WEEKLY ENERGY RECAP: Saudi Arabia, the most reliable supplier of oil and soon gas

The Jafurah gas field is located near existing export facilities. (Supplied)
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Updated 26 February 2020

WEEKLY ENERGY RECAP: Saudi Arabia, the most reliable supplier of oil and soon gas

  • The development of the gas sector comes as the Kingdom seeks to diversify its economy

The Kingdom of Saudi Arabia already has one of the world’s largest proven reserves of conventional gas of about 300 trillion cubic feet. There are also unconventional gas reserves, with estimated reserves of more than 600 trillion cubic feet.

The development of the giant Jafurah gas field in the eastern region of Saudi Arabia will catapult the Kingdom to the forefront of gas producers in the world.

According to the United States Energy Information Administration (EIA), the US is ranked 4th globally with gas reserves of 464 trillion cubic feet. This was before the discovery of the Jafurah gas field that will add 200 trillion cubic feet to the already proven 300 trillion cubic feet of gas reserves in the Kingdom, bringing the grans total to around 500 trillion cubic feet.

So this means Saudi Arabia will overtake the US in the list of countries with the biggest gas reserves.

Moreover, the giant Jafurah gas field is located near existing export facilities which will make its delivery to customers much quicker and easier — a benefit not shared by many of the other recent gas discoveries worldwide.

While Russia still holds the world’s largest natural gas reserves, Russian gas is delivered mostly to Europe via pipeline, and does not benefit from extensive LNG infrastructure that would allow the gas to be exported by ship worldwide to various destinations.

The development of the gas sector comes as the Kingdom seeks to diversify its economy and reduce its reliance on crude oil sales. It will help to power the next generation power and desalination plants while also providing the feedstock for the petrochemicals sector that converts ethane to ethylene.

Even before this latest discovery, gas has been playing a progressively more important role in the Kingdom’s economy.

In fact it has expanded to account for almost 57 percent of the Kingdom’s energy mix, and the goal is to reach 75 percent by 2030.

Already the world’s largest and most reliable oil exporter, the Kingdom will now be able to add gas to that claim.


$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.