OPEC+ likely to stick to its output target despite Kuwait’s concerns

OPEC+ likely to stick to its output target despite Kuwait’s concerns
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Updated 29 August 2021

OPEC+ likely to stick to its output target despite Kuwait’s concerns

OPEC+ likely to stick to its output target despite Kuwait’s concerns
  • The alliance might not change course easily as there are outages in North America affecting prices

RIYADH: OPEC+ and its allies are likely to keep their plan to gradually restore the vast amount of crude production halted during the pandemic and continue increasing production by 400,000 barrels per day every month for the remainder of the year even as members such as Kuwait are raising concerns about the weakness of the market. 

Plans for supply increases came into question, as international crude prices sank about $11 a barrel roughly 15 percent, in the first three weeks of August as China reimposed lockdowns. 

The 400,000 bpd increase in oil output agreed by OPEC+ nations in previous gatherings might be reconsidered at its next meeting on Sept. 1, Reuters reported on Sunday, citing Kuwait’s oil minister.

“The markets are slowing. Since COVID-19 has begun its fourth wave in some areas, we must be careful and reconsider this increase. There may be a halt to the 400,000 (bpd) increase,” Mohammad Abdulatif Al-Fares told Reuters at a government-sponsored event in Kuwait City.

He added that the economies of East Asian countries and China remain affected by COVID-19 and caution must be exercised. “There are meetings with OPEC countries, especially the Gulf Cooperation Council countries, and so far there are different views on how to handle this issue," Fares said.

The alliance might not change course easily as there are outages in North America affecting oil prices. Mexico has seen a halt of more than 400,000 bpd due to an offshore oil rig accident, while producers in the US are expecting decline in output due to a new storm hitting the US Gulf coast.

Oil and natural gas explorers in the US Gulf of Mexico and Louisiana refineries have begun shutting production ahead of Hurricane Ida. About 1.65 million bpd, or 91 percent of crude production, and 85 percent of gas output was shut-in as of Saturday, while 1.9 million bpd of refining capacity is shut, about 10 percent of the US total. 

Ports from southern Louisiana to Mississippi were closed on Sunday morning as Hurricane Ida raced toward the US Gulf Coast as an extremely dangerous Category 4 storm. The Louisiana Offshore Oil Port, the largest privately owned crude terminal in the US, had also halted deliveries ahead of the storm, according to a notice on its website. 

“The market east of Suez is weakening but it’s hard to see this coming as many countries within OPEC+ already like the UAE want to increase their output more, and there is pressure from consumers to bring down prices,” Abdulsamad Alawadhi, a London-based independent analyst and former Kuwaiti oil executive, told Arab News.

Analysts are already fixed on seeing OPEC+ maintains course, Bloomberg said on Friday based on a survey.

The US has urged OPEC and its allies to boost oil output to tackle rising gasoline prices that it views as a threat to the global economic recovery. Asked about the US call, Fares said OPEC+ members had different views on the matter.

"I agree with the minister’s sentiment, but it only reflects his position and I don't think it reflects that of the group," he added.

The OPEC+ coalition’s careful stewardship of the oil market has kept prices high enough to support the revival of the global petroleum industry, and largely avoided the kind of spike that could threaten the world’s economic recovery. They already restarted roughly 45 percent of the unprecedented production volume shuttered last spring.

 


China Evergrande lines up funds for interest payment to avert default — source

China Evergrande lines up funds for interest payment to avert default — source
Updated 4 sec ago

China Evergrande lines up funds for interest payment to avert default — source

China Evergrande lines up funds for interest payment to avert default — source
HONG KONG/SHANGHAI: China Evergrande Group has supplied funds to pay interest on a US dollar bond, a person with direct knowledge of the matter told Reuters on Friday, days before a deadline that would have seen the developer plunge into formal default.
The person said Evergrande remitted $83.5 million to a trustee account at Citibank on Thursday — as earlier reported on Friday by state-backed Securities Times — allowing it to pay all bondholders before the payment grace period ends on Oct. 23.
News of the remittance will likely bring relief to investors and regulators worried about a default’s wider fallout in global financial markets, adding to reassurance from Chinese officials who have said creditors’ interests would be protected.
Still, the developer, saddled with $300 billion in liabilities, will need to make payments on a string of other bonds, with the next major deadline to avoid default only a week away and little known about whether it is in a position to pay those debts.
“They seem to be avoiding short-term default and it’s a bit of a relief that they have managed to find liquidity,” said a Hong Kong-based debt restructuring lawyer representing some bondholders, who did not want to be identified.
“But still, Evergrande does need to restructure its debt. This payment might be a way for them to get some sort of buy-in with stakeholders before the heavy work needed on the restructuring.”
It was not immediately clear how cash-strapped Evergrande was able to raise funds for paying the bondholders or whether any bondholders have already received the money.
Evergrande did not respond to Reuters’ request for comment. Citibank declined to comment. The person with knowledge of the matter was not authorized to speak with media and so declined to be identified.
News of the remittance comes a day after financial information provider REDD said Evergrande had secured more time to pay a defaulted bond it guaranteed, issued by Jumbo Fortune Enterprises. “This is a positive surprise,” said James Wong, portfolio manager at GaoTeng Global Asset Management, who had expected a default.
The news would boost bondholders’ confidence, he said, as “there are many coupon payments due ahead. If Evergrande pays this time, I don’t see why it won’t pay the next time.”
Evergrande missed coupon payments totalling nearly $280 million on its dollar bonds on Sept. 23, Sept. 29 and Oct. 11, beginning 30-day grace periods for each.
Subsequent non-payment would result in formal default and trigger cross-default provisions for its other dollar bonds.
Evergrande’s next payment deadline is Oct. 29 with the expiration of the 30-day grace period on its Sept. 29 coupon.

