Philippines posts 15 percent drop in cash remittance from Middle East

A man counts a wad of Philippine Peso bills he received from a relative working abroad at a money remittance center in Makati City, Metro Manila, Philippines on Sept. 19, 2018. (REUTERS)
Updated 23 September 2018
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Philippines posts 15 percent drop in cash remittance from Middle East

  • There has been a 15 percent decrease in remittances from Overseas Filipino Workers (OFWs) in the Middle East, with fund transfers from Libya and Israel falling the most at 73 percent and 61 percent — Central Bank of the Philippines
  • Remittances from Kuwait fell by 20.4 percent despite resumption of OFW deployment; Bahrain showed negative 22.9 percent; transfers from Oman dropped by 38.3 percent; and Saudi Arabia showed a slide of 10.4 percent

MANILA: Cash remittance from Filipino workers (OFW), particularly those in the Middle East, saw a steep decline from January to July this year, figures from the Central Bank of the Philippines (BSP) show.
A lawmaker noted that even the lifting of the ban on deployment of Filipinos to Kuwait last May failed to stop the remittance plunge.
Based on latest BSP data, there was 15 percent decrease in remittances from OFWs in the Middle East, although fund transfers from Libya and Israel fell the most at 73 percent and 61 percent respectively.
With that, Rep. Henry Ong, chairman of the House Committee Chair on Banks & Financial Intermediaries, said the policy shift in OFW deployment priorities must happen “sooner rather than later.”
“Filipinos are being held hostage by armed groups in Libya. Israel recently welcomed President Rodrigo Duterte on a brief visit. However, the remittances from these two countries pale in comparison with those from Saudi Arabia, the United Arab Emirates, Bahrain, Kuwait, and Oman, which were in the high double-digit percentages decline,” he said.
Remittances from Kuwait fell by 20.4 percent despite the resumption of OFW deployment last May. Bahrain showed negative 22.9 percent, transfers from Oman dropped by 38.3 percent and Saudi Arabia showed a slide of 10.4 percent. 
Qatar is the exception. The remittances decline from Filipino workers there was only 6.3 percent.
The Leyte second district representative pointed out: “There should not even be Filipinos in Libya because the security situation there is horrible, but still Filipinos go because that is where they have found jobs on their own.
“OFWs clearly have bleak and low-paying job prospects here in the Philippines because our wages are way below what they can earn abroad, so we have no choice but to deploy them elsewhere, to countries that will pay them well and respect their rights as migrant workers and as people of varied gender.” .
For this to happen, Ong said the priority list of alternative countries “must include those states that are signatories to the international conventions on human rights, labor, social security, and migrant workers.
“The other criterion would be the economic growth prospects of the target host countries because that will determine how well they will be compensated for their services. OFWs will go where they are respected, wanted, and paid well.” 
Ong lamented, though, that “it does not seem the concerned top officials have what it takes to help OFWs find better jobs in new host countries.
“They are just doing bureaucratic procedures and damage control on the problems that keep cropping up, but we do not see systemic, long-term solutions. Suffering through all that are the OFWs.” 
Meanwhile, aside from the decrease in cash remittance, the Philippines also suffered a decline in deployment of OFWs in 2017 after 10 years of continuous growth.
Recruitment consultant and migration expert Emmanuel Geslani, citing statistics from the Philippine Overseas Employment Administrstion (POEA), said deployment of OFWs to 180 countries went down by 9 percent in 2017 compared ith the previous year. The year 2016, Geslani said, was a banner year of deployment for OFWs with total deployment hitting more than two million.
POEA records show that only 1,992,746 OFWs were deployed in 2017. Geslani said this is the first time after 10 years of continuous increase starting in 2008 with 1,236,613 deployment; 2009 with 1,422,382; 2010 with 1,476,826; 2011 with 1,687,463; 2012 with 1,802,031; 2013 with 1,826,804; 2014 with 1,832,668; 2015 with 1,841,205; and 2016 with 2,112,331.
Geslani said the decrease may be attributed to actors, such as the decline in the hiring of new workers to Saudi Arabia, from 219,134 in 2016 down to 163,238 in 2017. 
A decrease in the number of new hires was also noted in the rest of the top ten OFW destinations, which include Kuwait, Qatar, Hong Kong, Taiwan, the UAE, Japan, Singapore, Malaysia and Oman.
“Another reason for the decline is the increasing shift of Saudi Arabia to employ more citizens to work in companies and malls as part of its ‘Saudization’,” Geslani continued.
In addition, more major projects in the Kingdom have been shelved or delayed, resulting in the exodus of more than 30,000 Filipino skilled workers in construction, maintenance services and oil industries, he added. “Crude oil, which has stayed in the $70-80 level, has prevented Middle East countries from going on construction and infrastructure projects, except for Qatar which is preparing for the football World Cup in 2022.” 
Even the household service workers sector also dropped by 8 percent in 2017 owing to internal controls implemented by the Philippine labor officers in the Middle East, Geslani said.
For 2018, he predicts that deployment of household service workers is not expected to go beyond the 200,000 mark with the deployment ban imposed in Kuwait resulting in the loss of 40,000 jobs.


