Wamda chief sees Aramco dividend for Saudi economy

Fadi Ghandour, who runs the startup investment firm Wamda Capital, said the venture capital scene in the Middle East was improving. (Reuters)
Updated 22 November 2019

Wamda chief sees Aramco dividend for Saudi economy

  • Fadi Ghandour: The initial public offering of Saudi Aramco was a good thing for the Kingdom’s economy and its stock market
  • Ghandour: The decision not to market the IPO directly in some foreign financial centers would make little difference to the outcome of the IPO

BEIJING: Fadi Ghandour, one of the best known entrepreneurs in the Middle East, told Arab News that the initial public offering of Saudi Aramco was a good thing for the Kingdom’s economy and its stock market.

Speaking on the sidelines of the Bloomberg New Economy Forum in Beijing, Ghandour said: “It will be good for the country and for the Tadawul. It will deepen markets and give citizens a sense of participation.”

He added that the decision not to market the IPO directly in some foreign financial centers would make little difference to the outcome of the IPO. “It’s a statement by the Kingdom that it has its own resources, and does not have to rely on others. But I can see how some people would view it negatively. Once Aramco is listed on the market, it will all be much more transparent,” he said.

Ghandour, who runs the startup investment firm Wamda Capital, said the venture capital scene in the Middle East was improving. “Our business is different from the slow down in bricks and mortar. The sovereign wealth funds are finally starting to look at investment in startups and small-to-medium enterprises,” he said, citing recent activity by Saudi Arabia’s Pubic Investment Fund and Mubadala of the UAE.

“There are increasing opportunities in fintech and and e-commerce,” he said.

He said the investment strategy of other big players, like the Saudi and UAE-backed Vision Fund, was flawed. “Throwing a lot of money at companies with high valuations blunts their need to show a serious path to profits. Management loses its edge. The path to profitability is not through having a big brother with lots of money. Startup companies survive because they have a path to profitability,” he said.

Ghandour said he was in Beijing because he wanted a “Chinese perspective” on business. “The Middle East is looking increasingly eastwards, and that’s a good thing. China is always looking for new markets and resources, and they are increasingly innovators these days rather than copiers. They want to be leaders in business,” he added.


OPEC sees small 2020 oil deficit even before latest supply cut

Updated 12 December 2019

OPEC sees small 2020 oil deficit even before latest supply cut

  • OPEC keeps its 2020 economic and oil demand growth forecasts steady and is more upbeat about the outlook

LONDON: OPEC on Wednesday pointed to a small deficit in the oil market next year due to restraint by Saudi Arabia even before the latest supply pact with other producers takes effect, suggesting a tighter market than previously thought.

In a monthly report, OPEC said demand for its crude will average 29.58 million barrels per day (bpd) next year. OPEC pumped less oil in November than the average 2020 requirement, having in previous months supplied more.

The report retreats further from OPEC’s initial projection of a 2020 supply glut as output from rival producers such as US shale has grown more slowly than expected. This will give a tailwind to efforts by OPEC and partners led by Russia to support the market next year.

OPEC kept its 2020 economic and oil demand growth forecasts steady and was more upbeat about the outlook.

“On the positive side, the global trade slowdown has likely bottomed out, and now the negative trend in industrial production seen in 2019 is expected to reverse in 2020,” the report said.

Oil prices were steady after the report’s release, trading near $64 a barrel, below the level some OPEC officials have said
they favor.

The Organization of the Petroleum Exporting Countries, Russia and other producers, a group known as OPEC+, have since Jan. 1 implemented a deal to cut output by 1.2 million bpd to support the market. At meetings last week, OPEC+ agreed to a further cut of 500,000 bpd from Jan. 1 2020.

The report showed OPEC production falling even before the new deal takes effect.

In November, OPEC output fell by 193,000 bpd to 29.55 million bpd, according to figures the group collects from secondary sources, as Saudi Arabia cut supply.

Saudi Arabia told OPEC it made an even bigger cut in supply of over 400,000 bpd last month. The Kingdom had boosted production in October after attacks on its oil facilities in September briefly more than halved output.

The November production rate suggests there would be a 2020 deficit of 30,000 bpd if OPEC kept pumping the same amount and other factors remained equal, less than the 70,000 bpd surplus implied in November’s report and an excess of over 500,000 bpd seen in July. OPEC and its partners have been limiting supply since 2017, helping to revive prices by clearing a glut that built up in 2014 to 2016. But higher prices have also boosted US shale and other rival supplies.

In the report, OPEC said non-OPEC supply will grow by 2.17 million bpd in 2020, unchanged from the previous forecast but 270,000 less than initially thought in July as shale has not grown as quickly as first thought.

“In 2020, non-OPEC supply is expected to see a continued slowdown in growth on the back of decreased investment and lower drilling activities in US tight oil,” OPEC said, using another term for shale.