Trade wars, shale are energy industry’s top concerns: UAE minister

UAE Energy Minister Suhail Al-Mazroui. (Getty Images)
Updated 10 January 2019

Trade wars, shale are energy industry’s top concerns: UAE minister

  • Al-Mazroui says booming shale production in the US could throw out OPEC attempts to balance supply and demand of crude
  • Al-Mazroui cautiously optimistic that talks in China with American trade representatives could avert the possibility of an all-out trade war

ABU DHABI: A trade war between China and the US, and the prospect of increased production of American shale oil, are the top concerns for the energy industry in 2019, according to UAE Energy Minister Suhail Al-Mazroui.

Al-Mazroui, who was president of the Organization of the Petroleum Exporting Countries (OPEC) last year, told a conference in Abu Dhabi that both trends threatened to throw the global oil industry out of balance after a spike in the volatility of energy prices.

Speaking at the UAE Energy Forum 2019, organized by the consulting firm Gulf Intelligence in the capital Abu Dhabi, he said he was cautiously optimistic that talks in China with American trade representatives could avert the possibility of an all-out trade war.

“This (a possible trade war) is fundamental, not only affecting us but affecting the whole economy of the world. I tend to be more optimistic that we’re not going to see a war. It’s negotiation tactics. They’ll end on a resolution, whatever it takes, this year or next year,” Al-Mazroui said.

Booming shale production in the US, which helped make America the top oil producer in 2018, could throw out OPEC attempts to balance global demand and supply of crude, he added. 

After a year of steadily rising oil prices, crude fluctuated sharply in the final quarter of the year. From a high of $86 per barrel last October, Brent crude fell on fears of oversupply, weak global economic demand, and geopolitical factors such as the decision by US President Donald Trump to exclude some of the biggest oil consumers from the newly reintroduced sanctions on Iranian exports.

Al-Mazroui said the exemptions on Iranian exports “weren’t expected by OPEC, but when they came we dealt with them.” The volatility in the final quarter of the year was “not acceptable,” he added. But he said 2018 was a “good year” for OPEC in which it had sought to stabilize oil supplies around the five-year average, and it was “still very close” to that level, with obvious implications for the oil price.

In the face of criticism from Trump of last month’s decision by OPEC and non-OPEC producers led by Russia to cut production by 1.2 million barrels per day, Al-Mazroui said: “We’re not playing with President Trump or any other president. We hear them (the Americans). They’re major consumers versus the major producing nations. We hear what they say, but we’ll always do the right thing from our perspective, which is always trying to maintain the balance.”

Asked about the relevance of OPEC in the wake of the decision by Qatar to leave the producers’ organization, Al-Mazroui said: “OPEC will always be there. On average, more countries are joining than are leaving. It was a sovereign decision (by Qatar), but we don’t understand the logic.”

Crisis at India's Jet worsens as it grounds planes, faces strike

The debt-laden carrier has delayed payments to banks, suppliers, pilots and lessors. (Reuters)
Updated 34 min 12 sec ago

Crisis at India's Jet worsens as it grounds planes, faces strike

  • More than 20,000 people are employed in the company
  • The company had to stop more than 50% of their aircraft due to insufficient funds

MUMBAI: India's Jet Airways was fighting multiple crises Wednesday after grounding six planes, leaving it with only a third of its fleet flying, while pilots have threatened to walk out and a major shareholder is reportedly looking to offload its huge stake.

The problems at India's number-two carrier come as other airlines struggle to turn a profit despite the sector rapidly expanding in the country over recent years.

Jet, which employs more than 20,000 people, is gasping under debts of more than $1 billion and has now been forced to ground a total of 78 of its 119 aircraft after failing to pay lenders and aircraft lessors.

In a statement late Tuesday announcing its latest grounding, the firm it said it was "actively engaging" with lenders to secure fresh liquidity and wanted to "minimise disruption".

But with hundreds of customers left stranded, Jet's social media accounts have been flooded with often suddenly stranded passengers demanding information, new flight tickets and refunds.

"@jetairways We book our flights in advance so that we save on travel cost and you are sending cancellation (message) now?", read one irate tweet on Wednesday.

"I have sent a DM (direct message) regarding my ticket details. Please respond!", said Sachin Deshpande, according to his Twitter profile a design engineer.

Another, Ankit Maloo, wrote: "Received an email for all together cancellation of flight days before departure without any prior intimation or communication over phone!"

The firm is also facing pressure from its many pilots who have not been paid on time, with unions threatening they will walk off the job if salaries do not arrive soon.

"Pilots will stop flying jet planes from 1st April 2019 if the company does not disburse due salaries and take concrete decisions," a spokesperson for the National Aviator's Guild, a pilots union, told AFP.

India's aviation regulator on Tuesday warned Jet Airways to ensure that staffers facing stress are not forced to operate flights.

Meanwhile, Bloomberg reported that Etihad Airways of the United Arab Emirates has offered to sell its 24 percent stake in Jet to State Bank of India (SBI).

A collapse would deal a blow to Prime Minister Narendra Modi's pragmatic pro-business reputation ahead of elections starting on April 11.

India's passenger numbers have rocketed six-fold over the past decade with its middle-class taking advantage of better connectivity and cheaper flights.

The country's aviation sector is projected to become the world's third-largest by 2025.

But like other carries, Mumbai-based Jet has been badly hit by fluctuating global crude prices, a weak rupee and fierce competition from budget rivals.

Alarm bells for Jet first rang in August when it failed to report its quarterly earnings or pay its staff, including pilots, on time. It then later reported a loss of $85 million.

In February, it secured a $1.19 billion bailout from lenders including SBI to bridge a funding gap, but the crisis has since deepened.

"Jet Airways is rapidly reaching a point of no return and running out of assets to keep itself afloat," Devesh Agarwal, editor of the Bangalore Aviation website, told AFP.

"The only solution is equity expansion by diluting its stakes but Jet is just trying to cut losses and running out of options," Agarwal said.

Shares in Jet Airways were down more than five percent on Wednesday.