Spike in tensions but no oil market shock, says IEA

Spike in tensions but no oil market shock, says IEA
The global oil market is well placed to withstand any escalation in geopolitical tensions, according to the IEA. (Shutterstock)
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Updated 17 January 2020

Spike in tensions but no oil market shock, says IEA

Spike in tensions but no oil market shock, says IEA
  • Strategic reserves play key role in minimizing disruption to global supply amid US-Iran face-off, agency says

PARIS: The brief spike in Middle East tensions as the US and Iran faced off has served as a reminder of the havoc disruptions in supply from the key oil-producing region could wreak on the global economy, the International Energy Agency (IEA) said on Thursday.

But it said ample stocks and production elsewhere mean the world is relatively well placed to react to a crisis.

Washington and Tehran are currently in a standoff after tit-for-tat military actions over the past two weeks that had sparked fears of a large-scale confrontation that could choke off the Strait of Hormuz through which 20 percent of global oil supplies flow.

“We cannot know how the geopolitical situation will play out over time, but for now the risk of a major threat to oil supplies appears to have receded,” the IEA said in its latest monthly report on oil markets.

It noted that oil prices have receded after jumping $4 per barrel, much as they did in September when a series of attacks on Saudi oil facilities briefly knocked out part of the production of the key exporter.

“Today’s market where non-OPEC production is rising strongly and OECD stocks are 9 million barrels above the five-year average, provides a solid base from which to react to any escalation in geopolitical tension,” said the Paris-based organisation, which advises industrial nations that are members of the Organisation for Economic Cooperation and Development on energy policy.

“As a back-up resource, the value of strategic stocks has once again been confirmed.”

The IEA was created in the wake of the 1973 oil shock provoked by an embargo imposed by OPEC and IEA members now hold reserves worth three months of net imports.

The oil market has been driven in recent years by a surge of non-OPEC production that has outstripped demand, with OPEC and its allies moving to restrain production to support prices.

The IEA’s forecasts see faster growth in demand for oil this year thanks to expectations that global growth will pick up as trade tensions diminish.

However, the 2.1 million barrels per day (mbd) growth in non-OPEC supplies will far outpace the increased demand of 1.2 mbd, putting further pressure on OPEC and its allies to further cut production.

During 2019, falls in OPEC production nearly completely offset a rise in production from countries outside the group.


Brazilian renewable energy sector offers opportunities for Saudis

Brazilian renewable energy sector offers opportunities for Saudis
Updated 3 min 12 sec ago

Brazilian renewable energy sector offers opportunities for Saudis

Brazilian renewable energy sector offers opportunities for Saudis
  • The Kingdom imports several food products from Brazil, mostly in the form of meat and coffee

RIYADH: A new report by the Arab-Brazilian Chamber of Commerce (ABCC) revealed several opportunities for Saudi investors looking to break into the Brazilian market by investing in key sectors.

The report identified four core industries that the Kingdom had previously invested in: Rubber and plastic manufacturing, food storage and other transport activities, chemical and machinery manufacturing, and vehicle manufacturing.

Rachel Andalaft, CEO of research and consultancy firm Mangifera Analytics, told Arab News that Saudi Arabia has traditionally seen Brazil as a “possible gateway to the rest of Latin America.”

“Brazil’s increased opportunities have opened the door for Saudi Arabians to invest in diverse Brazilian markets — not only in ongoing food markets but also oil and gas,” she said.

The Kingdom imports several food products from Brazil, mostly in the form of meat and coffee. Saudi Arabia was the premier Arab importer of poultry from Brazil in January, with 35,800 tons of poultry shipped to the Kingdom.

Also, in February of this year, the Saudi Agricultural and Livestock Investment Co., a joint-stock company owned by the sovereign wealth fund the Public Investment Fund (PIF), entered into an agreement with Brazil’s Minerva Foods to acquire assets in Australia and set up a joint venture for the processing and export of beef and lamb produce.

Additionally, Andalaft stated that the PIF would be putting funds forward to be used in Ferrograo, a crucial railroad for Brazil. “This will go from Mato Grosso to Pará, spanning about 1,000 kilometers at an estimated cost of over $3 billion,” she said.

According to Andalaft, trade relations show great potential for growth given the productive complementarities between the two countries, particularly in Brazil’s emergent renewable energy market.

“Typical market opportunities are earmarked for double-digit returns, reaching beyond an 18-percent return on investment for those investors able to create smart financing structures,” she said of the opportunities in the wind and solar energy sector in Brazil.

