NEOM green hydrogen JV to secure billions in financing in early 2022: ACWA Power chief

NEOM green hydrogen JV to secure billions in financing in early 2022: ACWA Power chief
Saudi Acwa Power-generating windmills are pictured in Jbel Sendouq, on the outskirts of Tangier, Morocco, June 29, 2018. (File/Reuters)
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Updated 12 October 2021

NEOM green hydrogen JV to secure billions in financing in early 2022: ACWA Power chief

NEOM green hydrogen JV to secure billions in financing in early 2022: ACWA Power chief

DUBAI: ACWA Power, which debuted on Saudi Arabia’s stock market on Monday, expects to finalize in the first quarter of next year billions of dollars in financing for a green hydrogen joint venture at the planned futuristic city NEOM, ACWA’s CEO said.
The project, which will be equally owned by Air Products, ACWA Power and NEOM, will produce green ammonia for export to global markets, with the first shipment expected from NEOM’s port in the first quarter of 2026.
“We have not actually finalized the group of banks yet, but we are very advanced in structuring and work is being done internally,” CEO Paddy Padmanathan told Reuters in an interview, adding the project was “on track.”
Roughly 20 percent of the $6.5 billion project will be funded with equity and the rest will be limited-recourse project finance, he said.
“We would very much like to make sure it’s sustainability-linked,” he added.
Reuters reported in January that the joint venture had hired financial firm Lazard to advise on the project.
ACWA Power is planning projects this year with a total investment cost of around $16 billion, Padmanathan said.
Some projects planned last year were pushed into this year due to the COVID-19 pandemic, with ACWA projects in 2020 totalling about $3.5 billion — missing a $10 billion target as a result of the pandemic’s impact.
ACWA Power, which operates in 13 countries, is bidding for renewable energy projects in Uzbekistan, Egypt, South Africa and Indonesia, as well as a large pipeline of projects in Saudi Arabia, the CEO said.
“We have got five projects that we have already bid for in Indonesia, where we know that we are the lowest-priced on them. We are waiting for the Indonesian government to move forward.”
Asked whether ACWA would maintain its Dubai “extended headquarters,” as it is referred to in the IPO’s prospectus, Padmanathan said Riyadh had always been its base.
Saudi Arabia said in February that from 2024, it would stop giving state contracts to companies that base their Middle East hubs in any other country in the region, which analysts saw as a challenge to Dubai’s dominance as a tourism and business hub.
“As we grew our international business, at that time, it made sense for us to also maintain that satellite office (in Dubai) for efficiency. In time to come, I can see that the Riyadh base will continue to grow much more significantly, simply because also the volume of activity,” he said.
“We have bought some land and we are looking at developing our own office space. We have been leasing.”


Chinese industrial profits surge; mixed signals from Western Europe's consumers: Economic wrap

Chinese industrial profits surge; mixed signals from Western Europe's consumers: Economic wrap
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Updated 21 sec ago

Chinese industrial profits surge; mixed signals from Western Europe's consumers: Economic wrap

Chinese industrial profits surge; mixed signals from Western Europe's consumers: Economic wrap
  • Compared to January, profits in the coal mining and washing industries surged by 172.2 percent in September

The industrial sector’s profits in China saw a year-on-year jump of 16.3 percent in September to reach CNY738.74 billion ($115.5 billion), official data revealed. This is higher than last month’s gain of 10.1 percent.

While the sector faced rising prices and disruptions in the supply chain, mining and raw materials industries still grew at significantly high rates, pushing the entire sector’s profits up. 

Compared to January, profits in the coal mining and washing industries surged by 172.2 percent in September while profits of the fuel processing industry soared by 930 percent over the same period. On the other hand, power firms experienced a decline in profits, falling by 24.6 percent.

Consumer Confidence in Western Europe

France’s official statistics agency said that consumer confidence declined to 99 points in October, down from 101 points in September. It was below the long-term average of 100. 

Households were mainly worried about the impact of increasing prices on their ability to save in the future. They also seemed to have a negative outlook for their future financial situation and standard of living.

Germany's GfK consumer climate index unexpectedly jumped to 0.9 heading into November 2021. This is the highest level since April 2020. However, rising prices could pose risks to consumer confidence if they were to persist.

The GFK Group added that Germans seem to make more purchases now in a bid to avoid surging prices in the future.

Australia’s Inflation Rate 

Year-on-year inflation rate in Australia was down to 3 percent in the third quarter of 2021 from a 12.5-year high of 3.8 percent in the previous quarter, official data showed. 

Transportation costs slowed to 10.4 percent in 3Q of this year compared to 10.7 percent in the previous quarter. Similarly, price inflation for tobacco and alcohol products reached 4.4 percent, falling from the previous period’s 6.7 percent rise.

Turkey’s trade deficit and economic confidence

The trade deficit in Turkey sharply narrowed to $2.55 billion in September, down from a deficit of $4.86 billion in the same month last year, Turkish Statistical Institute said.

