Saudi energy minister lauds Kingdom’s response to Aramco strikes at global oil industry conference

The energy minister said that Saudi Arabia was able to resume operations 72 hours after the attack. (File/AFP)
Updated 06 October 2019

Saudi energy minister lauds Kingdom’s response to Aramco strikes at global oil industry conference

  • The kingdom’s oil production capacity now stands at 11.3 million barrels per day
  • The listing of Aramco is the centrepiece of Saudi Arabian plans to shake up its economy and diversify away from oil

MOSCOW: Saudi Energy Minister Prince Abdul Aziz bin Salman has paid tribute to the Kingdom’s ability to “rise to the challenge” in the aftermath of the recent attacks on Aramco oil facilities.

Speaking at the Russian Energy Week forum in Moscow, the minister thanked all those who had helped in the recovery mission after the Sept. 14 strikes on the Abqaiq processing plant and Khurais oilfield, in the Eastern Province.

During his address to delegates at the global oil industry gathering, the prince said: “I’m quite comfortable, and quite honored, to believe that I could stand here with a straight face and ask any of my colleagues here, present or who hear me, where in the world would you have a country, a people and a nation who could overcome that challenge, which has never been seen anywhere in the world?

“When you lose half of your production capacity, when you lose 5 percent of the world’s oil supply, and more important, when the attempt is to make you lose your reputation as a reliable, secure, dependable oil supplier.

“In 72 hours, we first of all regained our capabilities, and retained our reputation, and more or less we assumed our responsibility to attend to our major job, which specifically was to continue to be the most reliable, secure, dependable oil supplier,” he added.

“With a straight face we come to everybody and say if you believe us, that’s fine. If you don’t believe us, you’re more than welcome to come and visit. We have hosted a number of journalists who have visited. We were in the phase of inviting analysts to come to look at our numbers with regard to Aramco, and we will welcome any dignitaries that are here today,” he told a packed plenary session on the theme “maintaining energy connectivity in an unstable world.”

Prince Abdul Aziz also joked that, as the attack had come in his first week as energy minister, he “thought it was a bit of a drill to show me whether I was still up to the job.”

He expressed his gratitude to Crown Prince Mohammed bin Salman, executives and workers at Aramco, and “the entire nation” for their response to the drone and missile strikes.

The minister also thanked his Russian partners — represented on the Moscow stage by the country’s energy minister, Alexander Novak — for their support after the attacks, and revealed that on the first day after the introduction of the Kingdom’s new tourist visa arrangements, some 400 Russians had applied to visit Saudi Arabia, one of the highest number of any nationality.

Later, the prince gave some hard facts to illustrate the Kingdom’s recovery from the strikes. The country had stabilized production capacity at 11.3 million barrels per day (bpd) and made an “additional commitment” to volunteer to keep production lower than the 10.3 million bpd agreed under the Opec+ agreement on oil supply. “We still have the kit and the tools to overcome any future challenges to the Opec+ deal.”

He said the Kingdom should now move on from the attacks to deal with the forthcoming initial public offering (IPO) of Saudi Aramco, which he wanted to make “the most successful IPO ever.”

Prince Abdul Aziz also prioritized the Kingdom’s energy mix between fossil fuels and renewables and further energy price reforms. “We’re looking at the entire ecosystem of energy. We’ve moved on from the attacks, we’ve flipped the page and we’re looking at new challenges.”

He admitted that there were “recessionary forces” at work in the global economy that could affect demand for oil, but said that most of the problems, similar to Brexit and trade wars, were surmountable. “Human beings made the problems so I hope humans can repair them. It needs serious people to attend to them,” the minister added.


IMF downgrades outlook for world economy, citing trade wars

Updated 15 October 2019

IMF downgrades outlook for world economy, citing trade wars

  • Growth this year will be ‘weakest since the 2008 financial crisis,’ according to 2020 forecast

WASHINGTON: The International Monetary Fund is further downgrading its outlook for the world economy, predicting that growth this year will be the weakest since the 2008 financial crisis primarily because of widening global conflicts.

The IMF’s latest World Economic Outlook foresees a slight rebound in 2020 but warns of threats ranging from heightened political tensions in the Middle East to the threat that the US and China will fail to prevent their trade war from escalating.

The updated forecast released on Tuesday was prepared for the autumn meetings this week of the 189-nation IMF and its sister lending organization, the World Bank. Those meetings and a gathering on Friday of finance ministers and central bankers of the world’s 20 biggest economies are expected to be dominated by efforts to de-escalate trade wars.

The new forecast predicts global growth of 3 percent this year, down a 0.2 percentage point from its previous forecast in July and sharply below the 3.6 percent growth of 2018. For the US this year, the IMF projects a modest 2.4 percent gain, down from 2.9 percent in 2018.

Next year, the fund foresees a rebound for the world economy to 3.4 percent growth but a further slowdown in the US to 2.1 percent, far below the 3 percent growth the Trump administration projects.

IMF economists cautioned that that even its projected modest gains might not be realized.

“With a synchronized slowdown and uncertain recovery, there is no room for policy mistakes, and an urgent need for policymakers to cooperatively de-escalate trade and geopolitical tensions,” Gita Gopinath, the IMF’s chief economist, said in the report.

Last week, the US and China reached a temporary cease-fire in their trade fight when President Trump agreed to suspend a tariff rise on $250 billion of Chinese products that was to take effect this week. But with no formal agreement reached and many issues to be resolved, further talks will be needed to achieve any breakthrough. The Trump administration’s threat to raise tariffs on an additional $160 billion in Chinese imports on Dec. 15 remains in effect.

The IMF’s forecast predicted that about half the increase in growth expected next year will result from recoveries in countries where economies slowed significantly this year, as in Mexico, India, Russia and Saudi Arabia.

This year’s slowdown, the IMF said, was caused largely by trade disputes, which resulted in higher tariffs being imposed on many goods. Growth in trade in the first half of this year slowed to 1 percent, the weakest annual pace since 2012.

Kristalina Georgieva, who will preside over her first IMF meetings after succeeding Christine Lagarde this month as the fund’s managing director, said last week that various trade disputes could produce a loss of about $700 billion in output by the end of next year or about 0.8 percent of world output.

IMF economists said that one worrying development is that the slowdown this year has occurred even as the Federal Reserve and other central banks have been cutting interest rates and deploying other means to bolster economies.

The IMF estimated that global growth would have been about one-half percentage point lower this year and in 2020 without the central banks’ efforts to ease borrowing rates. “With central banks having to spend limited ammunition to offset policy mistakes, they may have little left when the economy is in a tougher spot,” Gopinath said.

In addition to trade and geopolitical risks, the IMF envisions
threats arising from a potentially disruptive exit by Britain from the EU on Oct. 31. The IMF urged policymakers to intensify their efforts to avoid economically damaging mistakes.

“As policy priorities go, undoing the trade barriers put in place with durable agreements and reining in geopolitical tensions top the list,” Gopinath said. “Such actions can significantly boost confidence, rejuvenate investment, halt the slide in trade and manufacturing and raise world growth.”

The IMF projected that growth in the 19-nation euro area will
slow to 1.2 percent this year, after a 1.9 percent gain in 2018. It expects the pace to recover only slightly to 1.4 percent next year.

Growth in Germany, Europe’s biggest economy, is expected to be a modest 0.5 percent this
year before rising to 1.2 percent next year.

China’s growth is projected to dip to 6.1 percent this year and 5.8 percent next year. These would be the slowest rates since 1990, when China was hit by sanctions after the brutal crackdown on pro-democracy demonstrators in Beijing’s Tiananmen Square.