Japan’s power plan will rattle coal, LNG exporters, including Qatar

Japan’s power plan will rattle coal, LNG exporters, including Qatar
Qatar and Australia are vying for the title of world's biggest LNG exporter. (AFP)
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Updated 22 July 2021

Japan’s power plan will rattle coal, LNG exporters, including Qatar

Japan’s power plan will rattle coal, LNG exporters, including Qatar
  • Japan is world's biggest importer of LNG
  • Qatar supplied 11.7 percent of Japan's LNG in 2020

DOHA: Japan has been largely forgotten as a source of demand for energy commodities, overshadowed by the rapid rise of China, but the country’s new electricity generation targets will shake the market up.
For many years Japan has been viewed as a largely steady source of demand for liquefied natural gas (LNG) and thermal coal used in power generation, with small variations in the volumes imported on a year-by-year basis.
But this comfortable situation for commodity producers supplying the world’s third-biggest economy may end if the draft of Japan’s latest energy policy is put into effect.
Japan aims to boost the use of renewable energy to 36-38 percent of the electricity mix by 2030, double the level of 18 percent achieved in the fiscal year to March 2020, according to a government report released on July 20.
The jump in renewable energy means that LNG and coal will have to surrender market share, with coal planned to drop to 19 percent of generation from about 32 percent in recent years, and LNG dipping to a planned 20 percent from around 37 percent.
Nuclear energy is targeted to provide 20-22 percent of electricity in 2030, which would by a sharp rise on the 6 percent it provided in the 2019 fiscal year, when many of the country’s reactors were still offline for extended safety checks implemented in the wake of the 2011 Fukushima disaster.
New fuels like hydrogen and ammonia are only expected to make up 1 percent of power generation by 2030, up from effectively zero currently.
The draft plan is certainly ambitious on renewable energy, very bullish on nuclear and surprisingly non-committal on new fuel sources.
It will likely be a stretch to achieve the targets, with massive investment needed in renewables such as wind and solar, most likely with battery storage as well.
The Japanese public may also baulk at the nuclear component, which will require restarting most, if not all the remaining reactors, with nine currently operating and some 24 still offline.

QATAR HIT
Notwithstanding the challenges involved in implementing the draft plan, the main impact would be felt by LNG and coal exporters, especially those in Australia.
Australia supplies about two-thirds of Japan’s thermal coal requirements, with imports of 70.7 million tons in 2020, out of a total of 105.2 million, according to official data.
Japanese utilities have long favored Australian thermal coal for its higher energy value and lower impurities compared to other grades available on the seaborne market.
If Japan does meet its target of reducing coal from the 32 percent share of power generation in the 2019 fiscal year to just 19 percent by 2030, this implies a reduction of total annual imports to around 62.6 million tons, assuming total power generation remains at current levels.
This would mean Japan would be buying about 42 million tons less by 2030, and it would be logical to assume that Australian miners would take the biggest blow.
Japan is currently the world’s biggest LNG buyer, and if it does drop the use of the super-chilled fuel to 20 percent of power generation by 2030 from 2019’s 37 percent, it implies annual imports should decline from 74.5 million tons in 2020 to about 40.3 million by 2030.
Australia, which vies with Qatar as the world’s biggest LNG producer, is again Japan’s top supplier, although it’s not quite as dominant a position as it is with thermal coal.
Australia supplied 29.1 million tons of LNG to Japan in 2020, or about 39 percent, beating out Malaysia’s share of about 14 percent and Qatar’s 11.7 percent.
There is also the likelihood that LNG not being sent to Japan will find other willing buyers in Asia, with several countries including China keen to expand their use of natural gas.
Nonetheless, the loss of around 35 million tons of demand will likely give pause to LNG producers eyeing new projects or expansion plans.