Exports jumped by a significant 30 percent year-on-year in September to reach $20.8 billion. Exports for manufactured products rose by 29.7 percent while sales of mining and quarrying activities leaped by 38.8 percent.

Meanwhile, imports rose by a lower 11.9 percent to be valued at $23.3 billion in September. This was mainly driven by a rise in purchases of intermediate goods, which increased by a 16.5 percent annual rate.

Turkey’s economic confidence index lowered to 101.4 in October. This is a 1 percent decrease from September’s reading of 102.4, the highest since April of 2018. 

Consumers and manufacturers’ sentiment got more pessimistic but service providers, retailers and constructors had a more favorable outlook. 

France’s producer prices

Industrial producer prices in France increased by 1.7 percent month-on-month in September, up from August’s 1 percent rise, official data showed.

Sources of inflationary pressures included rises in mining and quarrying activities prices as well as hikes in the costs of utilities.

In addition, producer prices rose annually by 11.6 percent in September compared to the same month in 2020. 

Indonesia’s FDI

Indonesia's foreign direct investment inflows fell by 2.7 percent on an annual basis to IDR 103.2 trillion ($7.3 billion) in the third quarter of 2021, official data revealed. This is a sharp decline when compared to the previous quarter’s 19.6 percent gain. Also, this was the first decrease since the second quarter of 2020.


SAIB net profit up 9% to $206.7m in first 9 months of 2021

SAIB net profit up 9% to $206.7m in first 9 months of 2021
Updated 7 min 41 sec ago

SAIB net profit up 9% to $206.7m in first 9 months of 2021

SAIB net profit up 9% to $206.7m in first 9 months of 2021
  • SAIB reported a net profit of SR274.3 million in the third quarter of 2021

RIYADH: The Saudi Investment Bank (SAIB) reported a net profit of SR775.6 million ($206.7 million) in the first nine months of 2021, a 9 percent increase from SR714.4 million in the year-earlier period, a bourse filing revealed.


The bank attributed the profit rise to a decline of 11.6 percent year-on-year (YoY) in total operating expenses amid lower salaries and employee-related expenses, as well as provisions for credit and other losses.

The total operating income decreased by 5.4 percent year-on-year, on a decrease in net special commission income, exchange income, dividend income, fair value through profit and loss, and other income, the company revealed in a statement on Saudi Stock market (Tadawul).

SAIB reported a net profit of SR274.3 million in the third quarter of 2021, declining by 9 percent compared to the same period of last year, from SR301.3 million. The total operating income decreased by 5.6 percent year-on-year, with a lower fee income from banking services, exchange income, fair value through profit and loss, and other income. Total operating expenses grew by 2.3 percent year-on-year. 

SAIB profit decreased by 4.7 percent in the third quarter of 2021 compared to the previous quarter, from SR287.77 million.


Total shareholders' equity, excluding minority interests, reached SR14.69 million during the first nine months of 2021, compared to SR12.81 million in the year-earlier period.


Oracle signed as first tenant of NEOM’s data centre

Oracle signed as first tenant of NEOM’s data centre
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Updated 26 min 32 sec ago

Oracle signed as first tenant of NEOM’s data centre

Oracle signed as first tenant of NEOM’s data centre
  • The agreement follows the launch of the Oracle Cloud Saudi Arabia West Region in Jeddah in February 2020

NEOM Tech & Digital Hold Co. announced Oracle as the first tenant of its hyper scale data centre at NEOM. 

Oracle Cloud Infrastructure (OCI), part of the US computer technology giant, is to be hosted at the data center to provide a high-performing, resilient foundation for cloud services.

The agreement follows the launch of the Oracle Cloud Saudi Arabia West Region in Jeddah in February 2020 and supports Oracle’s commitment to open two dedicated cloud regions in the Kingdom.

“Saudi Arabia is fast emerging as a global technology hub and NEOM Tech & Digital Hold Co.’s partnerships with Oracle and EzdiTek will enable us to build the foundations required to deliver on our full potential,” minister of communication and NEOM Tech & Digital Hold Co. chairman, Abdullah Alswaha, said. 

“Today’s announcement means the realization of technology that will serve the ambitions of the public and private sector across the region and beyond, positioning Saudi Arabia at the forefront of the industry,” he added. 

The company also announced a $500 million joint venture with EzdiTek, via its affiliate, FAS Energy Trading Co., to power the creation and operation of the data center.


Green investment lacking ‘urgency’, warns key global financial players at Future Investment Initiative 2021

Green investment lacking ‘urgency’, warns key global financial players at Future Investment Initiative 2021
Updated 32 min 40 sec ago

Green investment lacking ‘urgency’, warns key global financial players at Future Investment Initiative 2021

Green investment lacking ‘urgency’, warns key global financial players at Future Investment Initiative 2021

Global institutions are lacking urgency when it comes to investing in green initiatives, leading figures in the financial sector have warned in a sobering assessment of the battle against climate change. 

