Oil is ‘basically irreplaceable,’ OPEC leader tells Davos

Haitham Al-Ghais, secretary-general of Organization of Petroleum Exporting Countries (OPEC), is attending the World Economic Forum (WEF) in Davos this week. (AFP/File Photo)
Haitham Al-Ghais, secretary-general of Organization of Petroleum Exporting Countries (OPEC), is attending the World Economic Forum (WEF) in Davos this week. (AFP/File Photo)
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Updated 21 January 2023

Oil is ‘basically irreplaceable,’ OPEC leader tells Davos

Oil is ‘basically irreplaceable,’ OPEC leader tells Davos
  • ‘We are not climate change deniers,’ insists Haitham Al-Ghais

DAVOS: Oil is “basically irreplaceable” and will be an essential part of the global energy mix for years to come, Haitham Al-Ghais, secretary general of OPEC, has told the World Economic Forum in Davos.

Speaking to Arab News on the sidelines of the WEF, Al-Ghais said that global leaders are beginning to understand the need for hydrocarbon fuels to power economic growth, even as they transition toward cleaner forms of energy, such as renewables.

The WEF has leaned increasingly toward an environmentalist position in recent years.

However, according to Al-Ghais, “globally, there is a better understanding that is being developed of the importance of oil.”

OPEC has “a clear vision and strategy” about the development of renewables, he said.

“But oil is basically irreplaceable, in the future, as far as we can see, for the next couple of decades, at least. The only way is that we have to fuel global economic growth by a diverse energy mix, with renewables taking up more share as the world transitions to protect climate, and hopefully keeps the targets of the 1.5 degrees (of the Paris Agreement). But that does not mean that oil has to be kicked out of the energy equation.

“We are not climate change deniers, but we have a different approach to dealing with this issue,” Al-Ghais added, highlighting the need for dialogue between differing sides of the energy debate.

OPEC’s calculations suggest that oil and gas will still make up more than half the global energy requirement by 2045, even as renewables’ share of the world market increases.

It estimates that the global hydrocarbon industry will require $12.1 trillion of investment by 2045 to maintain supplies sufficient for economic growth.

Some financial institutions have stopped investing in new hydrocarbon resources because of pressure from the environmental activist lobby, but Al-Ghais said there were signs that this was beginning to change, especially in the energy heartlands of the US, including Texas.

“We are hoping that this will change, and we are seeing signs,” he said.

“I would hope that this will change because, again, this brings us back to the issue of dialogue and common understanding, sitting around the table with one common objective, and not to point the finger at each other, as opposed to working with each other.”

But OPEC is also committed to developing cleaner forms of energy, Al-Ghais said.

“We have to be open to adopting new forms of energy, such as renewables. Many of our member countries are already advancing this, and adopting and implementing renewables, including Saudi Arabia, of course, which is leading through the circular carbon economy and has ambitious hydrogen projects, under the leadership of (Saudi Energy Minister) Prince Abdulaziz bin Salman.”

OPEC+, the alliance of producers that includes Russia, is not scheduled to meet again until June, despite stresses in the global energy sector caused by international sanctions over the war in Ukraine.

Al-Ghais said that OPEC+ supply policy will not be affected by geopolitical tensions.

“We always continue to try to keep politics out of our decision making. We are a technical, intergovernmental organization that looks at raw data, supply demand balances, technical things, and with an objective of doing what’s best for our countries, and the wider global community,” he said.


Oil Updates – crude rebounds from six-month-low but demand concerns linger

Oil Updates – crude rebounds from six-month-low but demand concerns linger
Updated 20 sec ago

Oil Updates – crude rebounds from six-month-low but demand concerns linger

Oil Updates – crude rebounds from six-month-low but demand concerns linger

BEIJING/SINGAPORE: Oil prices reclaimed some ground on Thursday after tumbling to a six-month low in the previous session but investors remained concerned about sluggish demand and economic slowdowns in the US and China, according to Reuters.

Brent crude futures rose 27 cents, or 0.4 percent, to $74.56 a barrel by 9:13 a.m. Saudi time. US West Texas Intermediate crude futures rose 24 cents, also 0.4 percent, to $69.62 a barrel.

“Oil markets may have been oversold,” which could mean the recovery is a “short-term rebound,” Tina Teng, a markets analyst with CMC Markets, said in a note.

In the previous session, the market was spooked by data showing US output remains near record highs even though inventories fell, analysts at ANZ said in a note.

Some of the bearishness was also a result of higher product fuel inventories, the ANZ analysts said.