Saudi Arabia sees record IPOs requests, 50% rise in managed assets, says CMA chief

Saudi Arabia sees record IPOs requests, 50% rise in managed assets, says CMA chief
Updated 03 August 2021

Saudi Arabia sees record IPOs requests, 50% rise in managed assets, says CMA chief

Saudi Arabia sees record IPOs requests, 50% rise in managed assets, says CMA chief
  • Elkuwaiz says assets under management by financial institutions have increased by 50 percent

RIYADH: Saudi Arabia is seeing a record interests from companies to sell shares to the public, while the size of the assets under management by financial institutions increased by 50 percent to SR600 billion over 3 years, the chairman of the country’s capital market authority said.

The increase in the volume of assets under management (AUM) had impact on the financial market and has contributed to opening new investments areas such as the launch of financial derivatives market, which made a debut last year, Mohammed Elkuwaiz said in panel hosted by the Financial Academy.

The authority received recently 30 requests to sell shares in initial public offerings and this is the highest number the authority, known as CMA, got since its establishment, he added. 

Mohammed Elkuwaiz, CMA chairman

Saudi Arabia is implementing a huge program to modernize and develop its financial sector under the country’s vision 2030 plan. Under this program the CMA had a target to list 20 new companies in 2021 on the Saudi index through public offerings, and the authority had achieved half of this target by the end of the first half of the year, Elkuawiz said.

Interests from companies to sell shares to the public increased over the past few years with the introduction of the parallel market, known as Nomu. Elkuwaiz explained that the main market, Tadawul, targets larger and more mature companies with the ability and willingness to bear big loads in terms of disclosure data, governance, while smaller companies prefer to list on Nomu.

“Listing on Nomu is an exciting window for the small and medium size and entrepreneurs in Saudi Arabia as we see the increase in IPOs interest and this is the result of the CMA strategy,” said Mohammed Ramady, an independent economic analyst and former senior banker told the Arab News in comments on Saudi financial development.

Another area where Saudi Arabia is venturing and advancing is Fintech. “We have more than 15 companies licensed as financial technology companies, which facilitates the availability of other types of financing that did not exist in the past, such as crowdfunding, which has become a boost for the financial market,” Elkuwaiz added.

The chairman of CMA also noted that foreign investments in the Saudi stock market have been positive and steady since they were allowed several years ago, with more than SR20 billion has entered Tadawul market since it was included in global indexes.

“The system of governance and disclosure in the financial market has been developed, making the Kingdom one of the world’s top 4 countries in terms of governance – something we are very proud of,” he added.


Fitch revises Egyptian bank’s outlook to stable

Fitch revises Egyptian bank’s outlook to stable
Updated 03 August 2021

Fitch revises Egyptian bank’s outlook to stable

Fitch revises Egyptian bank’s outlook to stable

RIYADH: Fitch Ratings has revised Commercial International Bank (Egypt) S.A.E.’s (CIB) outlook to stable from negative while affirming the bank’s long-term issuer default rating at “B+” and viability rating at “b+.” 

According to the ratings firm, pressures on the domestic environment have eased since the end of the third quarter of 2020 moderating downside risks to Egyptian banks’ credit profiles.

It said this reflects improving foreign currency liquidity, with the banking sector’s net foreign assets reaching $3.5 billion in April 2021, a reversal of a net foreign liability position of $5.3 billion at the end of April 2020. This was supported by a strong increase in foreign holdings of Egyptian treasuries to $29 billion in May 2021.

Fitch expects real GDP growth to accelerate to 6 percent in 2022.


Egypt’s domestic liquidity exceeds $213.9 billion

Egypt’s domestic liquidity exceeds $213.9 billion
Updated 02 August 2021

Egypt’s domestic liquidity exceeds $213.9 billion

Egypt’s domestic liquidity exceeds $213.9 billion

CAIRO: Egypt’s domestic liquidity rose to EGP 5.36 trillion ($213.9 billion) at the end of June 2021.

According to the official data, liquidity grew by 1.9 percent monthly. Domestic liquidity increased by 18.3 percent annually, compared to EGP 4.53 trillion in June 2020.

The money supply rose during June to EGP 1.25 trillion, compared to EGP 1.22 trillion in May 2021.  Money supply includes deposits in local currency and cash in circulation outside the banking system.

Last November, the Central Bank of Egypt decided to reduce both the overnight deposit and lending rate and its main operation rate by 50 basis points, to 8.25 percent, 9.25 percent, and 8.75 percent, respectively.

