Oil keeps falling. And falling. How low can it go?

Oil keeps falling. And falling. How low can it go?
Updated 13 January 2016

Oil keeps falling. And falling. How low can it go?

Oil keeps falling. And falling. How low can it go?

DALLAS: The price of oil keeps falling. And falling. And falling. It has to stop somewhere, right?
Even after trending down for a year and a half, US crude has fallen another 17 percent since the start of the year and is now probing depths not seen since 2003.
"All you can do is forecast direction, and the direction of price is still down," says Larry Goldstein of the Energy Policy Research Foundation, who predicted a decline in oil in 2014.
On Tuesday the price fell another 3 percent to $30.51 a barrel in morning trading, its lowest level in 12 years. Oil had sold for roughly $100 a barrel for nearly four years before beginning to fall in the summer of 2014.
Many now say oil could drop into the $20 range.
The price of crude is down because global supplies are high at a time when demand for it is not growing very fast. The price decline, already more dramatic and long-lasting than most expected, deepened in recent days because economic turmoil in China is expected to cut demand for oil even further.
Lower crude prices are leading to lower prices for gasoline, diesel, jet fuel and heating oil, giving drivers, shippers, and many businesses a big break on fuel costs. The national average retail price of gasoline is $1.96 a gallon.
On Tuesday the Energy Department lowered its expectations for crude oil and most fuels for this year and next. The department now expects US crude to average $38.54 a barrel in 2016.
But layoffs across the oil industry are mounting, and bankruptcies among oil companies are expected to soar. BP announced layoffs of 4,000 workers on Tuesday. Fadel Gheit, an analyst at Oppenheimer & Co., says as many as half of the independent drilling companies working in US shale fields could go bankrupt before oil prices stabilize.
A boom in US oil production thanks to new drilling technology helped push global supplies higher in recent years. Other major oil producers and exporters in the Middle East and elsewhere have declined to reduce their own output in an attempt to push prices back up. Iran is looking to increase exports in the coming months, which could add further to global oil stockpiles.
The Energy Department said US crude oil inventories "remain near levels not seen for this time of year in at least the last 80 years." It says global supplies exceed global demand by about 1 million barrels per day on average. Economists at the Federal Reserve Bank of Dallas believe excess inventories won't begin falling until 2017.
The higher supplies and lower prices haven't translated into rising global demand. Most of the increase in world oil demand over the past several years has come from China, but signs are pointing to much slower economic growth there, which in turn reduces demand for fuels made from crude.
Disappointing reports last week about China's manufacturing sector and a fall in the yuan's value triggered a global stock sell-off and an even more dramatic decline in the price of oil and other commodities. The first five days of the year marked the worst start of a year for oil in history, according to S&P Dow Jones Indices, and oil has only fallen further since.

WINNERS AND LOSERS
Motorists are saving every time they fill up. The Energy Information Administration figures that the average US household saved about $660 on gasoline last year compared with 2014, and that the average price for gasoline this year will be $2.03 a gallon, the lowest since 2004.
Airlines, big users of jet fuel, have posted record profits, and other businesses are saving too from cheaper energy.
But workers in the oil patch have paid the price. About 17,000 oil and gas workers in the US lost their jobs in 2015, but if you include oilfield support jobs the number is about 87,000, according to Michael Plante, an economist at the Dallas Fed who has written about the effect of oil prices on the economy.
Even so, economists say low oil prices are still a net benefit for the US economy.
"Consumers have more money in their pocketbooks," says Amy Myers Jaffe, an energy consultant who teaches at the University of California, Davis. And for businesses, "I can hire more people or buy new equipment because I no longer have to spend that money on energy."

WHEN DOES IT END?
Oil traders and Wall Street analysts expect further declines in oil prices in the coming weeks. Several have predicted that prices will fall below $30 a barrel and even approach $20 a barrel.
There are wild cards that could result in a sudden rise in oil. A perennial threat is fighting in the Middle East, which has destroyed production facilities in the past.


Accor’s Hyde to open first international property in Dubai

Accor’s Hyde to open first international property in Dubai
Updated 19 June 2021

Accor’s Hyde to open first international property in Dubai

Accor’s Hyde to open first international property in Dubai
  • The new five-star hotel will be located in Business Bay, which is close to the iconic Burj Khalifa

Hyde, a brand under global hospitality group Accor, said that it is launching its first property outside the US in Dubai — set to open in the last quarter of the year.

The new five-star hotel will be located in Business Bay, which is close to the iconic Burj Khalifa. It has 276 rooms and offers canal views.

Developer Emerald Palace Group (EPG) is working with hotel management company SBE to develop the property, which is part of Accor’s expansion plans.

“We couldn’t be happier to be working with Emerald Palace Group on bringing the Hyde brand to Business Bay in Dubai,” said Chadi Farhat, CEO of SBE.

“Hyde Dubai Business Bay will continue to bring additional lifestyle experiences to one of the most vibrant destinations in the world,” he added, saying they are set to bring well-known culinary concepts to the hotel.

