Saudi, Kuwait to sign deal to resume joint oilfield output

Kuwaiti Oil Minister Khaled al-Fadhel attends a meeting of members of the Organization of Arab Petroleum Exporting Countries (OAPEC) in Kuwait City on December 22, 2019. (AFP)
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Updated 23 December 2019

Saudi, Kuwait to sign deal to resume joint oilfield output

  • The Kuwait Gulf Oil Company (KGOC) said the signing ceremony will take place in the neutral zone

KUWAIT CITY: Saudi Arabia and Kuwait will sign a deal on Tuesday to resume production at two major oilfields in a shared neutral zone after five years of stoppage.
The Kuwait Gulf Oil Company (KGOC) said on Monday the signing ceremony will take place in the neutral zone where the offshore Khafji field and onshore Wafra field are located.
The two fields were pumping some 500,000 barrels per day before production was halted first at Khafji in October 2014 and then at Wafra months later over a dispute between the two Arab Gulf neighbors.
Riyadh said at the time the decision was due to environmental issues.
The oil produced in the neutral zone in the border area is shared equally between the two nations.
Khafji was jointly operated by KGOC and Saudi Aramco Gulf Operations, while Wafra was operated by KGOC and Saudi Arabian Chevron.
It was not immediately specified when the two fields will start pumping again, but the agreement comes as oil prices are under pressure due to abundant reserves and weak global economic growth.
The slump has prompted OPEC and its allies to make deeper production cuts starting next month.
Saudi Arabia pumps just under 10 million bpd, while Kuwait produces around 2.7 million bpd.


$8bn blow to Erdogan as investors flee Turkey

Updated 09 July 2020

$8bn blow to Erdogan as investors flee Turkey

  • Overseas holdings in Istanbul stock exchange are at lowest in 16 years

ANKARA: Foreign capital is flooding out of Turkey in a massive vote of no confidence in President Recep Tayyip Erdogan’s economic competence.
Overseas investors have withdrawn nearly $8 billion from Turkish stocks since January, according to Central Bank statistics, reducing foreign investment in the Istanbul stock exchange from $32.3 billion to $24.4 billion.
As recently as 2013, the figure was $82 billion, and foreign investors now own less than 50 percent of stocks for the first time in 16 years.
“Foreign investment has left Turkey for several reasons, both internal and external,” Win Thin, global head of currency strategy at Brown Brothers Harriman, told Arab News.
“Externally, investors fled riskier assets like emerging markets during the height of the coronavirus pandemic. Some of those flows are returning, but investors are being much more discerning and Turkey does not seem so attractive.”
In terms of internal factors, Thin said that Turkish policymakers had made it hard for foreign investors to transact in Turkey. “This includes real money clients, not just speculative.
“By implementing ad hoc measures to try and limit speculative activity, Turkey has made it hard for real money as well. Besides these problems, Turkey’s fundamentals remain poor compared to much of the emerging markets.”
Erdogan allies claim international players are manipulating the Istanbul stock exchange through automated trading, and have demanded action to make it difficult for them to trade in Turkish assets.
Goldman Sachs, JPMorgan, Merrill Lynch, Barclays and Credit Suisse were banned this month from short-selling stocks for up to three months, and this year local lenders were briefly banned by the banking regulator from trading in Turkish lira with Citigroup, BNP Paribas and UBS
JPMorgan was investigated by Turkish authorities last year after the bank published a report that advised its clients to short sell the Turkish lira.
MSCI, the provider of research-based indexes and analytics, warned last month that it may relegate Turkey from emerging market status to frontier-market status because of bans on short selling and stock lending.
With the market becoming less transparent, overseas fund managers, especially with short-term portfolios, are unenthusiastic about the Turkish market and are becoming more concerned about any forthcoming introduction of other liquidity restrictions.
The exodus of foreign capital is likely to undermine Turkey’s drive for economic growth, especially during the coronavirus pandemic when employment and investment levels have gone down, with the Turkish lira facing serious volatility.