WEEKLY ENERGY RECAP: Strength in adversity

Damage at Saudi Arabia’s Abqaiq oil processing plant. (AFP)
Updated 22 September 2019

WEEKLY ENERGY RECAP: Strength in adversity

  • Saudi Aramco was able to continue with its deliveries which reassured the market

The week started with the largest “force majeure” in the history of the oil industry following the attacks on Saudi Aramco oil and gas facilities in Abqaiq and Khurais. 

It represented a supply disruption of some 5.7 million barrels per day (bpd). 

Still, Saudi crude oil exports were suspended for only 36 hours before resuming. Brent crude’s price started the week on levels not seen since late April, above $70.

The market calmed down after Saudi Aramco customers confirmed that their near-term crude oil term allocations were not affected by the attacks and that there was sufficient stockpiles to cover for lost production.

This clearly demonstrated the robust and resilient infrastructure of Saudi Aramco oil and gas facilities.

The immediate risk management response greatly mitigated the losses despite suggestions from parts of the oil industry media that the attacks highlighted the vulnerability of Saudi oil supplies.

Saudi Aramco was able to continue with its deliveries which reassured the market and was the main factor in the gradual retreat of the oil price over the week.

Brent softened to $64.28 per barrel and WTI fell to $58.09 — but that was still up almost $4 from a week earlier.

That represented the biggest weekly gain this year since, with prices moving mostly in a very narrow band until this week.

Elsewhere, the US EIA reported that Cushing oil stocks were at their lowest level since October 2018. 

Storms in Texas also triggered the shutdown of some pipeline and terminal capacity, but the impact on the market is not yet clear as it coincides with a period of extensive refinery turnarounds in the region.

Softening crude oil futures show that the physical market is more concerned than the paper market as Arabian Gulf sour crude grades continue to strengthen. 

Platts reported that the backwardation (where the spot price of oil is higher than the future price) in the Dubai forward price structure rose to a six-year high of $2.90 per barrel. 

• Faisal Faeq is an energy and oil marketing adviser. He was formerly with OPEC and Saudi Aramco. Twitter:@faisalfaeq


Saudi Arabia promotes investment opportunities with Japan’s business leaders  

Updated 23 October 2019

Saudi Arabia promotes investment opportunities with Japan’s business leaders  

  • Saudi Arabia and Japan exchanged 12 MoUs in the fields of education, science, technology, and banking and finance

DUBAI: Saudi Arabia opened its doors for Japanese investment during a Saudi-Japan business forum held in Tokyo on Wednesday amid growing economic ties between the two nations.  

The Saudi Arabian General Investment Authority (SAGIA) discussed tourism and entertainment investment opportunities in Saudi Arabia with Japan’s business leaders and government officials during the Saudi-Japan Vision 2030 Business Forum, hosted in partnership with the Japan External Trade Organization (JETRO).

During the forum, 12 Memoranda of Understanding (MoU) were exchanged in fields of education, science, technology, and banking and finance.

The MoUs include Toyobo and Saline Water Conversion Corporation and Arabian Japanese Membrane Company which will aim to manage disposed brine water generated from seawater desalination plants for environmental sustainability.

Two Saudi and Japanese universities signed MoUs for academic exchange on research. While SAGIA signed MoU with Sumitomo Mitsui Banking Corporation to enhance investment opportunities.

“Japan is one of Saudi Arabia’s most important economic partners, and businesses from across our countries have a strong track record of working together,” Saudi Arabia’s Minister of Commerce and Investment, Majid Al-Qasabi said at the Forum.

“Today’s Forum reflects the success and strength of this enduring partnership. We established the Saudi-Japanese Vision 2030 two years ago, which seeks to drive and facilitate continued private sector involvement by establishing joint-ventures between entities across our respective countries,” he added.

These investments come alongside a broad series of economic reforms, which are enabling rapid growth in foreign investment in Saudi Arabia. This is part of the Kingdom’s efforts to diversify its economy as outlined in Vision 2030.

Saudi Arabia has moved up three positions to the 36th place, globally, through its efforts to diversify the Kingdom’s economy, according to the 2019 Global Competitiveness Report published by the World Economic Forum.

The total number of foreign investor licenses issued in the first half of 2019 was more than double the number issued the same period a year before.

“We believe that the future prosperity of the Kingdom depends on fostering even closer ties with our strategic partners across the globe, and we look forward to welcoming these companies as they take part in the historic transformation of our economy,” Al-Qasabi said. 

Memoranda of Understanding exchanged at the Forum include:

  • University of Tokyo and King Fahd University of Petroleum and Minerals (KFUPM) – the academic exchange for research in renewable energy and petrochemicals
  • Kyoto University Institute for Advance Study (KUIAS) and King Abdullah University for Science and Technology (KAUST)– to promote the exchange of scientific materials, publications, and information and exchange of faculty members and researchers, students and joint research
  • University of Tokyo and King Abdullah University for Science and Technology (KAUST) – to collaborate on the research and the next generation of organic and soft electronics and efficient generation of hydrogen
  • Japan Patent Office (JPO) and Saudi Authority for Intellectual Property (SAIP) – to promote the exchange of data and best practices in the field of intellectual property protection including trademarks and patents
  • Sumitomo Mitsui Banking Corporation and Saudi Arabian General Investment Authority (SAGIA) – to enhance investment opportunities between Japan and Saudi Arabia
  • Mitsubishi UFJ Financial Group and Saudi Arabian General Investment Authority (SAGIA) – a framework for cooperation to enhance investment from Japan to the Kingdom of Saudi Arabia
  • Toyobo and Saline Water Conversion Corporation and Arabian Japanese Membrane Company – to develop innovative membrane technologies and manage disposed brine water generated from seawater desalination plants for environmental sustainability
  • Sojitz Corporation and AIZAWA Concrete Corporation and Al Saedan for Development – to explore opportunities and utilize 3D printing technology and local materials for housing construction
  • Cyberdyne Group and Abdul Latif Jameel Investments – to collaborate and enhance Cybernic treatment and contribute to the social development of the Kingdom.
  • Saudi-Japan Vision Office Riyadh (VRO) and National Industrial Development and Logistics Program (NIDLP) – to expand collaboration and enable investments in the field of industry, mining, energy and logistics
  • TBM and SABIC – to build a circular economy using LIMEX
  • Ministry of Economy, Trade and Industry (METI) and the National Industrial Clusters Development Program (NICDP) and the Technical and Vocational Training Corporation and Saudi-Japanese Automobile High Institute – to provide support and training for human capacity development for Saudi youth in the automotive sector