The Accor group earlier announced it was expanding its global portfolio of hotels around the world, especially amid a challenging time for tourism and hospitality.

Recent Accor openings include the SLS Dubai and SLS Cancun.


EU threatens Lebanese politicians with sanctions over crisis

EU threatens Lebanese politicians with sanctions over crisis
Updated 21 min 3 sec ago

EU threatens Lebanese politicians with sanctions over crisis

EU threatens Lebanese politicians with sanctions over crisis
  • Lebanon’s economic crisis began in late 2019 and has intensified in recent months
  • Borrell said the EU stands ready to assist Lebanon and its people

BEIRUT: The European Union’s foreign policy chief Saturday berated Lebanese politicians for delays in forming a new Cabinet, warning the union could impose sanctions on those behind the political stalemate in the crisis-hit country.
Josep Borrell made his comments at the presidential palace near the capital Beirut after meeting with President Michel Aoun. It was the first meeting in a two-day visit to Lebanon.
Borrell said Lebanese politicians should quickly form a new government, implement reforms and reach a deal with the International Monetary Fund to start getting the tiny country out of its paralyzing economic and financial crisis.
Lebanon’s economic crisis — triggered by decades of corruption and mismanagement — began in late 2019 and has intensified in recent months. The World Bank said earlier this month the crisis is likely to rank as one of the worst the world has seen in more than 150 years, adding that the economy contracted 20.3 percent in 2020 and is expected to shrink 9.5 percent this year.
A power struggle between premier-designate Saad Hariri on one side, and Aoun and his son-in-law Gebran Bassil on the other, has worsened the crisis despite warnings from world leaders and economic experts of the dire economic conditions tiny Lebanon is facing.
Hariri was named to form a new government in October and has not succeeded so far. The government of Prime Minister Hassan Diab resigned days after a massive blast in Beirut on Aug. 4, that killed 211 people and injured more than 6,000.
“We cannot understand that nine months after the resignation of a prime minister, there is still no government in Lebanon,” Borrell said. “Only an urgent agreement with the International Monetary Fund will rescue the country from a financial collapse.”
“There is no time to waste. You are at the edge of the financial collapse,” he said in English.
Borrell said the EU stands ready to assist Lebanon and its people but warned that if there is further obstruction to solutions “we will have to consider other courses of actions as some member states have proposed.”
“The council of the European Union has been including other options, including targeted sanctions,” Borrell said. He added: “Of course we prefer not to go down this road and we hope that we will not have to but it is in the hands of the Lebanese leadership.”
Borrel rejected claims by some Lebanese politicians that refugees are the cause of the crisis, saying it is “homemade.”
“It is not fair (to say) that the crisis in Lebanon comes from the presence of refugees,” he said referring to a nearly 1 million Syrian refugees who fled the war in their country to Lebanon.

 

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Global consortium completes $12.4bn stake sale in Aramco unit

Global consortium completes $12.4bn stake sale in Aramco unit
Updated 19 June 2021

Global consortium completes $12.4bn stake sale in Aramco unit

Global consortium completes $12.4bn stake sale in Aramco unit
  • It is part of the company’s long-term strategy to maximize its profit by optimizing its portfolio as Saudi Arabia seeks to diversify its income sources

DUBAI: Saudi Aramco has completed a $12.4 billion stake sale in its natural gas pipeline network to a global consortium that includes US-based EIG and Abu Dhabi’s Mubadala.

The international consortium, which consists of broad cross-section investors from North America, Asia and the Middle East, acquired 48 percent of the Aramco Oil Pipelines Co.

It is part of the company’s long-term strategy to maximize its profit by optimizing its portfolio as Saudi Arabia seeks to diversify its income sources.

“We are pleased to conclude this transaction with the global consortium. The interest we have received from investors shows strong confidence in our operations and the long-term outlook for our business,” Aramco President Amin Nasser said.

“We plan to continue to explore opportunities to capitalize on our industry-leading capabilities and attract the right type of investment to Saudi Arabia,” he added.

As part of the transaction, Aramco and its subsidiary entered into a 25-year leaseback agreement for the company’s stabilized crude oil pipeline network.

In return, Aramco Oil Pipelines Co. will receive a tariff payable by Aramco for stabilized crude oil that flows through the network.

Aramco retains a 51-percent majority stake in the subsidiary, and the transaction does not impose any restrictions on Aramco’s crude oil production volumes.


Qatar expects $20bn economic boost from 2022 World Cup

Qatar expects $20bn economic boost from 2022 World Cup
Updated 19 June 2021

Qatar expects $20bn economic boost from 2022 World Cup

Qatar expects $20bn economic boost from 2022 World Cup
  • Al-Thawadi said the construction and tourism industries are expected to benefit the most from the event

DUBAI: Qatar is anticipating big returns from hosting the World Cup in 2022, Bloomberg has reported.

