Saudi Aramco announces alliance with SAP

Saudi Aramco announces alliance with SAP
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Updated 29 December 2020

Saudi Aramco announces alliance with SAP

Saudi Aramco announces alliance with SAP
  • SAP is the market leader in enterprise application software

JEDDAH: Aramco on Monday announced a strategic alliance with SAP Saudi Arabia to expand the digitalization of its Enterprise Resource Planning (ERP) systems. The agreement with will see the deployment of cloud-based services, embedded analytics, mobility, machine learning, artificial intelligence, advanced analytics and internet-of-Things solutions.

Ahmad A. Al Sa’adi, Aramco senior vice president of technical services, said: “We are committed to our digital transformation program, which is improving our ability to meet the needs of our customers around the world.”

SAP is the market leader in enterprise application software, helping companies of all sizes and in all industries run at their best: Seventy-seven percent of the world’s transaction revenue touches an SAP system.


Kuwait Touristic to increase capital to $996m to boost tourism

Kuwait Touristic to increase capital to $996m to boost tourism
Kuwait Towers against the skyscrapers of Kuwait City during sunset. (Shutterstock)
Updated 14 sec ago

Kuwait Touristic to increase capital to $996m to boost tourism

Kuwait Touristic to increase capital to $996m to boost tourism

Kuwait Touristic Enterprises plans to increase its capital by 250 million dinars ($831.39 million) to 300 million, as it looks to reinvigorate tourism in the oil-rich country, its chief executive said.

A unit of Gulf country's Kuwait Investment Authority sovereign wealth fund, the company plans to borrow 50 million dinars from local banks to finance part of its projects, CEO Abdelwahab Almarzooq told a news conference.

"Our vision is to bring back the golden age of tourism in Kuwait," he said, adding that the company plans to execute 95 initiatives and projects costing 380 million dinars over 10 years.

 


Evergrande's debt struggle rattles investors

Evergrande's debt struggle rattles investors
China Evergrande Group icon on office building wall. Image Shutterstock
Updated 41 min 53 sec ago

Evergrande's debt struggle rattles investors

Evergrande's debt struggle rattles investors
  • Some commentators suggest Evergrande might become China’s “Lehman moment,” referring to the failure of Wall Street bank Lehman Brothers, a forerunner to the 2008 crisis
  • Evergrande’s Hong Kong-traded shares have fallen 85 percent since early 2021

Global investors are watching nervously as one of China’s biggest real estate developers struggles to avoid defaulting on tens of billions of dollars of debt, fueling fears of possible wider shock waves for the financial system.


Chinese regulators have yet to say what they might do about Evergrande Group. Economists expect Beijing to intervene if Evergrande and lenders can’t agree on how to handle its debts. But any official resolution is expected to involve losses for banks and bondholders.


The government “doesn’t want to be seen as engineering a bailout” but is likely to organize a debt restructuring to “reduce systemic risk and contain economic disruption,” Tommy Wu of Oxford Economics said in a report.


Evergrande is the biggest casualty yet from the ruling Communist Party’s effort to rein in surging debt levels Beijing sees as a possible threat to the economy.


Investors are watching how the developer headquartered in the southern city of Shenzhen near Hong Kong handles an interest payment due Thursday on one of its bonds.


Evergrande Group, founded in 1996, is one of China’s biggest builders of apartments, office towers and shopping malls and one of its biggest private sector conglomerates.


The company says it has more than 200,000 employees and supports 3.8 million jobs in construction and other industries. Evergrande says it has 1,300 projects in 280 cities and assets worth 2.3 trillion yuan ($350 billion).


Evergrande’s founder, Xu Jiayin, was China’s richest entrepreneur in 2017 with a net worth of $43 billion, according to the Hurun Report, which follows China’s wealthy. He has tumbled down the list as internet industries boomed but still ranked as China’s richest real estate developer last year.

He also topped Hurun’s 2020 list of philanthropists, giving away an estimated 2.8 billion yuan ($420 million).


Evergrande has branched out into electric vehicles, theme park development, health clinics, mineral water and other businesses.

Evergrande’s Hong Kong-traded shares have fallen 85 percent since early 2021. Its bonds are trading at an equally deep discount.


As of June 30, Evergrande reported 2 trillion yuan ($310 billion) of outstanding debts to bondholders, banks, construction contractors and other creditors.


Of that debt, 240 billion yuan ($37.3 billion) was due within a year, down 28.5 percent from the end of 2020 but nearly triple Evergrande's 86.8 billion yuan ($13.5 billion) in cash holdings, according to a company financial report.


