$1 trillion energy bill to hit Europe; Kazakhstan recalls bill authorizing $6m green deal: NRG Matters

$1 trillion energy bill to hit Europe; Kazakhstan recalls bill authorizing $6m green deal: NRG Matters
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Updated 13 January 2022

$1 trillion energy bill to hit Europe; Kazakhstan recalls bill authorizing $6m green deal: NRG Matters

$1 trillion energy bill to hit Europe; Kazakhstan recalls bill authorizing $6m green deal: NRG Matters

RIYADH: Unprecedented events are shaking up the energy sector on a macro and micro level. The sector is in flux as supply and prices bear down while the transition to greener energy gains momentum.

Looking at the Bigger Picture:

·Europe expects a $1 trillion energy bill in 2022 due to the hyperinflation in power and natural gas prices rippling across the continent, Bloomberg reported.

Unlike previous peaks which were attributed to surging oil prices, this one is primarily associated with the cost of heating households and powering renewable plants instead.

·The US government is to hold the largest sale in its history of offshore wind farm rights off New York and New Jersey in a swift clean energy push, Bloomberg reported.

As part of the accelerated energy push plan, the Biden administration also intends on building power transmission lines to fuel the country with sustainable electricity.

Through a micro lens:

·Kazakhstan's Prime Minister Alikhan Smailov signed a decree on Monday recalling a bill that had sanctioned a $6 million green energy deal with Abu Dhabi-based holding companies ADQ and Taqa, Reuters reported.

Despite scepticism from industry analysts upon the announcement of the deal last month as it was not followed by viable bidding, the reason behind this move has not been disclosed yet.

·Specializing in renewable energy production, EDF renewables UK, has created a strategic partnership with Irish renewable energy development corporation, DP energy, to produce as much as one gigawatt of wind power from a floating offshore wind project in the Celtic Sea, Reuters reported.

The project is anticipated to generate enough electricity to cater to an estimated 927,400 homes in the region.


Alandalus Property completes 70% of ‘The Village’ project in Jeddah

Alandalus Property completes 70% of ‘The Village’ project in Jeddah
Updated 10 sec ago

Alandalus Property completes 70% of ‘The Village’ project in Jeddah

Alandalus Property completes 70% of ‘The Village’ project in Jeddah

RIYADH: Alandalus Property Co. completed 70 percent of the Al Jawhara Al Kubra project in Jeddah, according to a bourse statement.

The company completed 100 percent of the structure and concrete works, 80 percent of facades, 70 percent of electromechanical works, and 65 percent of interior finishings, it said in a statement to the Saudi stock exchange.

The project is expected to complete in the second quarter of 2022, as per the latest report received from the developer partner. It will be operational in the third quarter of 2022, Alandalus said.

There is a change in the cost by SR22.34 million ($5.95 million), making the total cost including the land value SR895.34 million, the company said.

This is mainly due to an increase in the built-up area, the implementation of additional works in the entertainment area, and some other works on the site, according to Alandalus.

The project is named “The Village,” and the trade name for the owner company Al Jawhara Al Kubra Co. will not be changed.


Madinah public transport to be improved after $15m deal

Madinah public transport to be improved after $15m deal
Updated 1 min 58 sec ago

Madinah public transport to be improved after $15m deal

Madinah public transport to be improved after $15m deal
  • The Riyadh-based transport company, which operates local and international routes, signed the deal with the Madinah Region Development Authority

The Saudi Public Transport Co. has signed a public transport contract in Madinah with the city’s development authority, with a total value of SR57.5 million ($15.3 million)

The Riyadh-based transport company, which operates local and international routes, signed the deal with the Madinah Region Development Authority.

The contract is valid for five years, the company said in a bourse filing, and is expected to have a positive impact on the company’s revenues from the first half of 2022.