Permian shale output closes gap with Saudi Arabia as rig count doubles, confirming US’ powerhouse status

Updated 21 March 2019
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Permian shale output closes gap with Saudi Arabia as rig count doubles, confirming US’ powerhouse status

  • Exxon’s 1.6 million acres in the Permian means it can approach the field as a “megaproject”
  • The majors’ Permian investments position the field to compete with Saudi Arabia as the world’s top oil-producing region

NEW MEXICO: In New Mexico’s Chihuahuan Desert, Exxon Mobil Corp. is building a massive shale oil project that its executives boast will allow it to ride out the industry’s notorious boom-and-bust cycles.
Workers at its Remuda lease near Carlsbad — part of a staff of 5,000 spread across New Mexico and Texas — are drilling wells, operating fleets of hydraulic pumps and digging trenches for pipelines.
The sprawling site reflects the massive commitment to the Permian Basin by oil majors, who have spent an estimated $10 billion buying acreage in the top US shale field since the beginning of 2017, according to research firm Drillinginfo Inc.
The rising investment also reflects a recognition that Exxon, Chevron, Royal Dutch Shell and BP Plc largely missed out on the first phase of the Permian shale bonanza, while more nimble independent producers, who pioneered shale drilling technology, leased Permian acreage on the cheap.
Now that the field has made the US the world’s top oil producer, Exxon and other majors are moving aggressively to dominate the Permian and use the oil to feed their sprawling pipeline, trading, logistics, refining and chemicals businesses. The majors have 75 drilling rigs here this month, up from 31 in 2017, according to Drillinginfo. Exxon operates 48 of those rigs and plans to add seven more this year.
The majors’ expansion comes as smaller independent producers, who profit only from selling the oil, are slowing exploration, and cutting staff and budgets amid investor pressure to control spending and boost returns.
Exxon CEO Darren Woods said on March 6 that Exxon would change “the way that game is played” in shale. Its size and businesses could allow Exxon to earn double-digit percentage returns in the Permian Basin even if oil prices — now above $58 per barrel — crashed to below $35, added Senior Vice President Neil Chapman.
Exxon’s 1.6 million acres in the Permian means it can approach the field as a “megaproject,” said Staale Gjervik, head of shale subsidiary XTO Resources, whose headquarters was recently relocated to share space with its logistics and refining businesses. The firm also recently outlined plans to nearly double the capacity of a Gulf Coast refinery to process shale oil.
“It sets us up to take a longer-term view,” Gjervik said.
The majors’ Permian investments position the field to compete with Saudi Arabia as the world’s top oil-producing region and solidifies the US as a powerhouse in global oil markets, said Daniel Yergin, an oil historian and vice chairman of consultancy IHS Markit.
“A decade ago, capital investment was leaving the US,” he said. “Now it’s coming home in a very big way.”
The Permian is expected to generate 5.4 million barrels per day (bpd) by 2023 — more than any single member of the Organization of the Petroleum Exporting Countries (OPEC) other than Saudi Arabia, according to IHS Markit. Production this month, at about 4 million bpd, will about double that of two years ago.
Exxon, Chevron, Shell and BP now hold about 4.5 million acres in the Permian Basin, according to Drillinginfo. Chevron and Exxon are poised to become the biggest producers in the field, leapfrogging independent producers such as Pioneer Natural Resources.
Pioneer recently dropped a pledge to hit 1 million bpd by 2026 amid pressure from investors to boost returns. It shifted its emphasis to generating cash flow and replaced its CEO after posting a fourth-quarter profit that missed Wall Street earnings targets by 36 cents a share.

