Saudi Arabia well equipped to sustain oil market share

Saudi Arabia well equipped to sustain oil market share
Updated 28 January 2016

Saudi Arabia well equipped to sustain oil market share

Saudi Arabia well equipped to sustain oil market share

JEDDAH: OPEC’s oil production is expected to rise by a further 500,000 barrels per day by Q4 2016 year-on-year, according to a report released by Jadwa Investment.
It said that the current period of low prices is set to remain throughout 2016, pulled down primarily as a result of persistently high oil supply. All-out competition between members of OPEC will be the main reason for continued oversupplied markets.
But Saudi Arabia remains well equipped to hold off any attempts of encroachment on its market share since it is currently the only major oil producer with spare oil production capacity, Jadwa economists added.
Saudi Arabia’s (3 percent of global oil demand) total crude consumption is expected to average 2.8 million barrels per day in Q4 2015 up 5 percent compared to the same period last year, states the Quarterly Oil Market Update released by Jadwa Investment this week.
The rise in oil demand is largely a result of the start up of the 400,000 barrels per day Yasref refinery which came online earlier in 2015.
Latest data shows that year-to-November 2015 crude demand was also at 2.8 million barrels per day, up 8 percent year-on-year, and slightly below our forecasted 2.9 million barrels per day for the full year 2015.
“We expect lower consumption in line with seasonal demand during cooler months in Q1 2016,” said the Jadwa research team.
“Looking further ahead in 2016, while demand for crude will increase as three new crude oil-powered electricity plants come online, higher domestic energy prices and increases in gas output will help keep consumption flat year-on-year,” said the report.
The Hasbah and Arabiyah gas fields will produce non-associated gas processed by the Wasit plant, said the Jadwa report.
“According to Saudi Aramco, the Wasit gas plant will add around 1.75 billion cubic feet of sales gas per day (bcf/d), which we expect will replace the use of more expensive industry diesel and crude oil in generating electricity,” said the economists.
According to the report, total oil output from OPEC rose by 5 percent in Q4 2015, year-on -year, as a result of large increases from Iraq (up 22 percent) and Iran (up 10 percent), which pushed the organization’s quarterly average to 32.5 million barrels per day.
OPEC production in December 2015 was 2 million barrels per day higher than the November 2014 total, when it switched to defending market share from its previous policy of cutting output to maintaining prices.
Jadwa economists believe that lower for longer oil prices will have a direct implication over the kingdom’s current account and fiscal budget.
“We have therefore revised down our forecast for the kingdom’s fiscal and external balances for 2016,” they said.
The fiscal deficit is now expected to reach SR402 billion (17.8 percent of GDP), up from SR313 billion forecasted previously, according to the report.
Imbedded in our new forecast is a sharper reduction in total government spending to SR890 billion, down from our earlier forecast of SR922 billion.
“This reduction in spending will likely be achieved by a stronger implementation of initiatives specified in the budget announcement, which included proposed reforms to improve budgetary procedures, and reviews to existing government projects,” said the Jadwa research team.
“While we now forecast spending to be lower for 2016, our forecast of a steeper decline in total revenue (from SR609 billion to SR488 billion) will mean that the deficit will widen in 2016,” the report added.
The lower spending by the government will cause the non-oil private sector to post a slower growth than previously anticipated.
“We therefore expect growth in non-oil private sector activity to slow down to 2.6 percent, compared to our previous forecast of 2.8 percent. However, we maintain our view that overall GDP will expand by 1.9 percent in 2016,” said the economists.
“We have revised down our forecast for the 2016 current account deficit from $40 billion (6.3 percent of GDP), to $72 billion (12 percent of GDP),” they said.
“As a result of the decline in prices, we think 2016 oil export revenues will fall to their lowest levels since 2003 to reach $101 billion. We expect both non-oil exports and imports to rise marginally compared to their 2015 levels,” said the Jadwa researchers.
The deficit in the services account will meanwhile shrink as a result of lower expected demand for services during 2016.
“We have also revised our forecast for inflation to 3.9 percent, up from 2.5 percent previously. The recent increase to energy and water prices will likely put pressure on prices of multiple components of the headline index, including the housing, electricity, and water, and the transport components,” said the Jadwa economists.


