Aramco and ADNOC seen gaining more power with Shell Dutch ruling

Aramco and ADNOC seen gaining more power with Shell Dutch ruling
A Saudi Aramco employee is seen at the Natural Gas Liquids (NGL) facility at Aramco's Shaybah oilfield in the Empty Quarter. (Reuters)
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Updated 01 June 2021

Aramco and ADNOC seen gaining more power with Shell Dutch ruling

Aramco and ADNOC seen gaining more power with Shell Dutch ruling
  • An oil price rally coupled with the declining strength of oil majors would mean a large wealth transfer from the West to countries like Russia and Saudi Arabia, until demand starts declining not only in the West but in Asia too

LONDON: Climate activists who scored big against Western majors last week had some unlikely cheerleaders in the oil capitals of Saudi Arabia, Abu Dhabi and Russia.
Defeats in the courtroom and boardroom mean Royal Dutch Shell, ExxonMobil and Chevron are all under pressure to cut carbon emissions faster. That’s good news for the likes of Saudi Arabia’s national oil company Saudi Aramco, Abu Dhabi National Oil Company and Russia’s Gazprom and Rosneft.
It means more business for them and OPEC.
“Oil and gas demand is far from peaking and supplies will be needed, but international oil companies will not be allowed to invest in this environment, meaning national oil companies have to step in,” said Amrita Sen from Energy Aspects consultancy.
Climate activists scored a major victory with a Dutch court ruling requiring Royal Dutch Shell to drastically cut emissions, which in effect means cutting oil and gas output. The company will appeal.
The same day, the top two US oil companies, Exxon Mobil and Chevron  both lost battles with shareholders who accused them of dragging their feet on climate change.
“It looks like the West will have to rely more on what it calls “hostile regimes” for its supply,” joked a high-level executive from Russia’s Gazprom oil and gas group, referring to energy companies around the world owned completely or mostly by the state.
Saudi Aramco, ADNOC and Gazprom all declined to comment. Oil major Rosneft, in which the Russian state has the biggest stake, also declined to comment.
A senior Saudi Aramco staffer said the court ruling would make it easier for OPEC to ramp up production.
“It is great for Aramco,” the staffer said.
Western oil majors like Shell have dramatically expanded in the last 50 years, as the West sought to cut its reliance on energy from the volatile Middle East, and from Russia.
Those same Western energy majors, including BP and Total, have set out plans to sharply reduce emissions by 2050. But they face growing pressure from investors to do more to meet UN-backed targets to limit global warming.
Saudi Aramco, listed on the Saudi bourse but majority state owned, is not under the same sort of pressure to cut its carbon emissions, although the Kingdom’s rulers aim to sharply increase the country’s use of renewables.
Gazprom expects demand for natural gas to grow in the coming decades and for it to play a bigger role in energy consumption than renewable sources and hydrogen.
Western oil majors control around 15 percent of global output, while OPEC and Russia have a share of around 40 percent. That share has been relatively stable in the last decades as rising demand was met with new producers like smaller private US shale firms, which today face similar climate-related pressures.
Since 1990, global oil consumption has grown to 100 million barrels per day from 65 million bpd, with Asia providing the lion’s share of growth.
Countries such as China and India have made no pledges to reduce oil consumption, which on a per capita basis is still a fraction of the levels in the West. China will rely heavily on gas to cut its huge coal consumption.
The International Energy Agency, which looks after energy policies of the West, issued a stark appeal last month to the world to essentially scrap all new oil and gas developments. But it gave no clear formula on how to reduce demand.
Despite pressure from activists, investors and banks to cut emissions, Western oil majors are also tasked with maintaining high dividends amid heavy debt. Dividends from oil companies represent significant contributions to pension funds.
“It is vital that the global oil industry aligns its production to the Paris goals. But that must be done in step with policy, changes to the demand side, and the rebuilding of the world’s energy system,” said Nick Stansbury from Legal & General, which manage £1.3 trillion ($1.8 trillion) in assets on behalf of savers, retirees and institutions.
“Forcing one company to do so in the courts may (if it is effective at all) only result in higher prices and foregone profits,” he said. Legal & General, one of the world’s largest fund managers, holds assets in most oil majors.
Climate lawsuits have been filed in 52 countries in the past two decades, with 90 percent of those in the United States and European Union, risk consultancy Verisk Maplecroft said.
“In the West, energy investments will peak on fears and concerns over regulations and court rulings. Then, we will see peak dividends,” said the Aramco executive. Aramco pays the highest annual dividend of $75 billion.
Over the past five years, the IEA has been predicting a large oil shortage and an oil price spike due to a lack of investments following a 2014-2017 oil price crash.
An oil price rally coupled with the declining strength of oil majors would mean a large wealth transfer from the West to countries like Russia and Saudi Arabia, until demand starts declining not only in the West but in Asia too.
“The same oil and gas will still be produced. Just with lower ESG standards,” said an executive from a Middle Eastern producer, who previously worked for an oil major, referring to environmental, social and governance performance measurements.