Speaking at the Future Investment Initiative Forum in Riyadh, prominent players in Saudi’s Public Investment Fund (PIF), asset management firm Ninety One, and HSBC Holdings all called for the pace of investments to increase.

Fahad AlSaif, head of Global Capital Finance at PIF, told delegates: “The essence of the urgency is not there yet. There has to be collaboration, across global institutions, it is a trust problem in delivering.”

He added: “I worry about the balance of pace we are moving.”

His concerns were echoed by John Green, chief commercial officer at Ninety One, who also revealed that 60-70 percent of the conversations he has with clients are about energy. 

“Action in real financing is not there,” he said, arguing that not enough is being invested in developing economies.

Noel Quinn, group CEO at HSBC Holdings, said that while "acceleration" in this area is "really fast", the Covid-19 pandemic has acted "as a wake up call to say a natural event can have an affect on economy".

Julia Hoggett, CEO of the London Stock Exchange, insisted the six months following the UN Climate Change Conference in Glasgow, are “critical” for turning any announcements into action.

“I believe in pipes and plumbing,” she said. 


Norway's Equinor Q3 results surge to nine-year high on gas and derivatives

Norway's Equinor Q3 results surge to nine-year high on gas and derivatives
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Updated 44 min 48 sec ago

Norway's Equinor Q3 results surge to nine-year high on gas and derivatives

Norway's Equinor Q3 results surge to nine-year high on gas and derivatives
  • Norway is western Europe's largest oil and gas producer, pumping around 4 million barrels of oil equivalent per day

Norway's Equinor posted its strongest quarterly result in nine years on Wednesday, driven by a global energy supply crunch that pushed Europe's natural gas prices to record highs and sent the value of derivative contracts soaring.


Equinor has the largest exposure to spot gas prices among big oil companies and its results come ahead of those due from Shell this week and BP next.


Equinor said it would sharply increase its share buybacks in coming months while maintaining a quarterly dividend level of $0.18 per share.


Adjusted earnings before tax rose to $9.77 billion in the July-September quarter from $780 million, exceeding the $8.4 billion predicted in a poll of 25 analysts compiled by Equinor.


"The current unprecedented level and volatility in European gas prices underlines the uncertainty in the market," CEO Anders Opedal said in a statement.


Norway is western Europe's largest oil and gas producer, pumping around 4 million barrels of oil equivalent per day. Last year, it supplied 22 percent of the gas consumed in the European Union, Norwegian government data showed.


Equinor has said it would seek to boost pipeline gas exports to Europe by increasing production from the Troll and Oseberg fields, as well as from reducing gas injections normally used to pump oil.


"We have turned every valve to see if we can produce and export more gas," Opedal said, adding that one field, Gina Krog, had found ways to do so with only a marginal negative impact on its simultaneous oil output.


The confluence of factors driving global gas prices was unlikely to be permanent however, Opedal said.


"This makes for higher revenues for Equinor but is also a reminder how commodities prices swing," he told a news conference. "We have not changed our long-term price projections."


Equinor is benefiting from Europe's flexible gas market after the European Union forced gas producers years ago to shift away from steady, long-term contracts.


The increased energy cost has led to soaring electricity prices across much of Europe and the world, hitting households as well as companies which have been forced to shut factories, triggering further supply chain shortages.


Global gas prices rose sharply in the third quarter, with Europe's benchmark TTF front-month contract increasing threefold to around 90 euros per megawatt hour (MWh), below average storage levels and concerns over Russian supply ahead of the winter heating season.


In early October, the gas price again, hitting a record of 155 euros per MWh before easing to 89 euros on Tuesday. The price of North Sea crude oil meanwhile has risen 67 percent this year to a three-year high of $86 per barrel.

Earnings at Equinor's marketing, midstream and processing (MMP) unit rose to $2.19 billion from $262 million, boosted by derivatives contracts related to European gas, the company said.


Equinor sells most of its gas on a short-term, or spot, basis but also sells a small share based on longer-dated indices. For the latter, MMP has used financial contracts to benefit from strong spot and front-month pricing.


The mark-to-market gains from such contracts in the third quarter will be followed by losses in the MMP segment when those volumes are delivered under the long-term contracts, Equinor reiterated in its earnings report.


Higher profits will also mean higher taxes in the fourth quarter, the company said.


Shares in Equinor were down 2.4 percent earlier, lagging an Oslo benchmark index down 1.2 percent, with the benchmark Brent crude down 1.1 percent.

Equinor plans to buy back shares worth $1 billion in the next three months, up from a plan of $300 million.


Two thirds will be bought from the Norwegian government, its largest stakeholder, ensuring the state maintains an unchanged stake of 67 percent.


In the previous quarter it had planned to buy up to $300 million in shares. It spent $99 million on the market and has committed to buy the rest from the government's holdings.