G7 should invest $10tr to stoke economic recovery

G7 should invest $10tr to stoke economic recovery
Updated 34 min 38 sec ago

G7 should invest $10tr to stoke economic recovery

G7 should invest $10tr to stoke economic recovery
  • Summit will be chaired by Britain’s Johnson in Cornwall, southern England, on June 11-13

LONDON: G7 countries should invest $10 trillion to stoke an investment-driven recovery that puts COVID-19 vaccines in arms and triggers a sweeping energy transformation to slow climate change, according to a report requested by Prime Minister Boris Johnson.

US President Joe Biden is expected to join other Group of Seven leaders at a G7 summit chaired by Britain’s Johnson in Cornwall, southern England, on June 11-13.

Founded in 1975 as a forum for the West’s richest nations to discuss crises such as the OPEC oil embargo, the G7 will discuss what it perceives as the biggest threats: China, Russia, climate change and the coronavirus pandemic.

Nicholas Stern, professor of economics at the London School of Economics, said in a report for Johnson that the G7 was a crucial opportunity for the West’s richest economies to make a real change to the global economy.

“The transition to a zero-emissions and climate-resilient world provides the greatest economic, business and commercial opportunity of our time,” Stern said in the report.

“At the heart of the proposed vision for the economic response to the pandemic is a coordinated global program of investment for recovery, reconstruction and transformation that can boost all forms of capital — physical, human, natural and social,” Stern said.

G7 countries, he said, should set a collective goal to raise annual investment by 2 percent of GDP above pre-pandemic levels for this decade and beyond and improve the quality of investment — equal to about $1 trillion per year in additional investment over the next decade.

The G7 leaders should ensure a timely global roll-out of vaccines by immediately closing the $20 billion funding cap of COVAX, a global program to provide vaccines mainly for poor countries.

After Johnson called for countries to do more than produce “hot air” rhetoric on climate, the report said the G7 should come up with credible ways to meet Biden’s climate goals.

The G7 should commit to eliminating all fossil-fuel subsidies no later than 2025, lead a sweeping energy transition, end overseas support for fossil-fuel investments and consider a minimum corporate profit tax of 21 percent.


Copper hits record high on higher demand hopes

Copper hits record high on higher demand hopes
Updated 40 min 20 sec ago

Copper hits record high on higher demand hopes

Copper hits record high on higher demand hopes
  • Bullish investors bet that demand for copper will increase further as the world economy recovers from COVID-19 slumps and as investments into green energy sectors ramp up

HANOI: Copper prices touched record highs in both London and Shanghai markets on Monday on hopes for improved demand amid tightening supply.

Three-month copper on the London Metal Exchange rose to an all-time high of $10,747.50 a ton earlier in the session before easing to $10,694 a ton, still up 2.7 percent.

The most-traded June copper contract on the Shanghai Futures Exchange closed up 4.8 percent to 77,720 yuan ($12,094.62) a ton, after scaling a peak of 78,270 yuan earlier. Sentiment has been boosted following record high LME prices since 2011 hit on Friday.

Bullish investors bet that demand for copper will increase further as the world economy recovers from COVID-19 slumps and as investments into green energy sectors ramp up, while prices were also supported by tight supply in the concentrate market.

“Prices continue to rise as the world is talking about the global recovery and the need for metals,” said Malcolm Freeman, a director at UK broker Kingdom Futures, adding that the LME contract “looks set to attempt $11,000 on a technical basis.”

However, he noted that industrial players are not buying at this price level.

ShFE aluminum surpassed 20,000 yuan a ton, rising as much as 3.8 percent to 20,445 yuan a ton, its highest since January 2010, while ShFE zinc hit its highest since March 2008 of 23,065 yuan a ton. LME aluminum rose 2 percent to $2,590.50 a ton and zinc advanced 1 percent to $3,045 a ton.

A group of 15 key copper smelters in China have agreed to cut their purchases of raw material copper concentrate in 2021 by 8.8 percent year-on-year, state-backed research house Antaike said.


Egypt in talks with international firms to invest in data centers, says minister

Egypt is in talks with international companies to boost investment in data centers and information technology. (Shutterstock/Illustrative)
Egypt is in talks with international companies to boost investment in data centers and information technology. (Shutterstock/Illustrative)
Updated 10 May 2021

Egypt in talks with international firms to invest in data centers, says minister

Egypt is in talks with international companies to boost investment in data centers and information technology. (Shutterstock/Illustrative)
  • The aim is to take advantage of the geographical location of Egypt and the passage of a large number of international data cables between Asia and Europe

RIYADH: Egypt is in talks with international companies to boost investment in data centers and information technology, the country's communications minister revealed.