In early 2021, Evergrande forecast its total annual transaction volume would surpass 2 trillion yuan ($310 billion). It reported a $1.4 billion first-half profit but says sales are weakening because news of its cash crunch is making would-be buyers nervous.

Evergrande was caught out by new limits regulators imposed on real estate-related borrowing as part of the Communist Party's marathon campaign to reduce reliance on debt.


Economists have been warning China’s rising debt is a potential threat for more than a decade. The ruling party has made reducing such financial risks a priority since 2018.

But total corporate, government and household borrowing rose to nearly 300 percent of economic output last year from 270 percent in 2018. Unusually high for a middle-income country.


News reports indicate Evergrande borrowed everywhere it could, including by requiring employees of its construction contractors to buy its debt.


In 2017, state-owned China Citic Bank in Shenzhen agreed to lend 40 billion yuan ($6.2 billion) for an Evergrande project only after its executives agreed to invest at least 3 million yuan ($465,000) each, according to the business news magazine Caixin.


The Communist Party has cracked down on debt as it tries to nurture self-sustaining economic growth based on domestic consumption instead of trade and debt-supported investment.


It allowed China's first corporate debt default since the 1949 revolution in 2014 as part of efforts to force borrowers and lenders to be more disciplined.

Until then, the government had intervened to bail out insolvent borrowers to avoid spooking financial markets. Beijing has gradually allowed more defaults, but none by a debtor as big as Evergrande.

Some commentators suggest Evergrande might become China’s “Lehman moment,” referring to the failure of Wall Street bank Lehman Brothers, a forerunner to the 2008 crisis. But economists say the risk of wider financial market contagion is low.


“A managed default or even messy collapse of Evergrande would have little global impact beyond some market turbulence,” said MacAdam of Capital Economics.


In the unlikely event of an outright default, China’s banking system has an annual profit of 1.9 trillion yuan and reserves of 5.4 trillion yuan against bad loans, “which could easily absorb the loss,” Larry Hu and Xinyu Ji of Macquarie Group said in a report.

WHAT NEXT?


Investors are waiting to see what Chinese regulators might do, but analysts say they appear to be focused on protecting home buyers by ensuring apartments already paid for are completed.


The government has injected money into other insolvent Chinese companies, but economists say Beijing appears determined to avoid doing that with Evergrande.


In a letter Tuesday to employees, Xu expressed confidence the company will survive.

 


“Evergrande will surely get out of the darkest moment as soon as possible,” Xu said in the letter marking the traditional Mid-Autumn Festival.


Natural Gas Distribution to start trading on Nomu on Sept. 22

Natural Gas Distribution to start trading on Nomu on Sept. 22
Updated 21 September 2021

Natural Gas Distribution to start trading on Nomu on Sept. 22

Natural Gas Distribution to start trading on Nomu on Sept. 22

RIYADH: Natural Gas Distribution Co’s listing and trading shares on Parallel Market Nomu will start as of Wednesday, September 22, as a direct listing, according to a bourse filing.

Daily price fluctuation limits will be +/- 30 percent and static price fluctuation limits will be  +/- 10 percent, Tadawul said.

The natural gas producer set the benchmark price for its initial public offering in the parallel market at SAR 13, Argaam earlier reported.

 


Saudi looks to greener pastures as it boosts recycling investment

Saudi looks to greener pastures as it boosts recycling investment
Image: Shutterstock
Updated 21 September 2021

Saudi looks to greener pastures as it boosts recycling investment

Saudi looks to greener pastures as it boosts recycling investment
  • Saudi Arabia will look to invest almost SR24 billion ($6.4bn) in waste recycling by 2035
  • SIRC is keen to attract foreign direct investments worth SR6 billion, create 23,000 jobs, and contribute an amount of SR37 billion to the national GDP

Saudi Arabia will look to invest almost SR24 billion ($6.4bn) in waste recycling by 2035 as the country attempts to move to a more sustainable waste management system.

It will invest around SR1.3 billion ($346.6 million) in construction and demolition waste, and about SR900 million in industrial waste, while investments in municipal solid waste will exceed SR20 billion, and investments in other waste will exceed SR1.6 billion, Saudi Investment Recycling Company (SIRC) CEO, Ziyad Al-Shiha said.

Saudi Arabia had 5 percent of its total waste recycled from the beginning of 2020 until the first half of this year 2021, including plastic, metal and paper, Al-Shiha said.

The PIF-owned company started investing in projects specifically designed to increase conversion rates and recycling operations by establishing alliances with private sector companies specialized in this field, he told Al Eqtisadiah.

