Support grows for deeper OPEC+ oil output cuts

Azerbaijan’s energy minister said coronavirus concerns are excessive, adding to a growing group of officials who believe that markets are overreacting. (AFP)
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Updated 10 February 2020

Support grows for deeper OPEC+ oil output cuts

  • Azerbaijan is likely to support a provisional cut of 600,000 barrels per day, says country’s energy minister

BAKU: Azerbaijan is likely to support further oil output cuts by OPEC and its allies, the ex-Soviet country’s energy minister said, should the move be necessary to balance demand fears after a coronavirus outbreak in China.

A technical panel that advises the Organization of the Petroleum Exporting Countries and its allies led by Russia, the group known as OPEC+, proposed this week a provisional cut of around 600,000 barrels per day (bpd).

“Azerbaijan is likely to support this,” Parviz Shahbazov told Reuters in an interview. Azerbaijan is not an OPEC member but is part of the OPEC+ group informally established in 2016.

Although Azerbaijan is not a big contributor to the overall cuts by OPEC+, its position may shed light on Russia’s thinking as non-OPEC members of the group usually take a unanimous decision. Moscow is yet to give its nod to the further cuts.

Producers in the OPEC+ group are scheduled to meet in Vienna on March 5-6, although the meeting could be brought forward depending on how the coronavirus outbreak affects oil prices going forward. Brent dropped below $55 a barrel on Friday.

However, Shahbazov said he believed that the impact of the coronavirus might be short-lived, adding to a small number of other officials and market players who believe that markets are overreacting.

“At this stage, the effect of coronavirus is temporary and I do not see global threats, but I do not rule out that there may be further (oil output) cuts,” he said. “We can meet earlier than March if necessary although there is no such need so far.”

The death toll from the coronavirus outbreak in China rose above 800 on Sunday, surpassing the number killed globally by Severe Acute Respiratory Syndrome across 2002 and 2003.

Shahbazov said that oil output in Azerbaijan was around 770,000 bpd last month, in line with its OPEC+ quota.

The country has a balanced budget based on an oil price of $55 per barrel but can withstand a temporary dip to $40, Shahbazov said.

Baku, which plans to start gas exports to Europe, has also signed deals with Saudi Arabian energy company ACWA Power and United Arab Emirates’ Masdar to expand in renewable energy.

Shahbazov said the firms would invest around $400 million to build wind and solar power plants with a total capacity of 440 megawatts. Construction is due to start in September and last two years.


Bayut and Dubizzle fire M&A starting pistol

Updated 02 June 2020

Bayut and Dubizzle fire M&A starting pistol

  • The two owner companies will also run a $150 million investment round
  • EMGP will continue operating both Bayut and Dubizzle in the UAE

LONDON: The owners of Dubai-based listings sites Dubizzle and Bayut announced the merger of their MENA and South Asia operations as the regional property sector comes under pressure.

Dubai-based Emerging Markets Property Group (EMPG) and OLX Group made the disclosure in a statement carried by the UAE-based WAM news agency website.

The agreement includes a 550 million dirhams ($150 million) investment round, led by existing EMPG shareholders and OLX group. OLX has become EMPG’s largest single shareholder with 39 percent of shares, the statement said.

Both sites are known for their extensive listings in the real estate sector which has come under renewed pressure in recent months because of the coronavirus pandemic.

“This merger of EMPG and OLX will allow us to better serve our customers, given that both operate brands with a strong following and will allow us to leverage existing tech and data to paint a more accurate picture of the state of affairs in the real estate industry across the region,” said Haider Ali Khan, the head of EMPG — MENA . “At the same time, we will be making significant technology investments to provide more value to all users of property, automotive and other segments of the Dubizzle and OLX platforms.”

Merger and acquisition (M&A) activity is expected to accelerate this year as companies facing disruption from the coronavirus pandemic seek to cut costs and adapt to a rapidly changing marketplace.

Ali Maabereh, head of mergers and acquisition (M&A) at KMPG in Saudi Arabia predicted M&A activity will increase in GCC countries large corporates seek capital injections to satisfy working capital needs.

“The current pandemic is creating a lot of uncertainties and contradictions in what to expect after the dust settles. The expected key impacts on companies are shortages of liquidity and working capital requirements. Though companies might be running a healthy P&L, there will be significant pressure on working capital requirements,” he said.