Egypt eyes up to 15% higher revenues to finance wage hikes

Egypt eyes up to 15% higher revenues to finance wage hikes
Updated 7 min 30 sec ago

Egypt eyes up to 15% higher revenues to finance wage hikes

Egypt eyes up to 15% higher revenues to finance wage hikes
  • Ahmed Kojak said higher revenues would help set aside provisions to improve workers’ wages

Egypt is planning to raise revenues by 13 to 15 percent in the 2022/23 fiscal year budget to fund wage hikes, the Deputy Minister of Finance for Financial Policies said.

Ahmed Kojak said higher revenues would help set aside provisions to improve workers’ wages, in addition to enhancing the country’s infrastructure and mitigating the government’s deficit, Al Arabiya has reported.

Egypt’s government targets to grow the economy by 5.7 percent in the 2022/23 fiscal year and to reduce the debt’s percentage of GDP to below 90 percent.

The Egyptian fiscal year starts from June and ends in July of the following year.

Previously, the Ministry of Finance raised its budget deficit forecast for the next fiscal year to 6.3 percent from an earlier 6.1 percent estimate and expected to make a primary surplus of 1.5 percent.

In other related developments, the North African country made a deficit of 3.9 percent as a share of GDP in the first half of the 2021/22 fiscal year. This is compared to 3.6 percent and 4.1 percent in the previous two years, Asharq reported, citing an interview with Mohamed Maait, the head of the Ministry of Finance.

Egypt is expected to make a primary surplus of 1.1 to 1.2 percent in the current fiscal year, reflecting the government’s ability to cover all of its expenses, excluding interest payments.

Looking at financing options, Maait said the country will issue samurai bonds – yen-denominated bonds issued in Tokyo by non-Japanese entities – before the end of June. The amount would be relatively small at $500 million or less.

Meanwhile, wheat prices could particularly hit the country’s finances with a value estimated at 12 billion pounds ($764 million) for the current fiscal year as poor weather conditions impacted the grain’s crops from different exporters. Additionally, Russia – which is usually the largest provider of wheat to Egypt – imposed taxes on exports to limit outgoing sales.

Egypt is the world’s largest importer of wheat, buying around 12.9 billion tons of the commodity for the government in 2020.


Turkish industry copes with abrupt cut of gas flow from Iran

Gas flares from an oil production platform at the Soroush oil fields in the Persian Gulf, south of the capital Tehran. (REUTERS file photo)
Gas flares from an oil production platform at the Soroush oil fields in the Persian Gulf, south of the capital Tehran. (REUTERS file photo)
Updated 25 January 2022

Turkish industry copes with abrupt cut of gas flow from Iran

Gas flares from an oil production platform at the Soroush oil fields in the Persian Gulf, south of the capital Tehran. (REUTERS file photo)
  • Authorities should have taken necessary steps beforehand, energy expert tells Arab News
  • Record high losses for manufacturing facilities and disruption in export commitments feared

ANKARA: Following a decision by Iran to cut gas flows to Turkey last week, Ankara began ordering gas-fuelled power plants to decrease their gas use by 40 percent as of Monday.

The sudden move emphasized the need to diversify energy suppliers for the country. Households, schools and hospitals are, for now, exempt from the measures.

Iran’s natural gas consumption recently hit a record high at about 692 million cubic meters per day in households, commercial and smaller industries mainly because of harsh winter conditions, but the country cited a gas leak in a Turkish station for the disruption of exports to Turkey for up to 10 days.

Turkey is no exception to the record highs of daily gas consumption, which reached around 288 million cubic meters on Jan. 19.

Turkey is almost fully dependent on imported gas from Iran, Azerbaijan and Russia, while Iran alone provided about 16 percent of the country’s natural gas needs last year.

The decision worried several industrial representatives, as it did not discriminate between sectors with cold storage rooms or furnaces.

FASTFACT

Turkey is almost fully dependent on imported gas from Iran, Azerbaijan and Russia.

“Such a gas cut means greater financial loss for some key sectors such as glass, medicine and ceramic factories as well as those producing meat and dairy products,” Mehmet Ogutcu, a former diplomat and currently the president of London Energy Club, told Arab News.

The sectors that use the most electricity, namely the iron and steel sector, and the clothing industry, are expected to record high losses and will face disruption in export commitments.    