TEMPORARY RELIEF
Evergrande’s dollar bond prices surged on Friday, with its April 2022 and 2023 notes jumping more than 10 percent, data from Duration Finance showed, though they still traded at deeply distressed levels of around a quarter of their face value.
Its shares rose as much as 7.8 percent, a day after trade resumed following a more than two-week halt pending the announcement of a stake sale in its property management unit, which was scrapped this week.
Evergrande’s woes have reverberated across the $5 trillion Chinese property sector, which accounts for a quarter of the economy by some metrics, with a string of default announcements, rating downgrades and slumping corporate bonds.
In the latest such move, Fitch Ratings on Thursday cut Sinic Holdings (Group) Co. Ltd’s long-term foreign currency issuer default rating to “restricted default” from “C” as the developer failed to repay its $250 million notes due Oct. 18.
Still, the Evergrande news helped the Hang Seng mainland properties index surge more than 4 percent versus a gain of 0.25 percent in the broader Hang Seng index.
It also helped Evergrande’s smaller peer Kaisa Group Holdings Ltd, whose dollar bonds surged in price.
Kaisa was the first Chinese developer to default back in 2015 and the Evergrande crisis has put it back in the spotlight.
In mainland markets, the CSI300 Real Estate index jumped as much as 6.5 percent, and an index tracking the broader property sector was eyeing its biggest gain in nearly two months.
When asked whether it will step in to help its rival to ease its liquidity crisis, Chairman Yu Liang of the nation’s third-biggest developer, China Vanke Co. Ltd, said developers needed to ensure their own safety first.
“Everyone feels the chill as ‘winter’ arrives for the sector... Whether we can pass this winter safely is still unknown,” Yu told a company forum on Friday.

FREEWHEELING
Evergrande’s woes had been snowballing for months. Dwindling resources set against more than $300 billion of liabilities had wiped out 80 percent of its value.
Founded in Guangzhou in 1996, the developer epitomised a freewheeling era of borrowing and building. But that business model has been scuttled by hundreds of new rules designed to curb developers’ debt frenzy and promote affordable housing.
Analysts said any prospect of demise would raise questions over what would happen to the more than 1,300 real estate projects Evergrande has ongoing in over 280 cities, and any impact the wider property sector.
Bank exposure to developers is also extensive. A leaked 2020 document, branded a fake by Evergrande but taken seriously by analysts, showed the company’s liabilities extending to more than 128 banks and over 121 non-banking institutions.
“Given that we have little clarity on how bank financing is going for stalled real estate projects, but we know that project pre-sales are down a lot, the onshore business is unlikely to be supplying cash to Evergrande near-term,” said analyst Travis Lundy at Quiddity Advisers in Hong Kong.

Renewable energy employed up to 12 million people worldwide in 2020

Renewable energy employed up to 12 million people worldwide in 2020
Updated 5 min 47 sec ago

Renewable energy employed up to 12 million people worldwide in 2020

Renewable energy employed up to 12 million people worldwide in 2020
  • Sector created 500,000 jobs last year

RIYADH: The renewable energy industry created half a million jobs in 2020 so that 12 million people were employed in the sector at the end of the year, according to the International Renewable Energy Agency (IRENA) and the International Labor Organization (ILO).

Solar energy jobs led the way in renewables employment, accounting for 33 percent of jobs, IRENA and the ILO said in a report titled World Energy Transitions Outlook. Liquid biofuels had a 20 percent share of jobs.

“The potential for renewable energy to generate decent work is a clear indication that we do not have to choose between environmental sustainability on the one hand, and employment creation on the other,” ILO Director-General Guy Ryder said in the report. “The two can go hand-in-hand.”

