$15.5bn Gulf rail project: Overseeing body on way

Updated 28 December 2013

$15.5bn Gulf rail project: Overseeing body on way

ABU DHABI: Construction of a $15.5 billion rail network linking the six Gulf states will start late next year and an overseeing authority for the project is being set up, an adviser said.
The joint project is to develop a railway network linking Oman in the south to Kuwait in the north through the UAE, Qatar, Bahrain and Saudi Arabia.
Progress has been held up by bureaucratic and technical obstacles, but if the railway is completed, it could have a major impact on the Gulf economy by stimulating trade and limiting consumption of fuel for road travel.
Detailed engineering and design (DED) work will be completed by late 2013 or early 2014, with construction to follow, Ramiz Al-Assar, the World Bank’s resident adviser to the Gulf Cooperation Council (GCC) Secretariat, told a conference organized by MEED, a business information company.
A GCC authority to oversee the project is being established after it was recently approved by national ministers of transport and finance, he said.
“Some key milestones have been achieved and we are targeting for the project to be fully operational in 2018,” he said.
GCC countries will build their parts of the railway on their own; the UAE and Saudi Arabia have begun their construction work while other countries will start shortly, he added.
Oman has begun preliminary design on its rail project.
Meanwhile, the contract to study a proposal for a new causeway linking Saudi Arabia and Bahrain, part of the GCC rail project, will be awarded next month and the study is scheduled to be completed in 2014, he said.
“This is an important strategic project in the scheme.”


WEEKLY ENERGY RECAP: Keeping things in balance

Updated 08 December 2019

WEEKLY ENERGY RECAP: Keeping things in balance

  • The over-compliance will result in cuts of 1.7 million bpd

Brent crude rose above $64 per barrel after OPEC+ producers unanimously agreed to deepen output cuts by 503,000 barrels per day (bpd) to a total 1.7 million bpd till the end of the first quarter of 2020.

The breakdown is that OPEC producers are due to cut 372,000 bpd and non-OPEC producers to cut 131,000 bpd.

Current market dynamics led to this decision as oil price-positive news outweighed more bearish developments in the US-China trade narrative that has weighed on oil prices throughout the year, with US crude exports rising to a record 3.4 million bpd in October versus 3.1 million bpd in September.

OPEC November crude oil output levels at 29.8 million bpd show that producers were already overcomplying with its current 1.2 million bpd output cuts deal by around 400,000 bpd. 

The over-compliance will result in cuts of 1.7 million bpd, especially when Saudi Arabia continues to voluntarily cut more than its share.

This makes the agreed 1.7 million bpd output cuts pragmatic since it won’t taken any barrels out of the market.

It isn’t a matter of OPEC making room in the market for other additional supplies from non-OPEC sources, as OPEC barrels can’t be easily replaced.

Instead, this is about avoiding any oversupply that might damage the global supply-demand balance.

Saudi energy minister Prince Abdulaziz bin Salman has effectively kept his promise and managed to smoothly forge a consensus among OPEC and non-OPEC producers.

He has also successfully managed the 24-country coalition of OPEC+ including Russia in reaching an agreement.

Despite suggestions otherwise in recent coverage of the Vienna meeting, the deeper cuts announced on Friday have nothing to do with the Aramco IPO. Let’s remember this meeting was scheduled six months ago and the IPO has been in the works for much longer.

The Aramco share sale did not target a specific oil price. If that was a motivating factor it could easily have chosen another time.