Customers and investors are driving low-carbon footprint demand, says SABIC executive 

Customers and investors are driving low-carbon footprint demand, says SABIC executive 
Fahad Al Sherehy, vice president of energy efficiency and carbon management at SABIC (Screenshot)
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Updated 13 January 2022

Customers and investors are driving low-carbon footprint demand, says SABIC executive 

Customers and investors are driving low-carbon footprint demand, says SABIC executive 

Customer demand for low-carbon products is one of the key challenges facing the chemical industry, according to a top executive at Saudi Basic Industries Corporation.

Fahad Al Sherehy, vice president of energy efficiency and carbon management at SABIC, included the shift in attitudes from consumers among a list of issues his firm has to tackle.

Al Sherehy made the comments during a discussion at the Future Minerals Forum in Riyadh on Thursday.

“Our industry, with minerals not an exception. is facing five key challenges.

“One is related to the government and the regional compliance requirements.

“Second, our customer expectation and demand for low carbon footprint products.

“Third, the investors and financial institutions that are demanding the same.

“(Fourth) transparency and reporting required by key stakeholders.

“Finally, disruptive innovation.”

Al Sherehy’s comments were made during a debate focused on how mining could be reinvented in light of a drive towards a circular economy in the region. 

This means that every form of debris is the raw material for a fresh product or energy source — a key part of Saudi Arabia’s sustainability drive. 

Reflecting on this, Al Sherehy said: “In SABIC, we see the circular carbon economy, which Saudi Arabia during the G20 last year got approval for as a framework to address climate change, as a real enabler to achieve our carbon neutrality strategy.”

“It takes into consideration different options around the four Rs: reuse, reduce, recycle, remove.”

The Future Minerals Forum is a special event bringing together ministers, organisations and mining leaders from more than 30 countries.

Hosted by the Saudi Ministry of Industry and Mineral Resources, is aimed at highlighting the role of mining in Saudi Vision 2030, after the government identified it as the third pillar of the Kingdom’s economy.


Mobily prepares major announcements for LEAP22 tech conference

Mobily prepares major announcements for LEAP22 tech conference
Updated 56 min 45 sec ago

Mobily prepares major announcements for LEAP22 tech conference

Mobily prepares major announcements for LEAP22 tech conference

RIYADH: Etihad Etisalat, known as Mobily, said it will launch a range of innovative and disruptive digital solutions during LEAP22, the technology event scheduled for Riyadh in February.

Mobily’s announcements will be in the area of the Internet of things, artificial intelligence, smart cities, smart health care systems and others, it said in a statement.

“LEAP is a turning point in the Kingdom’s journey toward digital transformation, elevating its position at the forefront of global players who develop and empower the latest technologies that shape the future of our world,” said Mobily CEO Eng. Salman Al Badran. “As the Kingdom moves toward enabling a leading digital economy, Mobily seeks to provide individuals and corporates with the tools they need to unlocking opportunities and pursue their ambitions.”

“At Mobily, we persistently contribute to the realization of Vision 2030 through providing advanced telecommunications services and digital solutions that contribute to transforming the Kingdom’s digitalization ambitions into reality, he said.

Leap will be held in Riyadh from Feb. 1 to Feb. 3, 2022.


Germany’s gas costs surged by 78.5%, despite drop in imports

Germany’s gas costs surged by 78.5%, despite drop in imports
Updated 21 January 2022

Germany’s gas costs surged by 78.5%, despite drop in imports

Germany’s gas costs surged by 78.5%, despite drop in imports

Germany saw its bill for importing gas shoot up by 78.5 percent last year despite a cut in the amount it brought in.

According to the country’s trade statistics office BAFA, Germany imported 7 percent less gas between January and November 2021 compared to the same period a year earlier, Reuters reported.

Tight global supply meant that prices soared, before recently coming down due to the arrival of more seaborne cargoes and environmental factors such as a relatively mild winter.

There could yet be another rise as there are fresh concerns over when the new Nord Stream 2 pipeline with Russia starts flowing. 