China held the bulk of renewable energy jobs, with 39 percent, followed by Brazil and India, at 10 percent and 6 percent, respectively. Other countries rapidly generating employment in the sector include Vietnam, Malaysia and Indonesia.

The transition to renewable energy will more than offset job losses in traditional energy, the report predicted, with 24-25 million jobs created by 2030 compared with 6-7 million roles lost by the transition.

The report also expects that 43 million people will be working in the renewable energy sector by 2050.


Trump deal delivers $420 million windfall for wondering dealmaker

Trump deal delivers $420 million windfall for wondering dealmaker
Updated 22 October 2021

Trump deal delivers $420 million windfall for wondering dealmaker

Trump deal delivers $420 million windfall for wondering dealmaker
  • Digital World shares ended trading on Wednesday up 357 percent after the deal was announced, giving the firm a market value of close to $1.5 billion

A merger with former US President Donald Trump’s new social media venture has delivered a potential windfall of $420 million for a former finance executive who has been trying for a decade to reinvent himself as a serial dealmaker.
Benessere Capital CEO Patrick Orlando’s stake in Digital World Acquisition Corp, the Miami-based blank-check acquisition firm he is leading, was worth $423 million on Thursday after his deal to merge Trump Media and Technology Group was announced, according to a regulatory filing and Reuters calculations.
Orlando invested only $3 million in Digital World, and is set to receive the windfall because the deal entitles him to additional compensation in shares as sponsor of the firm, the filing shows. Digital World shares ended trading on Wednesday up 357 percent after the deal was announced, giving the firm a market value of close to $1.5 billion.
To be sure, these gains are on paper. The terms of the SPAC do not allow Orlando to cash out until six months after the merger has been completed.
It is nonetheless a remarkable reversal of fortune for the former Deutsche Bank AG derivatives banker who worked in Peru’s biofuel industry and for a US sugar trading company before trying his hand at special purpose acquisition companies (SPACs).
He launched Benessere in 2012 to advise other companies on their deals but it was not until last year that he launched four SPACs with the help of Shanghai-based investment bank ARC Capital.
He struggled to gain traction. One of his SPACs, which was based in Wuhan, China, failed last month to complete a merger with Giga Energy Inc. that would have valued the transportation solutions provider at $7.3 billion, because it could not deliver the cash required, according to regulatory filings.
Orlando did not respond to requests for comment.
Trump Media said it would receive $293 million in cash that Digital World had in a trust if no shareholder of the acquisition firm chose to cash in their shares.
The company said it planned a trial version of its social media app next month and a full roll-out in the first quarter of 2022.


John Kerry to attend Middle East Green Initiative Summit in Saudi Arabia

John Kerry to attend Middle East Green Initiative Summit in Saudi Arabia
Updated 21 October 2021

John Kerry to attend Middle East Green Initiative Summit in Saudi Arabia

John Kerry to attend Middle East Green Initiative Summit in Saudi Arabia
  • Kerry will “engage with government counterparts and private sector leaders on climate crisis

LONDON: US climate envoy John Kerry will travel to Saudi Arabia on Sunday to take part in the Middle East Green Initiative Summit.

During his two-day visit to the Kingdom, Kerry will “engage with government counterparts and private sector leaders on efforts to address the climate crisis,” the State Department said.

Kerry’s meetings will “bolster the United States’ bilateral and multilateral climate diplomacy” ahead of the COP26 climate summit in Glasgow that starts on Oct. 31.

Saudi Arabia will host the inaugural Saudi Green Initiative Forum and Middle East Green Initiative Summit in Riyadh on Oct. 23-25.

The environmental initiatives were launched in March by Crown Prince Mohammed bin Salman. Together they aim to plant 50 billion trees in the region and reduce Middle East carbon emissions by 60 percent.


NEOM’s green hydrogen plant to operate in 2026: Air Product’s CEO

NEOM’s green hydrogen plant to operate in 2026: Air Product’s CEO
Updated 21 October 2021

NEOM’s green hydrogen plant to operate in 2026: Air Product’s CEO

NEOM’s green hydrogen plant to operate in 2026: Air Product’s CEO
  • Seifi Ghasemi noted that the project is the biggest in the world and that it is the first time for the company to handle a project with this scale, echoing a similar comment from ACWA Power CEO to Arab News. 

NEOM’s green hydrogen plant will start operations in 2026, the chief executive officer of Air Products & Chemicals revealed in an interview with Alarabiya.

The project will export hydrogen in the form of liquid ammonia to the world market for use as a biofuel that feeds transportation systems.

Seifi Ghasemi noted that the project is the biggest in the world and that it is the first time for the company to handle a project with this scale, echoing a similar comment from ACWA Power CEO to Arab News. 

This comes amid the Kingdom’s directions towards green energy.