OPEC trims 2021 demand forecast, says gas price surge may help

OPEC trims 2021 demand forecast, says gas price surge may help
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Updated 13 October 2021

OPEC trims 2021 demand forecast, says gas price surge may help

OPEC trims 2021 demand forecast, says gas price surge may help
  • Shortage of fuel used for power generation is pushing use of oil products up

RIYADH: The Organization of the Petroleum Exporting Countries on Monday trimmed its world oil demand growth forecast for 2021 while maintaining its 2022 view.

Its monthly report, however, said surging natural gas prices could boost demand for oil products as end users switch.

Oil prices were flat on Wednesday after erasing earlier losses as surging fuel costs for power generation offset expectations that demand growth will fall as a result of major economies being under strain from inflation and supply chain issues.

Brent futures fell 9 cents, or 0.1 percent, to $83.33 a barrel by 11:29 a.m. EDT (1529 GMT), while US West Texas Intermediate crude rose 4 cents, or 0.1 percent, to $80.68.

That puts WTI on track to close at its highest since October 2014 for a fourth day in a row and keeps the US benchmark trading in overbought territory.

Prices had come under pressure on Wednesday, when China, the world’s biggest crude importer, released data showing September imports fell 15 percent from a year earlier.

China, along with Europe and India, faces coal and natural gas shortages that have pushed up prices for the fuels burned for electricity generation and are leading to oil products being used as a substitute.

OPEC now expects oil demand to grow by 5.82 million barrels per day, (bpd), down from 5.96 million bpd in its previous forecast, saying that the downward revision was mainly driven by data for the first three quarters of the year.

It maintained a growth forecast of 4.2 million bpd for next year.

The group said, however, that natural gas prices at record highs could provide a potential boost to oil demand growth as industrial users switch to oil products instead.

“Should this trend continue, fuels such as fuel oil, diesel, and naphtha could see support, driven by higher demand for power generation, refining and petrochemical use,” OPEC said.

Saudi Aramco CEO Amin Nasser last week put the demand boost from the gas-to-oil switch at about 500,000 bpd.

OPEC+, an alliance between OPEC and other producers led by Russia, this month agreed to stick with its plan for a 400,000 bpd production increase for November as it gradually unwinds output cuts it made to support previously low prices.

In its report, OPEC raised its forecast for 2021 demand for OPEC crude oil by 100,000 bpd to 27.8 million bpd and by another 100,000 bpd for 2022 to 28.8 million bpd.

It said that OPEC’s output in September rose by about 490,000 bpd to 27.33 million bpd, according to secondary sources.

In a sign of a tightening oil market, OPEC said that OECD commercial oil inventories fell by 19.5 million barrels in August from the previous month to 2.855 billion barrels, according to preliminary data.

This figure is 183 million barrels below the latest five-year average and 131 million barrels below the 2015-2019 average, OPEC said.


Nigeria to launch digital currency on Monday, central bank says

Nigeria to launch digital currency on Monday, central bank says
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Updated 7 sec ago

Nigeria to launch digital currency on Monday, central bank says

Nigeria to launch digital currency on Monday, central bank says
  • Central Bank of Nigeria (CBN) Governor Godwin Emefiele has said the eNaira would operate as a wallet

Nigeria will on Monday launch a digital currency, the eNaira, the central bank said, months after it barred banks and financial institutions from dealing in or facilitating transactions in cryptocurrencies.

Central Bank of Nigeria (CBN) Governor Godwin Emefiele has said the eNaira would operate as a wallet against which customers can hold existing funds in their bank account.


"The eNaira therefore marks a major step forward in the evolution of money and the CBN is committed in ensuring that the eNaira, like the physical Naira, is accessible by everyone," the bank said in a statement.


Nigeria has named Barbados-based Bitt Inc as a technical partner in developing the eNaira. 


Saudi Arabia plans to be world’s biggest hydrogen producer

Saudi Arabia plans to be world’s biggest hydrogen producer
Updated 2 min 45 sec ago

Saudi Arabia plans to be world’s biggest hydrogen producer

Saudi Arabia plans to be world’s biggest hydrogen producer

DUBAI: Saudi Arabia’s Energy Minister Prince Abdulaziz bin Salman Al-Saud said the Kingdom has plans to be the biggest producer of hydrogen in the world.

The comments were made at the Youth Green Summit in Riyadh, which is part of the Saudi Green Initiative.


QatarEnergy signs deal with ExxonMobil Canada on farm-in exploration license

QatarEnergy signs deal with ExxonMobil Canada on farm-in exploration license
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Updated 24 October 2021

QatarEnergy signs deal with ExxonMobil Canada on farm-in exploration license

QatarEnergy signs deal with ExxonMobil Canada on farm-in exploration license
  • The Hampden exploration well activities are planned in deep water, 450 km off the coast of Newfoundland and Labrador

QatarEnergy has signed a deal for a 40 percent stake in one of ExxonMobil’s major offshore explorations in Canada, the Qatar state-owned oil and gas firm said on Sunday.


