US energy secretary meets Saudi counterpart after OPEC cuts

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Saudi Arabia’s energy minister, Khalid Al-Falih, met with his US counterpart, Rick Perry, after OPEC defied US pressure to cut oil production in a bid to prop up prices. (Twitter/@Khalid_AlFalih)
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Saudi Arabia’s energy minister, Khalid Al-Falih, met with his US counterpart, Rick Perry, after OPEC defied US pressure to cut oil production in a bid to prop up prices. (Twitter/@Khalid_AlFalih)
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Saudi Arabia’s energy minister, Khalid Al-Falih, met with his US counterpart, Rick Perry, after OPEC defied US pressure to cut oil production in a bid to prop up prices. (Twitter/@Khalid_AlFalih)
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Saudi Arabia’s energy minister, Khalid Al-Falih, met with his US counterpart, Rick Perry, after OPEC defied US pressure to cut oil production in a bid to prop up prices. (Twitter/@Khalid_AlFalih)
Updated 10 December 2018
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US energy secretary meets Saudi counterpart after OPEC cuts

RIYADH: Saudi Arabia’s energy minister held talks Monday with US Energy Secretary Rick Perry, after the Kingdom and its allies defied US pressure to cut oil production in a bid to prop up prices.
They discussed the “state of the oil market” and energy cooperation between the two countries during a meeting in eastern Dhahran city, the minister, Khalid Al-Falih, said on Twitter.
Perry tweeted that he discussed the need for “open, free, and fair markets with the Saudis.”
OPEC members and 10 other oil producing nations, including Russia, on Friday agreed to cut output by 1.2 million barrels a day from January in a bid to reverse recent falls in prices.
The decision came even as US President Donald Trump demanded that the cartel boost output in order to push prices down.
But Al-Falih shrugged off the pressure last week, saying “we don’t need permission from anyone to cut” production.
The US “is not in a position to tell us what to do,” he told reporters ahead of Friday’s OPEC meeting in Vienna.
Last week, for the first time in decades, the United States — which is not a member of OPEC — was a net exporter of crude oil and petroleum products.
It was the latest sign of how the shale boom has lifted the US standing on global petroleum markets, prompting talk of “energy dominance” by Trump.
Perry’s visit to Dhahran came as Crown Prince Mohammed bin Salman unveiled state oil giant Aramco’s plan for a new energy megaproject in the area known as the King Salman Energy Park (SPARK).
The energy park is expected to attract an initial investment of $1.6 billion, Aramco said.


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

Updated 42 min 31 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.