mother has basic literacy, but both provided me with the education I desired. They want their daughters to be as successful as their sons.”
Like women in any country, the transition from university to the workplace is not always easy, even for young Saudi women with technology degrees. Yet they are not losing hope.
“We realize these are difficult times in terms of employment, especially in technology-related fields, but things will change,” Al-Taleb said. “Saudi women will soon be ruling the fields of STEM all over the country.”