He pointed out that there is cooperation with leading local companies such as SABIC and Aramco in the recycling of plastic waste, and Maaden in the recycling of mining waste, and several companies in the building materials sector in the field using waste to produce alternative fuels, as well as a group of companies in the field of metal recycling and electronics.

"The company is also working with legislators and regulators to separate waste from the source by placing dedicated containers, organizing transportation and waste collection operations, building sorting and treatment stations, as well as making use of non-recyclable waste to produce alternative fuels and energy, and converting organic waste into organic fertilizers for agriculture," Al-Shiha said.

"This enhances the added value and reduces the cost of environmental degradation, which is estimated at SR86 billion annually," he said.

He stated that the company is keen to attract foreign direct investments worth SR6 billion, create 23,000 jobs, and contribute an amount of SR37 billion to the national GDP.


He pointed out that the share of foreign investment in the field of recycling at the present time is relatively "low", compared to other sectors, especially that the recycling market in Saudi Arabia is still nascent, and the number of local specialized companies in this field is still limited.

SIRC seeks within its strategic objectives to divert 85 percent of hazardous industrial waste from landfills, and 100 percent of solid waste from landfills and 60 percent of construction and demolition waste from landfills by 2035, Al-Shiha said.

Accordingly, the company is working on several promising projects to invest in the circular economy, through global and local partnerships to improve value chains, he said.

Al-Shiha pointed out that SIRC is also working to promote the Green Saudi Initiative goals by shifting from landfills by 94 percent..


"More than 40 percent of the recyclable materials in the Kingdom, amounting to about 56 million tons annually, are concentrated in Riyadh, Jeddah and Dammam, where 85 percent of them can be recycled and utilized for the purpose of obtaining a source of alternative energy and raw materials that enter into Manufacturing processes," Al-Shiha said.


The Kingdom recycles only about 10 percent of recyclable materials, while 90 percent of materials are disposed of by landfill, which causes harm to the environment and limits the use of recyclable materials, he explained.


He pointed out that one of the biggest challenges facing the sector at the present time is the lack of awareness of the importance of recycling, especially with the absence of a waste sorting system from the source. 

SIRC cooperates with the relevant government agencies to raise awareness, community participation, and disseminate awareness campaigns in the coming years, he said.

 


Global conversation on energy transition is ‘misrepresented’: OPEC chief

Global conversation on energy transition is ‘misrepresented’: OPEC chief
Updated 21 September 2021

Global conversation on energy transition is ‘misrepresented’: OPEC chief

Global conversation on energy transition is ‘misrepresented’: OPEC chief

DUBAI: While the global transition to clean energy is crucial, OPEC Secretary General Mohammad Barkindo said the current conversation around it is “misrepresented” and “distorted” by emotions. 

“Emotions have taken over industry fronts,” Barkindo said at a high-profile energy conference in Dubai on Tuesday, adding the global conversation has been skewed to mean “we have to transit from one set of energy sources to another.”

This has affected investor sentiment in some energy sources, the OPEC chief added, and will have implications for the ability of the oil industry to invest across value chains.

The pressure is being amplified by hundreds of climate litigations around the world, Barkindo said, as well as by civil societies and activists who are taking over the discussions.

In a previous speech, Barkindo referred to a Dutch court ordering Royal Dutch Shell to cut its global carbon emissions by 45 percent by the end of 2030 compared to 2019 levels, describing it as a “dramatic and far-reaching decision.”

These court decisions, he said, “could further shape energy policy directions and investment trends that are exclusionary in nature."

“This world will continue to consume energy. We project that demand will increase by 28 percent by 2045, and oil and gas will remain the dominant sources of energy,” Barkindo added. 

He said oil will contribute 28 percent of global energy needs by 2045, highlighting the importance of a balanced and inclusive approach in the global energy transition. Around 26 to 27 percent will be from gas. 

‘Practically irreplaceable’

“The world needs continuous, predictable, and adequate investments in energy, particularly in oil and gas which he said was practically irreplaceable because of the scale of its contribution to the global energy mix in the next decades”, he added.

Barkindo also called on the investment community “not to crowd out the oil and gas industry, because nobody can tell us how to replace this nearly 50 percent of the global energy mix.”

The comments were made at the Gastech conference in Dubai, attended by major energy and gas players in the industry, as well as ministers from the UAE, Qatar, Turkey, and Indonesia, among others. 

The OPEC chief said the event, which runs until Sept. 23, is the perfect place for the energy industry to “pause and ask the hard questions,” and to realign the global discussions on energy transition.