Last month, the central bank froze the interest rate for the fourth time this year.


Saudi Arabia reiterates its commitment to fight climate change

Saudi Energy Minister Abdulaziz Bin Salman. (REUTERS file photo)
Saudi Energy Minister Abdulaziz Bin Salman. (REUTERS file photo)
Updated 02 August 2021

Saudi Arabia reiterates its commitment to fight climate change

Saudi Energy Minister Abdulaziz Bin Salman. (REUTERS file photo)
  • Prince Abdul Aziz and Sharma discussed the framework of the circular carbon economy adopted by G20 leaders during Saudi Arabia’s presidency in 2020

RIYADH: Saudi Energy Minister Prince Abdul Aziz bin Salman recently held a meeting with COP26 President-designate Alok Sharma and discussed ways to enhance cooperation in confronting global climate change.
The Saudi minister highlighted the Kingdom’s qualitative initiatives to help reduce emissions and preserve the environment, foremost of which are the Saudi Green and Middle East Green initiatives.
Saudi Crown Prince Mohammed bin Salman launched these initiatives on March 27. These initiatives are aimed at reducing carbon emissions in the region by 60 percent through the use of clean hydrocarbon technologies and the planting of 50 billion trees, including 10 billion in Saudi Arabia.
The “green” initiatives, which are part of the Vision 2030 strategy, will place Saudi Arabia at the center of regional efforts to meet international targets on climate change mitigation, as well as help it achieve its own goals.
Prince Abdul Aziz and Sharma also discussed the framework of the circular carbon economy adopted by G20 leaders during Saudi Arabia’s presidency in 2020.
While the Gulf Cooperation Council (GCC) region has long been a leading global supplier of fossil fuels, renewables are complementing its own energy mix, offering eco-friendly alternatives such as clean hydrogen fuel to decarbonize and reduce gas emissions.
With around 70 to 90 percent of the Arabian Peninsula facing the threat of desertification, owing to past and ongoing human activities, massive afforestation, and land restoration initiatives hold hope for millions of hectares of degraded land.
Unfortunately, in a G20 meeting held in Italian city, Naples on July 22-23, energy and environment ministers failed to agree on the wording of key climate change commitments in their final communique after China and India refused to give way on two key points.
One of these was phasing out coal power, which most countries wanted to achieve by 2025 but some said would be impossible for them.
The other concerned the wording surrounding a 1.5-2 degree Celsius limit on global temperature increases that was set by the 2015 Paris Agreement.
Average global temperatures have already risen by more than 1 degree compared to the pre-industrial baseline used by scientists and are on track to exceed the 1.5-2 degree ceiling.
“Some countries wanted to go faster than what was agreed in Paris and to aim to cap temperatures at 1.5 degrees within a decade, but others, with more carbon-based economies, said let’s just stick to what was agreed in Paris,” said Italy’s Ecological Transition Minister Roberto Cingolani.
The G20 meeting was seen as a decisive step ahead of United Nations climate talks, known as COP26, which take place in 100 days’ time in Glasgow in November.


Saudi CITC pushes for more tech listings on Tadawul

Saudi CITC pushes for more tech listings on Tadawul
Updated 02 August 2021

Saudi CITC pushes for more tech listings on Tadawul

Saudi CITC pushes for more tech listings on Tadawul
  • The CITC is aiming to enhance the investment environment in the telecoms and IT sectors

RIYADH: Saudi Arabia’s Communications and Information Technology Commission (CITC) signed an initial agreement with the Saudi Stock Exchange pushing for more listing of technology operators in the Kingdom on the Saudi stock market.

The CITC is aiming to enhance the investment environment in the telecommunications and information technology sector, the postal sector and delivery applications, SPA reported.

Financial market listings provide greater investment opportunities and helps companies to expand and enter new markets, and develop products, CITC said.

It also contributes to strengthening corporate governance with a regulatory framework of high quality and institutional value.

This agreement comes in line with the Vision 2030 objectives aimed at making the Kingdom a leading global logistics platform and a connecting hub for the three continents.