“We anticipate the contribution to the economy essentially would be around about $20 billion,” said Hassan Al-Thawadi, secretary-general of the committee for delivery and legacy, citing a “high-level study.”

That represents 11 percent of the country’s gross domestic product in 2019.

But a more detailed projection is yet to be declared, he added, as the event will take place in November and December next year.

Al-Thawadi said the construction and tourism industries are expected to benefit the most from the event.

Qatar has developed massive infrastructure ahead of the cup, which could be the first widely attended sporting event since the outbreak of the COVID-19 pandemic.

It is building a new metro system, an airport expansion and an entirely new city, which Bloomberg estimates to be worth $300 billion.


Arab economies jostle for position in $200 billion green hydrogen race

Arab economies jostle for position in $200 billion green hydrogen race
Updated 19 June 2021

Arab economies jostle for position in $200 billion green hydrogen race

Arab economies jostle for position in $200 billion green hydrogen race
  • The region has the potential to be one of the most competitive globally for green hydrogen production thanks to its abundant wind and solar resources

RIYADH: Another week, another huge green hydrogen project announcement in the Middle East. This time, it was Egypt’s turn. The most populous Arab nation is planning to invest up to $4 billion in a project to create hydrogen through electrolysis powered by renewable energy, Egyptian Minister of Electricity and Renewable Energy Mohamed Shaker said on June 14.
The disclosure follows a flurry of announcements last month, including Oman’s plan for the biggest green hydrogen plant in the world, to be built over the coming 27 years along with 25 GW of solar and wind power.
Also in May, Dubai launched the region’s first industrial scale solar-powered green hydrogen plant, a demonstration facility built by Siemens Energy and Dubai Electricity and Water Authority (DEWA).
Later in the month, Abu Dhabi got in on the act as it revealed plans for a $1 billion facility with capacity to produce 200,000 tons of green ammonia from 40,000 tons of green hydrogen (hydrogen is turned into ammonia for long-distance transport before being transformed back for use).
As for Saudi Arabia, it unveiled plans in July last year for a green hydrogen facility powered by 4 GW of wind and solar, the world’s largest such project at the time. The $5 billion plant will be built by Air Products, ACWA Power and Neom and will be capable of producing 650 tons of green hydrogen a day, enough to run about 20,000 hydrogen-fueled buses.
“The Middle East has joined the green hydrogen wave with mega project announcements,” said Flor Lucia De la Cruz, a senior research analyst for hydrogen and emerging technologies at Wood Mackenzie. “The Middle East has now positioned itself to become a key player in the green hydrogen economy leveraging its solar and wind capabilities and strategic position in between the European and Asian markets.”


The region has the potential to be one of the most competitive globally for green hydrogen production thanks to its abundant wind and solar resources, industrial infrastructure and its location as an export hub, Dii Desert Energy and Roland Berger said in a report on the industry this month.
The Gulf alone could create a $200 billion green hydrogen industry by 2050, generating up to one million jobs, the report said as it predicted a long-term renewable energy deployment of up to 1,000 GW, 500 GW of electrolyzer capacity producing 100 million megatons of hydrogen.
“The GCC region is on the verge of a new era similar to the discovery of oil decades ago,” Vatche Kourkejian, a partner at Roland Berger, wrote in the report. Green hydrogen could allow the Gulf to continue being the main energy supplier to the world in a sustainable manner, he said.
The majority of the world’s hydrogen today (about 95 percent) is considered brown or gray, in that it is produced by steam reforming of natural gas, partial oxidation of methane or coal gasification. While the end product is a clean fuel, the production process uses huge amounts of energy and creates significant amounts of carbon dioxide.
So-called blue hydrogen uses the same process as gray hydrogen, but captures the carbon. Green hydrogen creates the gas through splitting water into oxygen and hydrogen via electrolysis and powering the process with renewable energy, leaving no dirty byproducts.
As well as allowing for the storage of intermittent wind and solar power, hydrogen can also be used to heat homes and cook as a replacement for natural gas, power vehicles, including planes and ships as well as cars, trucks and trains, and be used in industry to reduce the environmental impact of making metals, chemicals and refining oil.
However, the Middle East is not the only region looking to green hydrogen for future industrial development.
So far, 17 countries, (including Japan, South Korea, Canada and UK) have announced a hydrogen roadmap, strategy or vision, according to Wood Mackenzie.
Last year, the EU’s Green Recovery Package earmarked €150 billion ($178 billion) for green hydrogen, including targets for 6 GW of electrolyzer capacity in the first phase between 2020 and 2024, with 40 GW to be installed by the end of the second phase in 2030.
“The last year has seen a decisive pivot toward decarbonization globally, which is extremely positive for zero-carbon technologies,” said Ben Gallagher, lead analyst, emerging technologies at Wood Mackenzie. “Green hydrogen is a key beneficiary, with this pivot pushing it to the fore ahead of other methods for producing the gas. In fact, electrolysis-based low-carbon production now makes up 67 percent of the overall pipeline for hydrogen.”