Qatar leads talks to acquire British department store for $5.5bn

Qatar leads talks to acquire British department store for $5.5bn
Updated 30 sec ago

Qatar leads talks to acquire British department store for $5.5bn

Qatar leads talks to acquire British department store for $5.5bn

British Selfridges department store owner, the Weston family, is in talks with Qatar about a potential £4 billion ($5.5 billion) sale, which would change the ownership of the store for the first time in two decades, the Daily Mail reported. 

Meanwhile, The Times reported that the Kingdom's PIF is also among the parties rumored to be interested in Selfridges, as are Abu Dhabi's ADIA, and Lane Crawford, a department stores business based in Hong Kong.

The PIF has been asked to comment.

Sources told the Daily Mail that Qatar is leading talks to buy Selfridges, but the talks are not exclusive, which means the famous Oxford Street may be sold to another party.

According to The Times, the Westons are understood to be seeking a buyer not only for their UK stores, which also include a store at the Bullring in Birmingham, but also department stores Brown Thomas and Arnotts in Dublin, De Bijenkorf in the Netherlands and Holt Renfrew in Canada.

Qatar's sovereign wealth fund, the Qatar Investment Authority already owns the famous Harrods store, which it bought in 2010.


A rise in annual US industrial output; Canada's debt fears: Economic wrap

A rise in annual US industrial output; Canada's debt fears: Economic wrap
Updated 9 min 28 sec ago

A rise in annual US industrial output; Canada's debt fears: Economic wrap

A rise in annual US industrial output; Canada's debt fears: Economic wrap

US industrial production increased by a yearly rate of 4.6 percent in September, data from the Federal Reserve showed. 

This is the fifth consecutive month in which industrial output growth slowed after growing 17.8 percent in April due to last year's lower base effects.

On a monthly basis, industrial output declined by 1.3 percent in September. This is a larger decline than the one experienced in the previous month when industrial production fell by 0.1 percent.

This was driven by a 3.6 percent drop in utilities production and a 2.3 percent fall in mining output. Moreover, manufacturing production decreased by 0.7 percent in September as motor vehicles output slumped by 7.2 percent.

Canada’s debt fears

The Canadian government intends to impose new taxes which will help in financing some campaign promises. However, the new stream of revenues will prove to be insufficient to pay off the country’s mounting debts. According to analysts, this will leave Canadians at risk of a potential economic crisis in the near future.

Notably, the country accumulated debt at a faster rate than any other member of the G7. Piling debts could hamper efforts that require sizable finances such as the transition to a green economy.

Central banks and governments clash in Eastern Europe

Rising inflation in Eastern Europe has prompted central banks to raise their interest rates despite a backlash from governments that want to defend strong output growth.

The situation is most visible in Hungary and the Czech Republic as their central banks raised interest rates by more than 1 percent since June.

Capital Economics expects that the Eastern Europe will be one of the regions where inflation will have far-reaching effects in the next year.


Egypt signs deal with Nokia to build IoT infrastructure

Egypt signs deal with Nokia to build IoT infrastructure
Updated 45 min 7 sec ago

Egypt signs deal with Nokia to build IoT infrastructure

Egypt signs deal with Nokia to build IoT infrastructure

CAIRO: Egyptian Minister of Communications and IT Amr Talaat oversaw the signing of a deal between Telecom Egypt and Nokia International to build Internet of Things infrastructure in the country.

The ministry said Telecom Egypt’s network enables the provision IoT services to companies on a global scale, based on Nokia’s multi-service model. 