The deal marks QatarEnergy’s first foray into offshore exploration in Canada, the company said in a statement.


The agreement will give QatarEnergy a farm-in exploration license for EL 1165A, currently held by ExxonMobil Canada.


The Hampden exploration well activities are planned in deep water, 450 km off the coast of Newfoundland and Labrador. ExxonMobil Canada will retain the remaining interest in the exploration.


Over the past two years, Qatar Energy has expanded internationally, gaining stakes in oil and gas projects around the world by signing deals with major energy companies, including ExxonMobil.


Qatar is the world's largest supplier of liquefied natural gas and aims to expand production to 127 million tonnes annually by 2027 from the current 77 million tonnes.


Gazprom could cut gas to Moldova if contract not signed

Gazprom could cut gas to Moldova if contract not signed
Image: Shutterstock
Updated 24 October 2021

Gazprom could cut gas to Moldova if contract not signed

Gazprom could cut gas to Moldova if contract not signed
  • Moldova's contract with Gazprom ran out in September

Moscow's Gazprom could cut Moldova's gas supply if the country does not settle its bill and sign a new contract, the energy giant's top official was quoted by Russia's Interfax news agency as saying.


Moldova declared a 30-day state of emergency on Friday in an effort to secure the ex-Soviet country cheaper natural gas from Europe after Moscow - its traditional supplier - raised prices.


Gazprom's Sergei Kupriyanov said Chisinau owed the company $709 million (610 million euros).


Moldova's contract with Gazprom ran out in September, but Kupriyanov said the pair were able to "meet half way" and extend a contract for October.


"If payment for gas supplies is not fully paid and a contract is not signed from December, then Gazprom will halt gas supplies to Moldova," he told Interfax.


The country of 2.6 million people wedged between Romania and Ukraine gets gas from Russia via its pro-Russian separatist region of Transnistria and Ukraine.


Gazprom this month hiked prices more than 40 percent to $790 per thousand cubic metres from $550 - a level Deputy Prime Minister Andrei Spinu said was "not justified and not realistic" for Europe's poorest country.


Despite the contract being extended, Moldovan Prime Minster Natalia Gavrilita said on Friday the country was receiving a third less natural gas than usual for October.


"We face a critical situation," she said.


She told parliament Moldova would be seeking supplies from EU countries and thanked Romania and Ukraine for already providing some gas.


The month-long state of emergency, which will last until November 20, gives Moldovan utility company Energocom the powers to secure gas from other countries.


The country's gas shortages come amid skyrocketing gas prices that some in Europe have blamed on Moscow not providing additional supplies to put pressure on the continent.


Saudi industrial sector grows on MODON-led initiatives: Knight Frank

Saudi industrial sector grows on MODON-led initiatives: Knight Frank
Updated 24 October 2021

Saudi industrial sector grows on MODON-led initiatives: Knight Frank

Saudi industrial sector grows on MODON-led initiatives: Knight Frank
  • The consultancy firm said the “fast-paced growth” is due to initiatives by MODON, or the Saudi Authority for Industrial Cities and Technology Zones

DUBAI: Investments in Saudi Arabia’s industrial sector grew 281 percent in the last 12 months, global property consultant Knight Frank showed, attributing it to strong regulatory support. 

The consultancy firm said the “fast-paced growth” is due to initiatives by MODON, or the Saudi Authority for Industrial Cities and Technology Zones, which include offering new products and services such as warehouses, self-storage units, and financing solutions. 

“The 281% jump in industrial sector investments in the last 12 months has delivered a staggering 30,000 new jobs across the Kingdom,” Faisal Durrani, head of Middle East research at Knight Frank, said. 

The COVID-19 pandemic has also played a big role in the Kingdom’s industrial sector, as online shopping drove a surge in requirements for better logistics facilities, Durrani said. 

“We do not expect a let-up in online shopping and indeed the government forecasts revenues for the sector to close in on SR30 billion ($8 billion) this year, up from SR24.7 billion in 2020,” he added.

This strong market performance has also led to rising lease rates and occupancy levels in industrial real estate in the Kingdom — 7 percent growth in Riyadh, and 4.5 percent increase in Jeddah.

“Riyadh in particular is expected to outperform Jeddah as stock levels have remained unchanged so far this year. Indeed, over the last six months, prime rents have increased by close to 8%, while grade B rents have retreated by 3.5,” Durrani explained. 

The Knight Frank researcher said developers traditionally “developed warehouse and logistics facilities based on speculative demand, while built-to-suit stock has always been limited.”