Saudi Aramco and ADNOC sign MoU to explore investment opportunities in gas sector

Saudi Aramco and ADNOC sign strategic cooperation agreement on natural gas and LNG. (SPA)
Updated 12 November 2018
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Saudi Aramco and ADNOC sign MoU to explore investment opportunities in gas sector

  • Two of the worlds largest oil companies have signed a cooperation agreement to meet global demands for natural gas
  • Saudi Aramco and UAE's ADNOC have been focusing on raising their gas production

ABU DHABI: The state energy giants of Saudi Arabia and the United Arab Emirates, Aramco and ADNOC, signed a cooperation deal Monday aimed at bolstering gas production and revenue.
The agreement was signed by CEO of Saudi Aramco Amin Hassan Al-Nasser and UAE Minister of State and CEO of ADNOC Group Sultan Ahmed Al-Jaber.
The framework deal saw the two biggest Arab oil firms agree to jointly explore investment opportunities and exchange technical expertise as they seek to tap into natural gas and Liquefied Natural Gas (LNG) markets.
The deal also follows an agreement between the two companies earlier this year to participate in an integrated refining and petrochemical project in India.
“This agreement focuses on attractive and valuable investment opportunities in the field of natural gas and liquefied natural gas and represents a collaborative framework between two global giants of the oil and gas industry,” said Al-Nasser.
“Enhancing cooperation with ADNOC will have a positive impact on the sustainability objectives and will benefit the two companies economically,” he said, adding “we have recently announced our intention to invest in a large-scale refinery on the western coast of India.”
“Saudi Aramco is expanding both conventional and non-conventional gas operations and this new agreement helps us accelerate growth in natural gas and liquefied natural gas, enhance our competitive advantage, diversify our business and expand our international gas investment activities,” Al-Nasser said.
Meanwhile, Al-Jaber said the UAE and Saudi Arabia have a close relationship based on history, vision and common strategic interests. 
“Increased cooperation between ADNOC and Aramco will ensure greater energy security and long-term economic prosperity for both nations,” Al-Jaber said.
No further details on the specifics of the agreement were provided but the two companies have been focusing on raising their gas production.
Last week, UAE’s supreme petroleum council approved investments worth $132 billion over the next five years to boost oil and gas production.
Under the investment plan, both countries aim to become self sufficient in natural gas and later net exporters.
As part of its energy push, ADNOC on Sunday granted French major Total an exploration and production concession agreement for natural gas.
LNG is the fastest growing hydrocarbon at 4% per annum. Global demand for this gas is expected to exceed 500 million tons per year by 2035, up from the demand levels in 2017 which amounted to about 300 million tons. 
The concession agreement aims at producing one billion cubic feet daily of gas by 2030.
ADNOC Gas LNG, a subsidiary of ADNOC, is a reliable supplier of LNG. It has a proven track record of 40 years in this field and accounts for 2% of the global market share of LNG.

* With AFP


Saudi Real Estate Refinance Co. plans up to $1.07bn sukuk sale this year

Updated 35 min 8 sec ago
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Saudi Real Estate Refinance Co. plans up to $1.07bn sukuk sale this year

  • The plan by SRC, a subsidiary of Saudi Arabia’s sovereign Public Investment Fund, comes as it prepares to purchase more home loan portfolios
  • SRC, formed in 2017, is also keen to tap foreign institutional investors for its debt sale this year

RIYADH: Saudi Real Estate Refinance Co. (SRC), modelled on US mortgage finance firm Fannie Mae, aims to issue up to 4 billion riyals ($1.07 billion) of long-term sukuk this year, its chief executive said on Tuesday.

The plan by SRC, a subsidiary of Saudi Arabia’s sovereign Public Investment Fund, comes as it prepares to purchase more home loan portfolios from mortgage financing companies and banks to boost the Kingdom’s secondary mortgage market.

SRC, formed in 2017, is also keen to tap foreign institutional investors for its debt sale this year, Fabrice Susini told Reuters in an interview.

“Our strategy is clearly to tap the market twice this year,” he said. “We are really looking at probably issuing something between ... 2 and 4 billion riyal that we may be issuing in two tranches.

He said SRC was looking at sukuk in the 10 to 15-year range, to help minimize refinancing risks. “Generally speaking we are trying to issue as long as possible,” Susini said.

He said the company was assessing whether it could also issue bonds in currencies other than the local riyal.

In March, SRC completed a 750 million riyal sukuk issue with multiple tenors, under a program that allows it to issue up to 11 billion riyals of local currency denominated Islamic bonds.

“The rule of the game for us is, like many projects across the Kingdom, attract liquidity from foreign investors,” Susini said.

He said SRC had spent 1.2 billion riyals from its balance sheet buying mortgages from local mortgage financing companies and provided liquidity to these firms.

It has also signed initial accords with several commercial banks to acquire housing mortgage portfolios.

Saudi Arabia’s housing ministry is targeting the mortgage market to reach a total value of 502 billion riyals by 2020 from around 300 billion riyals now.

The government wants to increase activity in the real estate market as it moves to revitalize the economy and is taking steps to reform the sector as part of its 2030 reform plan.

It has been working with developers and local banks to counter a shortage of affordable housing — one of the country’s biggest social and economic problems. Saudi Arabia wants 60 percent of its nationals to own homes by 2020, up from 47 percent in 2016.

The size of real estate financing relative to its gross domestic product is 5 percent in Saudi Arabia compared to 69 percent in the United States, 74 percent in the United Kingdom and 43 pct in Canada, the housing ministry has said.

“The goal of SRC in this market was to make sure that we will be able to refinance at least around 10 percent of the market in 2020, and 20 percent of the market by 2028,” Susini told Reuters.