Saudi Arabia to drive oil and gas production increases this decade as majors remain wary – Fitch

Saudi Arabia to drive oil and gas production increases this decade as majors remain wary – Fitch
Saudi Arabia will add more crude, condensate and natural gas liquids than any other country through 2030, according to Fitch. (Reuters)
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Updated 07 August 2021

Saudi Arabia to drive oil and gas production increases this decade as majors remain wary – Fitch

Saudi Arabia to drive oil and gas production increases this decade as majors remain wary – Fitch
  • Saudi Arabia seen increasing production by 2.24 million barrels a day between 2021 and 2030
  • Investment by IOCs will contract 3.6 percent this year

RIYADH: Saudi Arabia will lead increases in oil and gas production globally through 2030 as international energy majors remain wary of fluctuating demand and focus on short-term profit, according to Fitch Ratings.

The Kingdom will increase production of crude oil, condensate and natural gas liquids by 2.24 million barrels a day between 2021 and 2030, ahead of Iran’s 2.17 million barrels the UAE’s 1.61 million, Libya’s 1.04 million and Kuwait’s 966,000 barrels, Fitch wrote in its Oil & Gas Global Capex Outlook.

Iraq is also expected to see a considerable gain, of 691,000 barrels, while Qatar’s will be more modest, at 127,000 barrels. Bahrain and Oman will both see a contraction in output.

The bulk of Libya, Iran and Iraq’s output gains are “due to the recovery of barrels temporarily shut-in due to domestic instability (Libya) or international sanctions (Iran), or as a result of the unwinding of the OPEC+ production cut agreement (Iraq),” Fitch analysts wrote in the report. “The only markets in which we forecast substantial gains above pre-pandemic levels are Saudi Arabia, the UAE and Kuwait.”

Such was the size of last year’s oil market crash when global oil and gas capex slumped 25.9 percent to $423 billion, investment will not return to 2019 levels until 2025, Fitch said. This year will see 12.8 percent growth to $477 billion, followed by a similar-sized increase in 2022, to $505 billion.

Investment by international oil companies will contract 3.6 percent this year, to $79.35 billion before rebounding 12.6 percent in 2022 to $89.34 billion, Fitch predicts.

“Middle Eastern NOCs, at least those in the GCC, are very well placed to exploit current market conditions,” Emma Richards, a senior oil and gas analyst at Fitch told Arab News. “Because of the nature of the resource base, they can compete on the basis of both cost and carbon intensity and they’re not coming under the same regulatory pressures as companies in Europe and North America.”

“As we see greater restrictions on supply coming into force in those markets, there will be a sizeable gap for the Middle East to fill,” Richards said.

The report also looked at the energy transition with a focus on the emerging hydrogen-production industry.

While low-carbon investment by the Middle East’s national oil companies is likely to take only a negligible share of capex for the coming years, Saudi Arabia and the UAE have the opportunity to gain a first-mover advantage in the markets for clean hydrogen and ammonia, Fitch said.

Saudi Arabia ranks 8th and the UAE 7th in Fitch’s blue hydrogen index, which assesses the suitability of a given market for the development of a blue hydrogen industry.

Blue hydrogen is created from natural gas through traditional methods but the carbon is captured, while green hydrogen is produced through electrolysis of water. Hydrogen is converted to ammonia for long-distance transport before being turned back into hydrogen.

“We expect hydrogen to be a big growth market in the GCC,” Richards said. “They have a strong resource endowment, so are well-placed to 1ompete with others once the market matures.”

Saudi Arabia has been a first mover in the hydrogen and ammonia markets. Saudi Aramco partnered with SABIC on the world’s first shipment of blue ammonia to Japan in September last year.

“Over the longer run, green hydrogen is likely to dominate, but I don’t think the near-term cost advantages of blue hydrogen should be underplayed,” said Richards. It depends on the market, but where natural gas is cheap and abundant, blue hydrogen makes a lot of sense.”


Oil prices ease off highs as US factory data weighs on market: Energy market wrap

Oil prices ease off highs as US factory data weighs on market: Energy market wrap
Updated 13 sec ago

Oil prices ease off highs as US factory data weighs on market: Energy market wrap

Oil prices ease off highs as US factory data weighs on market: Energy market wrap

RIYADH: Oil prices pulled back after touching multiyear highs on Monday, trading mixed as US industrial output for September fell, tempering early enthusiasm about demand.

Brent crude oil futures were down 20 cents or 0.24 percent at $84.66 a barrel by 11:46 a.m. EST (1546 GMT) after hitting $86.04, their highest since October 2018.
US West Texas Intermediate crude futures were 17 cents higher, or 0.2 percent, at $82.46 a barrel, after hitting $83.87, their highest since October 2014.
Both contracts rose by at least 3 percent last week.

OPEC+ quota

OPEC+ compliance with oil cuts fell slightly to 115 percent in September, three sources from the alliance told Reuters on Monday.

The figure shows that some members continue to struggle to produce at their agreed quota levels due to various technical problems.

The Organization of the Petroleum Exporting Countries and allies led by Russia, or OPEC+ as the alliance is known, raised its output targets by 400,000 barrels per day in September. 
It has also agreed to raise them by a further 400,000 bpd in October and in November.


Underinvestment and maintenance problems have stymied efforts by Angola and Nigeria to raise output, an issue that is expected to continue impacting the West African producers in the near future.

Saudi exports

Saudi Arabia’s crude oil exports rose in August to its highest level in seven months, according to data released by the Joint Organizations Data Initiative (Jodi) on Monday.

Some 6.45 million barrels per day (bpd) were shipped from the Kingdom in August, a rise from 6.327 million bpd recorded in July.

US coal-fire generation

The Energy Information Administration (EIA) said on Monday it expected the US coal-fired generation to increase in 2021 by 22 percent compared with 2020.

Green hydrogen

INEOS, Europe’s largest hydrogen producer, said on Monday it would invest more than $2.3 billion on electrolysis plants to make zero-carbon green hydrogen across Europe.

Emission cuts

South Korea aims to cut its greenhouse gas emissions to 40 percent below 2018 levels by 2030, for fighting climate change over the next decade.

Japan’s Mitsubishi Corp, a trading house and mineral resources company with energy and metals assets worldwide, will invest $17.54 billion by 2030 in alternative energies, to halve its greenhouse gas emissions on 2020 levels, and to achieve net zero emissions by 2050, it said in a statement.

Gas supply 

Russian gas giant Gazprom has booked 35 percent of total additional capacity, offered by the Polish operator Gas System for transit via the Kondratki transit point for the Yamal-Europe pipeline for November and has not booked any volumes via Ukraine, according to the auction results shown on Monday.

Germany does not see any gas supply shortages despite a slight drop in its storage levels from the week before, a spokesperson for the country’s Economy Ministry said.

Storage facilities are now filled to around 70 percent capacity compared with 75 percent last week, but the ministry still assumes that the facilities will continue to be filled as suppliers honor their contracts, he added.

Coal vs. renewable 

Global coal prices have jumped to record highs and top thermal coal exporter Indonesia has increased its 2021 output to 625 million tons, 11percent higher than 2020 output target to meet the demand.

The EU’s head of climate change policy said that returning to using dirty energy from coal during the current energy crunch is “not a smart move” and markets should seize the opportunity to transition into renewables.


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

Qatar leads talks to acquire British department store for $5.5bn
Updated 18 October 2021

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 18 October 2021

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 18 October 2021

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 18 October 2021

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.