“The production could be at risk if the interruption continues to grow in the coming days,” Ogutcu said.

“It will damage the economy and industrial production especially at a time when exports and production were accelerating.”

Companies in industrial zones were notified of the three-day restriction on Friday and will be allowed to use gas only on allotted days.

The prospect of electricity cuts to industrial sites is also on the horizon, and might affect households as well, although gas prices have become discouraging for citizens, as they increased by 25 percent for residential use and 50 percent for industrial use in January.

Turkey’s domestic gas consumption rate increased from 48 billion cubic meters to 60 billion in a year, while there are some 18 million natural gas subscribers across the country.

“I have repeatedly warned about a potential outage for the last six months. It also happened in the European countries,” Ogutcu said.

“Turkey should have taken necessary measures beforehand when the first signs appeared.”

According to Ogutcu, Turkey either had to decrease gas demands and simultaneously develop plans to increase energy efficiency, or develop alternative energy resources like liquefied natural gas.

Turkey imports LNG from the US, Morocco, Qatar and Nigeria, but it still remains much more expensive than natural gas imports for Ankara.

About a third of Turkey’s natural gas needs are currently met through LNG deliveries.

“There are ongoing projects in the Black Sea for gas discoveries with some drilling testing. But it will take at least seven or eight years to reap the benefits of that project,” Ogutcu said.

Turkey’s 405 billion cubic meter gas discoveries in the Black Sea were accepted as the largest offshore gas discovery in the world in 2020.

Similar gas supply cuts have happened in the past, but did not result in power outages in the industrial sector on such a great scale.

Experts emphasized the need to learn lessons from this latest crisis and to design alternative energy sources.

Turkish President Recep Tayyip Erdogan recently announced that Turkey is still interested in transporting Israeli gas to Europe — a potential step to diversify much-needed gas sources.

Last week, a blast in the southeastern province of Maras resulted in another disruption in the flow of crude oil through the Kirkuk-Ceyhan pipeline.

“In the past decade, Turkey has succeeded in further diversifying its energy sources with more energy suppliers, the growing use of LNG and renewables,” Gallia Lindenstrauss, a senior research fellow at the Institute for National Security Studies in Israel, told Arab News.

“The first unit in the Rosatom-built nuclear power plant in Akkuyu is expected to be operational in 2023 and Turkey has discovered gas reserves in the Black sea that will be another future source of energy.”

According to Lindenstrauss, the problem today is less related to the issue of diversification and more to the sharp devaluation of the Turkish lira alongside rising energy prices, which translates into difficulties for the purchase of LNG.

“Obviously, Turkey would also benefit if it were able to sign contracts to import gas, or be a transit route for gas, from the Eastern Mediterranean, but this has not been possible until today mainly because of political reasons,” she said.

Even in the unlikely scenario that neighboring states overcome the hurdles between them, Lindenstrauss thinks that it is still only part of the solution to Turkey’s growing energy needs, and short-term energy shortage problems from time to time will be a recurring problem.

This year, Turkey’s natural gas storage capacity has reached 3.8 billion cubic meters.


Kuwait estimates 74.2% decrease in deficit according to a budget draft report

Kuwait estimates 74.2% decrease in deficit according to a budget draft report
Updated 24 January 2022

Kuwait estimates 74.2% decrease in deficit according to a budget draft report

Kuwait estimates 74.2% decrease in deficit according to a budget draft report
  • The Kuwaiti Ministry of Finance expects a budget deficit decrease by 74.2 percent from previous year

Riyadh: The Kuwaiti Ministry of Finance submitted on Monday a budget draft report for 2022-2023 fiscal year, with an expected deficit of 3.1 billion dinars ($10.26 billion), decreasing 74.2 percent from previous year, according to a Reuters report citing a ministry statement. 

The report also stated that the OPEC member country expects oil income of 16.7 billion dinars during the fiscal year ending in March 2023, an increase of 83.4 percent from 2021-2022.

Total revenues are estimated at 18.8 billion dinars and expenditures at 21.9 billion dinars in the 2022-2023 fiscal year.