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.

 


Oil world tries to read Chinese post-pandemic demand

Updated 25 October 2020

Oil world tries to read Chinese post-pandemic demand

  • The economic outlook for Asia will help decide some pretty pressing short-term policy issues
  • China’s refineries are getting back in top gear, and are looking to increase crude purchases in anticipation of economic recovery

DUBAI: While all eyes are on the US presidential election, the energy sector is keeping a watchful scrutiny on what is happening on the other side of the world, in China and the rest of Asia. Who the Americans choose will of course have enormous influence on energy policy for years to come, not least because Donald Trump versus Joe Biden is, in many ways, a runoff between the traditional oil and gas industry and the alternative renewable future.

But policymakers in the Middle East and in the broader OPEC+ alliance led by Saudi Arabia and Russia are looking eastward to determine more immediate priorities. The economic outlook for Asia, and of China in particular, will help decide some pretty pressing short-term policy issues.

At what official selling price should big producers such as Saudi Aramco and Adnoc mark their exports to China in the coming weeks? What stance should OPEC+ take toward compliance and compensation for the rest of this year? And, crucially, should it press ahead with plans to put an extra 2 million barrels per day (bpd) of oil on global markets in January, as the historic April cuts deal envisaged?

An added variable has been thrown into the works with higher-than-expected output from Libya, which has resumed production and exports from its war-torn facilities and could, according to some energy experts, be producing another 1 million barrels by the end of the year.

That is hardly a deluge of crude by global standards, in a world that consumes above 90 million bpd, though it is enough to complicate the already-delicate calculations of OPEC+ analysts.

But the big imponderable is China. The country blew hot and cold on oil imports since the April crisis, snapping up cheap oil one month and easing back on imports the next. It was hard to read the signals coming out of China.

Were the pauses in imports due to a slower rate of recovery from the pandemic economic lockdowns? Or was China simply chock-full of crude, to the extent that it had filled its strategic reserve and had nowhere else to store it?

Evidence of the latter came in the form of the flotilla of crude tankers waiting to unload off the coast of the Shandong oil terminal. At one stage, there were as many as 60 million barrels afloat awaiting discharge off China’s coast.

The people who make a living from tracking these things say that there has recently been evidence of a slow unloading from these ships, but that there is still an awful lot of crude afloat, waiting to come onshore.

There have also been signs that China’s refineries are getting back in top gear, and are looking to increase crude purchases in anticipation of economic recovery. One of the biggest, Rongsheng Petrochemical, recently snapped up 7 million barrels through Singapore, in a move taken by some to be the starting gun on an aggressive Chinese buying spree.

The economic logic suggests that if that is going to happen, it will take place pretty soon. According to the International Monetary Fund’s latest review, China — the only major economy forecast to grow in 2020, with 1.9 percent growth — will soar to 8.2 percent expansion next year. The country’s early and rigorous lockdown, and high levels of economic stimulus since then, are clearly paying off.

Whether the Chinese lift-off comes in time to affect OPEC+ calculations over the planned January increase remains to be seen. From where oil policymakers are looking at it at the moment, it looks like a good bet that China, at least, will need plenty of crude next year to fuel its post-pandemic recovery.