No production cut to make space for others: Kingdom

Updated 24 January 2016

No production cut to make space for others: Kingdom

JEDDAH: The Kingdom will not cut oil production and give up its market share in order to prop up prices, said the chairman of Saudi Aramco at the World Economic Forum in Davos.
“We are not going to accept to withdraw our production to make space for others,” Khalid Al-Falih said at a panel hosted by CNN’s emerging markets editor John Defterios.
Saudi Arabia is the world’s second biggest oil producer and the top crude exporter. “This is the position that we’ve earned...we are not going to leave that position to others,” Al-Falih said.
He said Saudi Arabia has in the past played the role of a “reserve bank” in the oil market, smoothing short-terms shocks. The country has acted during the financial crisis and during civil unrest and wars in oil producing regions that have disrupted supplies. But it will not step in to fix the hugely oversupplied market.
“Saudi Arabia has never advocated that it would take the sole role of balancing market against structural imbalance,” he said at the CNN panel.
“If there are short-term adjustments that need to be made and if other producers are willing to collaborate, Saudi Arabia will also be willing to collaborate,” he said.
Oil prices have crashed to $27 per barrel from well over $100 in just 18 months. “If the prices continue to be low, we will able to withstand it for a long long time ... obviously we hope it will not happen,” he said.
He said the current prices are “unreasonable,” but are probably not likely to climb much any time soon. “Short term, it’s a very bleak picture,” he said.
Saudi production (now at about 10.3 mbd) would be nothing by now if the Kingdom had continuously cut production to allow room for others, he added.
Earlier this week, Foreign Minister Adel Al-Jubeir told CNN that supply and demand are governing Saudi’s oil strategy, not an attempt to hurt Iran. “People should go back to Adam Smith and basic economics. It’s about supply and demand ...We let the market determine where the equilibrium should be. What we’re seeing now is the market price,” he said.
Saudi Arabia has the world’s largest spare crude oil production capacity. Saudi Aramco says it is the world’s lowest-cost producer.


Saudi energy giant to invest $3bn in Bangladesh’s power sector

Updated 22 October 2019

Saudi energy giant to invest $3bn in Bangladesh’s power sector

  • Experts say deal will usher in more economic and development opportunities for the country

DHAKA: Saudi Arabia’s energy giant, ACWA power, will set up an LNG-based 3,600 MW plant in Bangladesh after an agreement was signed in Dhaka on Thursday.

The MoU was signed by ACWA Chairman Mohammed Abunayyan and officials from the Bangladesh Power Development Board (BPDB), officials told Arab News on Monday.

According to the agreement, ACWA will invest $3 billion in Bangladesh’s energy development sector, of which $2.5 billion will be used to build the power plant while the rest will be spent on an LNG terminal to facilitate fuel supply to the plant. Under the deal, ACWA will also set up a 2 MW solar power plant.

In recent months, both countries have engaged in a series of discussions for investment opportunities in Bangladesh’s industry and energy sectors. 

During the Saudi-Bangladesh investment cooperation meeting in March this year, Dhaka proposed a $35 billion investment plan to a high-powered Saudi delegation led by Majed bin Abdullah Al-Qasabi, the Saudi commerce and investment minister, and Mohammed bin Mezyed Al-Tuwaijri, the Saudi economy and planning minister.

However, officials in Dhaka said that this was the first investment deal to be signed between the two countries.

“We have just inked the MoU for building the LNG-based power plant. Now, ACWA will conduct a feasibility study regarding the location of the plant, which is expected to be completed in the next six months,” Khaled Mahmood, chairman of BPDB, told Arab News.

He added that there are several locations in Moheshkhali, Chottogram and the Mongla port area for the proposed power plant.

“We need to find a suitable location where the drift of the river will be suitable for establishing the LNG plant and we need to also consider the suitability of establishing the transmission lines,” Mahmood said.

“It will be either a JV (Joint Venture) or an IPP (Independent Power Producer) mode of investment, which is yet to be determined. But, we are expecting that in next year the investment will start coming here,” Mahmood said.

BPDB expects to complete the set-up process of the power plant within 36 to 42 months.

“We are in close contact with ACWA and focusing on the successful completion of the project within the shortest possible time,” he said.

Abunayyan said that he was optimistic about the new investment deal.

“Bangladesh has been a model for the Muslim world in economic progress. This is our beginning, and our journey and our relationship will last for a long time,” Abunayyan told a gathering after the MoU signing ceremony.

Economists and experts in Bangladesh also welcomed the ACWA investment in the energy development sector.

“This sort of huge and long-term capital investment will create a lot of employment opportunities. On the other hand, it will facilitate other trade negotiations with the Middle Eastern countries, too,” Dr. Nazneen Ahmed, senior research fellow at the Bangladesh Institute of Development Studies (BIDS), told Arab News.

She added that Bangladesh needs to weigh the pros and cons before finalizing such contracts so that the country can earn the “maximum benefits” from the investment.

“It will also expedite other big investments in Bangladesh from different countries,” she said.

Another energy economist, Dr. Asadujjaman, said that Bangladesh needs to exercise caution while conducting the feasibility study for such a huge investment.

“We need to address the environmental aspects, opportunity costs and other economic perspectives while working with this type of big investment. Considering the present situation, the country also needs to focus on producing more solar energy,” Dr. Asadujjaman told Arab News.