The agreement will contribute to the automation of projects and help companies reduce their operating expenses, enhance productivity, and provide new services to markets faster.

It includes establishment of a global IoT infrastructure and a Pay As You Grow business model, and Nokia will enable Telecom Egypt to provide IoT services at low prices.

The deal was signed by Adel Hamed, managing director and CEO of Telecom Egypt, and Henrik Fall, head of cloud services and networks in the Middle East and Africa at Nokia.

Talaat attended the signing ceremony during his visit to Dubai to attend the 41st GITEX Global Exhibition and Conference.

He also met Ram Ramachandran, senior vice president and head of Middle East and Africa for Tech Mahindra. Tech Mahindra is an Indian multinational subsidiary of the Mahindra Group.

The Egyptian minister discussed ways to increase Tech Mahindra’s contribution to the digital transformation of Egypt.


TASI down by 0.1% as petrochemicals fall: Market wrap

TASI down by 0.1% as petrochemicals fall: Market wrap
Updated 51 min 3 sec ago

TASI down by 0.1% as petrochemicals fall: Market wrap

TASI down by 0.1% as petrochemicals fall: Market wrap

RIYADH: The Tadawul All Share Index declined on Monday by 0.1 percent, or 15 points, to 11.758 points. 

Petrochemical shares, led by SABIC falling by 1.5 percent, pushed the market down.

Some 193.5 million of shares changed hands in 337.000 deals, with heavy trading in ACWA Power, Kayan, and SABIC. 

Yansab's share fell by 4.8 percent, after the company announced a decline in its Q3 profits  by more than 8 percent. 

Leejam also recorded the highest close since listing at SR106.80.

Other News: 

Arabian Centers and Fawaz Al Hokair companies announced an agreement to acquire 51 percent of an e-commerce platform, VogaCloset, at a value of SR138 million.

VogaCloset also transferred 25.5 percent of its share capital to Arabian Centers Company, following a capital increase .

However, insurance companies topped the gains today, led by Arabia Insurance reaching SR41.60.

Amana Insurance, Saudi Enaya and Salamarose gained between 5 percent, and 9 percent. 

Saudi Arabia’s parallel stock market index, Nomu, gained 228.70 points, down by 0.95 percent, closing at 23,835.75 points. 


TotalEnergies opens UK offshore wind hub in North Sea oil, gas center

TotalEnergies opens UK offshore wind hub in North Sea oil, gas center
Updated 18 October 2021

TotalEnergies opens UK offshore wind hub in North Sea oil, gas center

TotalEnergies opens UK offshore wind hub in North Sea oil, gas center
  • The energy firm also announced a £140 million investment in a 2 gigawatt offshore wind project in the west of Orkney

Enregy company TotalEnergies has opened an offshore wind hub in Scotland that will allow the “transition of staff from oil and gas to offshore wind” as the green sector grows, the French energy major said in a statement.

The unit will sit inside the firm’s existing Aberdeen center for UK North Sea oil and gas, and will draw on operations that have been “built over the last 50 years” at the site.

TotalEnergies chairman and chief executive Patrick Pouyanné said in the statement: “With the energy transition gathering speed, we see Scotland as a great place to broaden our relationship by investing in offshore wind.

“As a global multi-energy company long engaged in UK energy supply, our decision to base our UK offshore wind hub here in Aberdeen is a mark of our confidence in the future of renewables in the UK and our continued commitment to Scotland and the North Sea.”

TotalEnergies, formerly Total, also announced a £140 million investment in a 2 gigawatt offshore wind project called West of Orkney Windfarm. Australian bank Macquarie’s Green Investment Group and Scottish developer Renewable Infrastructure Development Group are also partners in the wind farm.

TotalEnergies said the three firms will “develop the Scottish supply chain and harbour infrastructure specifically around this project”.

The energy major purchased a majority stake in another large wind farm off the coast of Scotland last year, with expectations that global oil demand will peak before 2030, due to the low-carbon energy shift, reported Bloomberg News.

The firm has upped its stakes in renewable energy assets across the UK recently.

The French firm also invested in a smaller floating-wind project in Wales, Bloomberg said.

Also, in February, TotalEnergies again partnered with Macquarie’s Green Investment Group to win the rights to develop a 1.5 gigawatt offshore wind farm off the coast of Lincolnshire, England.