Arab-Brazilian trade relations are expected to retain a strong growth trajectory in the future, particularly after the ABCC announced plans in February to set up an international office in the Saudi capital of Riyadh to capitalize on trade between the two countries.


Saudi Aramco part of $50 million funding for US software firm

Saudi Aramco part of $50 million funding for US software firm
Updated 8 min 17 sec ago

Saudi Aramco part of $50 million funding for US software firm

Saudi Aramco part of $50 million funding for US software firm
  • The extra $50 million brings Seeq’s total funding since its launch in 2013 to around $115 million

RIYADH: Saudi Aramco’s investment arm was among a group of investors who awarded SR187.5 million ($50 million) to a Seattle-based manufacturing and technology software company.

Seeq Corp. said it had raised the new funds as part of a Series C funding round as the group of investors backing the financing were Altira Group, Chevron Technology Ventures, Cisco Investments, Second Avenue Partners and Saudi Aramco Energy Ventures (SAEV).

The extra $50 million brings Seeq’s total funding since its launch in 2013 to around $115 million. While the breakdown of figures was not given, Seeq did say that SAEV was already an existing investor from previous funding rounds. Seeq enables engineers and scientists to rapidly analyze, predict, collaborate, and share insights to improve production and business outcomes for its products. It operates across many sectors, including oil and gas, pharmaceutical, chemical, energy and mining.

The Seattle-based company aims to use the new funds to develop its sales and marketing resources and expand its presence into international markets.

“By leveraging big data, machine learning and computer science innovations, Seeq is enabling a new generation of software-led insights,” Steve Sliwa, the CEO and co-founder of Seeq, said in a press statement.

According to its website, SAEV is described as the strategic technology venturing program of Saudi Aramco. Its mission is to invest globally into startup and high-growth companies with technologies of strategic importance to Aramco, to accelerate its development and its deployment in the company.


EU poised to unveil green investment list

EU poised to unveil green investment list
Updated 17 min 22 sec ago

EU poised to unveil green investment list

EU poised to unveil green investment list
  • Bloc aims to become carbon neutral by 2050 and mitigate climate change

BRUSSELS: The European Commission will next week present the first part of a “green taxonomy” list of energy sources and technology to be labeled as sustainable investments, but a question mark hangs over the inclusion of natural gas.

The classification system, to be published on Wednesday, is mandated under a 2019 agreement between member states and the European Parliament meant to define durable economic activities and green finance.

It seeks to define what the EU would deem as sustainable as it moves toward a goal of Europe becoming carbon neutral by 2050, with criteria focusing on mitigating climate change or preparing for it.

A second commission proposal is to follow later this year covering four other subjects — protection of water and marine resources, the circular economy, preventing pollution and biodiversity — all part of the EU’s “Green Deal” to reach that ambition.

For an investment to be considered “green” it has to meet one of these objectives without hurting any of the others.

The proposal is to become a “delegated act,” meaning it becomes law unless member states or the European Parliament reject it.

But a leak of the commission’s taxonomy list last month raised an outcry from NGOs, experts and MEPs, in particular over the inclusion of gas as a partially sustainable energy source.

Nine experts the commission consulted threatened to break off cooperation over the perceived “greenwashing,” according to a letter sent to the commission and seen by AFP.

The commission plan, according to the leak, is to have gas-fueled power stations labeled as “green” as transitional facilities up to 2025 where they replace ones using coal. One of the experts signing the letter, Sebastien Godinot, economist at the environmental protection NGO WWF, said that would give a “blank check” to gas operators and risk a long-term dependence on fossil fuels.

“This proposal could potentially create a direct incentive to build even more gas co-generation plants than already planned,” Godinot warned.

A Green MEP from the Netherlands, Bas Eickhout said: “A gas-fired power plant built now is there to stay for 40 years. So brings you way over the 2050 deadline.”

As a result, “we are going to object” to the commission proposal, based on the version leaked in March, Eickhout said.

Several sources said that the governments of Austria, Denmark, Ireland, Luxembourg and Spain had written a joint letter to the commission to voice their objection to including gas in the taxonomy.

Godinot noted that, while natural gas releases less carbon dioxide than coal, it also emits methane, considered a worse greenhouse emission.

Other points of discord are the commission’s approach to forestries and logging, seen by some as not rigorous enough, and it automatically classifying bioenergy as durable even when the biomass it uses comes from dedicated farmland.