Also, disruption of shipments are expected to be caused by escalating tensions on the Russia/Ukraine border.

BAFA’s monthly figures showed Germany’s gas imports from January to November in 2021 totaled 4.546 million terajoules, compared with 4.888 million TJ in the same period a year earlier.

Importers’ bills over the 11 months amounted to $33 billion, versus $18.47 billion in the same period of 2020. In November alone, the price per TJ witnessed a rise of 217.5 percent year-on-year.

The average price paid per TJ on the border in the period was up 92 percent year-on-year, BAFA said.

Germany, Europe’s biggest economy, relies on gas from Russia, Norway, the Netherlands, UK and Denmark. 

German gas stocks, which can hold three to four months of annual consumption, dropped to 45 percent of available capacity this week, down 9 percent on the year, according to Reuters quoting figures by gas infrastructure group GIEs.


Capital Economics sees stronger Gulf non-oil growth in 2022 and 2023

Capital Economics sees stronger Gulf non-oil growth in 2022 and 2023
Updated 21 January 2022

Capital Economics sees stronger Gulf non-oil growth in 2022 and 2023

Capital Economics sees stronger Gulf non-oil growth in 2022 and 2023

RIYADH: Higher oil prices will support looser Gulf fiscal spending for the next two years, with a knock-on effect on non-oil growth in the region, according to Capital Economics.

The economic consultancy updated its oil-price forecasts this week, predicting Brent crude will end 2022 at $70 a barrel and 2023 at $65 a barrel, up from previous forecasts of $60 and $55, respectively. The change was driven by the expectation that Russia and some smaller producers within OPEC+, the alliance of the Organization of Petroleum Exporting Countries and other producers, will struggle to meet their production quotas.

That led to an upgrade in Gulf hydrocarbon export revenue prediction of 8 percent and 11 percent for this year and next, respectively, Capital Economics Middle East and North Africa Economist James Swanston wrote in a research note.

“The upshot is that higher oil prices will keep the door for fiscal loosening ajar for longer, which may provide scope for slightly stronger growth in non-oil sectors,” he wrote. “But, as prices head below $70pb in 2023, that door will gradually close.”

For Middle East economies outside the Gulf, continued high oil prices will mean current-account deficits stay wider for longer, the note said. For countries that haven’t scaled back fuel subsidies, fiscal budgets will also remain under pressure.

“This furthers cement our view that, with officials struggling to push through fiscal consolidation, Tunisia will continue along the past to a sovereign default,” Swanston said.


Sukuk issuance to remain flat in 2022, says S&P Global

Sukuk issuance to remain flat in 2022, says S&P Global
Updated 21 January 2022

Sukuk issuance to remain flat in 2022, says S&P Global

Sukuk issuance to remain flat in 2022, says S&P Global
  • Global sukuk issuance fell marginally to about $147.4 billion from $148.4 billion in 2020

RIYADH: Sukuk issuance volumes will not grow significantly in 2022 as global interest rates rise and funding needs for Gulf economies fall, according to a report from S&P Global Ratings.

Global sukuk issuance fell marginally to about $147.4 billion from $148.4 billion in 2020, S&P said in the report.

Central bank interest rates tend to respond to moves from the US Federal Reserve, particularly those in the Gulf where currencies are pegged to the dollar.

“Amid a tight job market, accelerated inflation readings over the past few months, and increasingly hawkish forward guidance from the US Federal Reserve, we now expect three rate hikes in 2022, with the first expected in May,” the report said.

While sukuk issuance is likely to be subdued this year, the market is likely to grow in the long run, due to the increasing importance of environment and governance factors, it added.

Green and sustainability linked sukuk will continue to attract investors, S&P said. Energy transition policies adopted by Gulf countries as well as fresh fintech solutions will provide new opportunities for sukuk issuers.