 

Meanwhile, Shell is considering a multibillion-dollar deal to buy independent producer Endeavor Energy Resources, according to people familiar with the talks. Shell declined to comment and Endeavor did not respond to a request.
Chevron said it would produce 900,000 bpd by 2023, while Exxon forecast pumping 1 million barrels per day by about 2024. That would give the two companies one-third of Permian production within five years.
At first, the rise of the Permian was driven largely by nimble explorers that pioneered new technology for hydraulic fracturing, or fracking, and horizontal drilling to unlock oil from shale rock, slashing production costs. The advances by smaller companies initially left the majors behind. Now, those technologies are easily copied and widely available from service firms.
Surging Permian production has overwhelmed pipelines and forced producers to sell crude at a deep discount, sapping cash and profits of independents who, unlike the majors, don’t own their own pipeline networks.
Even as the majors have ramped up operations, the total number of drilling rigs at work in the Permian has dropped to 464, from 493 in November, as independent producers have slowed production, according to oilfield services provider Baker Hughes.
Shell, by contrast, plans to keep expanding even if prices fall further, said Amir Gerges, Shell’s Permian general manager.
“We have a bit more resilience” than the independents,” he said.
In west Texas, the firm drills four to six wells at a time next to one another, a process called cube development that targets multiple layers of shale as deep as 8,000 feet.
Cube development is expensive and can take months, making it an option only for the majors and the largest independent producers. Shell has used the tactic to double production in two years, to 145,000 bpd.
The largest oil firms can also take advantage of their volume-buying power even if service companies raise prices for supplies or drilling and fracking crews, said Andrew Dittmar, a Drillinginfo analyst.
“It’s like buying at Costco versus a neighborhood market,” he said.
The majors’ rush into the market means smaller companies are going to struggle to compete for service contracts and pay higher prices, said Roy Martin, analyst with energy consultancy Wood Mackenzie.
“When you’re sitting across the negotiating table from the majors, the chips are stacked on their side,” he said.
The revival of interest in the Permian marks a reversal from the late 1990s, when production had been falling for two decades.
“All the majors and all the companies with names you’ve heard left with their employees,” said Karr Ingham, an oil and gas economist. “Conventional wisdom was this place was going to dry up.”
Chevron was the only major that stayed in the Permian. It holds 2.3 million acres and owns most of its mineral rights, too, but until recently left drilling to others.
But this month, CEO Mike Wirth called the Permian its best bet for delivering profits “north of 30 percent at low oil prices.”
“There is nothing we can invest in that delivers higher rates of return,” Wirth said this month at its annual investor meeting in New York.
Matt Gallagher, CEO of Parsley Energy Inc, calls the majors’ investments “the best form of flattery” for independents operating here.
Parsley holds 192,000 Permian acres — most of which was snatched up on the cheap during oil busts — and sees its smaller size as an advantage in shale.
“We’re not finished yet,” Gallagher said. “We can move very quickly.”
The majors have greater infrastructure, but independents continue to innovate and design better wells, said Allen Gilmer, a co-founder of Drillinginfo.
“Nothing is a bigger motivator than, ‘Am I going to be alive tomorrow?’” Gilmer said.
“Hunger and fear is something that every independent oil-and-gas person knows — and that something no major oil-and-gas person has ever felt in their career.”

FACTOID

5.4 million

The Permian Basin is expected to generate 5.4 million barrels of oil per day by 2023, more than any single OPEC member other than Saudi Arabia.