A French news website, Contexte, said on Thursday that the commission has been forced to revise its document and could revert to an ordinary legislative process that would be much longer.

The commission did not confirm that. An EU source said the text it is to present is “still in development” and stressed how technical it was.

“Right now, we’re talking about a general approach to gas. Further analyses are needed,” the source said.


Egypt, Sudan airlines sign MoU to boost ties

Egypt, Sudan airlines sign MoU to boost ties
Updated 23 min 3 sec ago

Egypt, Sudan airlines sign MoU to boost ties

Egypt, Sudan airlines sign MoU to boost ties
  • The partnership aims to transfer Egyptian expertise in the aviation sector to Sudan

CAIRO: Egypt’s national carrier EgyptAir has launched a strategic partnership with Sudan Airways to strengthen aviation ties between the two countries.

Egyptian Civil Aviation Minister Mohamed Manar and Khaled Al-Sheikh, deputy Sudanese ambassador to Egypt, attended the memorandum of understanding (MoU) signing ceremony.

Amr Abu El-Enein, EgyptAir chairman and CEO, and Sudan Airways Director General Yasir Timo signed the MoU.

The Egyptian minister highlighted the importance of the strategic partnership between the airlines and their role in enhancing trade exchange between the two countries. He said the MoU is part of Cairo’s strategy to strengthen bilateral ties in a range of fields, including aviation.The partnership aims to transfer Egyptian expertise in the aviation sector to Sudan.

Manar said the MoU includes training of employees with the Sudanese flag carrier, and helping the country modernize its aircraft fleet by managing network planning, developing maintenance operations, and providing advisory services in quality control and technical approvals. Under the agreement, Egyptian experts will train Sudanese officials in aviation security, ground services and other technical aspects.

The MoU also seeks to increase air traffic between the two countries, leading to increased economic opportunities for both.

A joint working group will have regular meetings to follow up on projects and contracts.

Timo also expressed his happiness at signing the MoU with EgyptAir, due to its expertise, human cadres and technical capabilities.


Musk’s SpaceX wins $2.9bn moon lander contract

Musk’s SpaceX wins $2.9bn moon lander contract
Updated 35 min 14 sec ago

Musk’s SpaceX wins $2.9bn moon lander contract

Musk’s SpaceX wins $2.9bn moon lander contract
  • NASA says the spacecraft will carry two American astronauts in 2024

WASHINGTON: NASA awarded billionaire entrepreneur Elon Musk’s space company SpaceX a $2.9 billion contract to build a spacecraft to bring astronauts to the moon as early as 2024, the agency said on Friday, picking it over Jeff Bezos’ Blue Origin and defense contractor Dynetics Inc.

Bezos and Musk — the world’s first and third richest people respectively, according to Forbes — were competing to lead humankind’s return to the moon for the first time since 1972.

Musk’s SpaceX bid alone while Amazon.com founder Bezos’ Blue Origin partnered with Lockheed Martin Corp., Northrop Grumman Corp. and Draper. Dynetics is a unit of Leidos Holdings Inc.

“NASA Rules!!” Musk wrote on Twitter after the announcement.

The US space agency awarded the contract for the first commercial human lander, part of its Artemis program. NASA said the lander will carry two American astronauts to the lunar surface.

“We should accomplish the next landing as soon as possible,” Steve Jurczyk, NASA’s acting administrator, said.

“If they hit their milestones, we have a shot at 2024,” Jurczyk added.

NASA said SpaceX’s Starship includes a spacious cabin and two airlocks for astronaut moon walks and that its architecture is intended to evolve to a fully reusable launch and landing system designed for travel to the Moon, Mars and other destinations in space.

SpaceX also responded on Twitter, writing: “We are humbled to help @NASAArtemis usher in a new era of human space exploration.”

SpaceX will be required to make a test flight of the lander to the moon before humans make the journey, NASA official Lisa Watson-Morgan told reporters.

NASA had been expected to winnow the lunar lander contest to two companies by the end of April, but instead it picked only SpaceX, a move that deepens their cooperation. On Thursday, NASA said it would send its crew to the International Space Station aboard a SpaceX rocket on April 22.

The agency aims to create regular service to the moon and said it will have a separate competition for that contract.

NASA said in a news release that SpaceX’s HLS Starship, designed to land on the moon, “leans on the company’s tested Raptor engines and flight heritage of the Falcon and Dragon vehicles.”