Turkey’s swap deal with the UAE is a boost, but won’t solve the lira’s underlying problems

Turkey’s swap deal with the UAE is a boost, but won’t solve the lira’s underlying problems
Updated 21 January 2022

Turkey’s swap deal with the UAE is a boost, but won’t solve the lira’s underlying problems

Turkey’s swap deal with the UAE is a boost, but won’t solve the lira’s underlying problems
  • Agreement is valued at $4.9 billion
  • Comes ahead of Turkey's President Erdogan planned visit to Abu Dhabi in February

ANKARA: At a time when Ankara is searching for foreign resources and facing unprecedented inflation rates, Turkey’s currency swap deal with the UAE is a much-needed confidence boost for the country’s economy.

However, analysts have warned that this deal alone will not solve the underlying problems facing the lira. 

The two nations have signed a three-year agreement worth $4.9 billion, including finance and trade relations.

Securing foreign swap lines are expected to fuel Turkey’s much-needed foreign currency reserves. 

“While this is a good vote of longer-term confidence in the Turkish economy, the currency swap will not address the roots of Turkey’s economic challenges. Many of these challenges are linked to nonconventional economic policy decisions,” Robert Mogielnicki, a senior resident scholar at the Arab Gulf States Institute in Washington, told Arab News.

According to Mogielnicki, the currency swap puts some cash behind recent efforts to improve strained relations between the UAE and Turkey.

“The UAE is likely interested in using the currency swap to better position Emirati firms and investors to engage with Turkish markets as well as to support foreign policy objectives,” he said. 

Noting that currency swaps reduce dependency on a third currency and thus avoid fees arising from exchange rate volatility and transfer costs, Mogielnicki said that this move paves the way for greater trade and investment between countries.

“The broader MENA region is unlikely to be worse off because of the currency swap, but I don’t view this agreement as especially significant for the region,” he added. 

Enver Erkan, the chief economist of Tera Investment in Istanbul, welcomes the swap agreement with the UAE as a positive step towards increasing the gross foreign exchange reserves held by the Turkish Central Bank.

 “We, on the other hand, also consider the economic landscape in terms of net reserves excluding swaps. While net reserves are around $8 billion under the current circumstances, there is a negative picture of minus $56 billion in net reserves excluding swaps,” he told Arab News. 

Talks between Turkey's central bank and its counterpart in Azerbaijan on securing a possible currency swap line are also ongoing. 

Swap agreements are mainly used by countries that conduct large-scale trade relations between each other to finance part of these relations to be paid in local currencies.

Turkey already has some swap deals with China, Qatar and South Korea worth about $23 billion.

With this latest currency swap agreement, the Turkish Central Bank's total swap figure with foreign central banks reached $28 billion.

The swap agreement with China in 2012 and subsequent arrangements have permitted Turkish companies to pay for imports from China using yuan.

The agreement between Turkish and Emirati Central Banks will be valid for a period of three years, with the possibility of being extended further. 

Emre Peker, European director for political risk consultancy Eurasia Group, thinks the swap agreement will not have a material impact on Turkey's economy, but it will help Turkish companies trading with the UAE on the margins. 

“It is not a game changer, but will alleviate some financing pressures, considering that the swap covers Turkey's average annual exports to the UAE,” he told Arab News. 

The agreement comes ahead of a trip by Turkish President Recep Tayyip Erdogan to Abu Dhabi in February as part of Turkey’s moves to repair ties and concentrate on the economy.

Mustafa Sentop, Speaker of the Grand National Assembly of Turkey, told the Emirates News Agency the visit is “going to be a testament to the improved ties between our countries.”

"We believe that the leaders of Turkey and the UAE standing next to each other will deliver an important message on its own. The objective is to further strengthen the bilateral relations. There are mutual efforts to conclude new agreements and to renew previous commitments to cover a wider range in our current cooperation," he added.

According to the Emirates News Agency, the UAE is Turkey’s top trading partner among the Gulf Cooperation Council countries, with trade between the two countries US$8 billion in 2020. 

Sentop said the trade in the first 10 months of 2021 had amounted to US$6.4 billion.lira