The aim is to take advantage of the geographical location of Egypt and the passage of a large number of international data cables between Asia and Europe, reaching North America, said Minister of Communications and Information Technology,Amr Talaat.

It is part of a wider push to build an integrated digital society, Al Arabiya reported.

That is why the budget for the information technology sector and the ministry’s budget has been growing over the last two years and will continue to grow over the next three years, he added.

“We have started building the Egypt digital platform that provides more than 70 digitized government services at the present time, and we look forward to increasing it to 170 services by the end of this year, and then increasing to include all government services within two years until 2023,” said the minister.


Egyptian prime minister discusses industry localization with US firm Bechtel

According to a statement issued by the Egyptian government, Madbouly said that the Bechtel delegation’s visit to Egypt was part of a strategy to enhance Egyptian-American cooperation. (AFP/File Photo)
According to a statement issued by the Egyptian government, Madbouly said that the Bechtel delegation’s visit to Egypt was part of a strategy to enhance Egyptian-American cooperation. (AFP/File Photo)
Updated 10 May 2021

Egyptian prime minister discusses industry localization with US firm Bechtel

According to a statement issued by the Egyptian government, Madbouly said that the Bechtel delegation’s visit to Egypt was part of a strategy to enhance Egyptian-American cooperation. (AFP/File Photo)
  • Mostafa Madbouly said the country was currently localizing industrial production with the aim of rendering it more sustainable

CAIRO: Egyptian Prime Minister Mostafa Madbouly held discussions with US construction firm Bechtel on ways to increase the use of local products and components in the development of projects in Egypt.

According to a statement issued by the Egyptian government, Madbouly said that the Bechtel delegation’s visit to Egypt was part of a strategy to enhance Egyptian-American cooperation across a number of sectors.

The prime minister said there were several projects in Egypt being developed in cooperation with American companies, like the petrochemical complex in the Ain Sokhna area. He added that he is following up on these megaprojects.

Madbouly also said that he welcomed the cooperation proposed by Bechtel in constructing a sixth metro line and in managing new cities.

Bechtel’s Infrastructure Global Business Unit President Shaun Kenny expressed his enthusiasm to work with the Egyptian government on megaprojects currently being implemented, especially the metro line.

The Egyptian prime minister stated that the country is currently localizing its industrial production with the aim of rendering it more sustainable.


Egypt’s Cleopatra Hospitals bid to buy Alameda Healthcare halted

Egypt’s Cleopatra Hospitals Group said its bid to acquire Alameda Healthcare through a sale and purchase agreement of shares has been halted. (Cleopatra Hospitals Group)
Egypt’s Cleopatra Hospitals Group said its bid to acquire Alameda Healthcare through a sale and purchase agreement of shares has been halted. (Cleopatra Hospitals Group)
Updated 10 May 2021

Egypt’s Cleopatra Hospitals bid to buy Alameda Healthcare halted

Egypt’s Cleopatra Hospitals Group said its bid to acquire Alameda Healthcare through a sale and purchase agreement of shares has been halted. (Cleopatra Hospitals Group)
  • The proposed deal was originally announced by Cleopatra in late December 2020

RIYADH: Egypt’s Cleopatra Hospitals Group said its bid to acquire Alameda Healthcare through a sale and purchase agreement of shares has been halted.

It made the disclosure in a filing to the Egyptian Stock Exchange on Monday.

The proposed deal was originally announced by Cleopatra in late December 2020, with an estimated value of about $500 million.

But it was quickly followed by an announcement from the Egyptian Competition Authority saying that it did not agree in principle to the acquisition.

It highlighted the potential consolidation of Cleopatra’s dominance over hospitals around Cairo and Giza.

Alameda Healthcare’s network includes four tertiary care hospitals in Cairo, two of which are currently being constructed. Once the facilities are fully commissioned Alameda Healthcare will have a capacity of 890 beds, according to its website. The network also includes facilities in Kuwait and London, outpatient clinics, diagnostic centers, specialist centers, pharmacies, and a rehabilitation center.