Gasoline stocks rose by 5.4 million barrels in the week to 223.6 million barrels, the Energy Information Administration said on Wednesday, far exceeding expectations for a 1 million-barrel build.

For the first time in a year, the market structure for Brent contracts switched to trade in contango, with contracts for near-term delivery cheaper than six months later . WTI contracts have also switched to trade in contango over six months out.

A market moving back into contango suggests there is less worry about the current supply situation and encourages traders to put barrels in storage.

Oil prices have fallen by about 10 percent since the Organization of the Petroleum Exporting Countries and allies, together called OPEC+, announced a combined 2.2 million barrels per day voluntary output cuts.

“Oil markets seem to completely sideline producer’s cartel maneuvers aimed at keeping oil prices elevated,” said Priyanka Sachdeva, analyst from Phillip Nova, in a note.

“The sign of easing inflation is (also) feeding into fears of a global economic slowdown and in turn dented demand for fuel globally,” Sachdeva said.

A Reuters survey found that OPEC oil output fell in November in the first monthly drop since July, as a result of lower shipments by Nigeria and Iraq as well as ongoing market-supporting cuts by Saudi Arabia and other members of the wider OPEC+ alliance.

Meanwhile, Russian President Vladimir Putin and Saudi Crown Prince Mohammed bin Salman met to discuss further oil price cooperation on Wednesday as members of OPEC+, which may strengthen the market’s confidence in the impact of output cuts.

Kuwait and Algeria also reaffirmed their support and commitment to the voluntary cuts.

Russia has pledged to disclose more data about the volume of its fuel refining and exports after OPEC+ asked Moscow for more transparency on classified fuel shipments from the many export points across the country, sources at OPEC+ and ship-tracking firms told Reuters.

Concerns about China’s economy also put a lid on oil’s price gains. Chinese customs data showed that crude oil imports in November fell 9 percent from a year earlier, as high inventory levels, weak economic indicators and slowing orders from independent refiners weakened demand.

While China’s total imports dropped on a monthly basis, exports grew for the first time in six months in November, suggesting the manufacturing sector may be beginning to benefit from an uptick in global trade flows.

Ratings agency Moody’s put Hong Kong, Macau and swathes of China’s state-owned firms and banks on downgrade warnings on Wednesday, just one day after it put a downgrade warning on China’s sovereign credit rating.

UAE energy minister: world needs to focus on phasing out coal

UAE energy minister: world needs to focus on phasing out coal
Updated 9 min 56 sec ago

UAE energy minister: world needs to focus on phasing out coal

UAE energy minister: world needs to focus on phasing out coal

DUBAI: The world needs to focus on phasing out coal, UAE Energy Minister Suhail Mohamed Al-Mazrouei said on Thursday on the sidelines of the COP28 climate summit, according to Reuters.

“I don’t think we should talk about (fossil fuel) phase out because the technologies are also improving. What if in the future we have a technology that omits all of the CO2 emissions from fossil fuel and makes it clean, as clean as any other fuel? Why should we fight it before we have the alternative?” he said.

Saudi Arabia’s non-oil activities increase by 3.5% in Q3: GASTAT 

Saudi Arabia’s non-oil activities increase by 3.5% in Q3: GASTAT 
Updated 52 min 6 sec ago

Saudi Arabia’s non-oil activities increase by 3.5% in Q3: GASTAT 

Saudi Arabia’s non-oil activities increase by 3.5% in Q3: GASTAT 

RIYADH: Saudi Arabia’s non-oil activities increased by 3.5 percent in the third quarter of 2023, compared to the same quarter of 2022, as the Kingdom steadily diversifies its economy away from oil, official data showed. 

According to a report released by the General Authority for Statistics, the Kingdom’s non-activities also rose by 0.4 percent in the third quarter compared to the previous quarter of this year.  

Strengthening the non-oil private sector is crucial for Saudi Arabia, aligning with the goals outlined in Vision 2030 as the Kingdom continues to diversify its economy. 

However, the report noted that Saudi Arabia’s real gross domestic product decreased by 4.4 percent year-on-year in the third quarter, and by 3.2 percent compared to the previous quarter. 

Saudi Arabia, IAEA discuss cooperation on development of nuclear energy

Saudi Arabia, IAEA discuss cooperation on development of  nuclear energy
Updated 19 min 56 sec ago

Saudi Arabia, IAEA discuss cooperation on development of nuclear energy

Saudi Arabia, IAEA discuss cooperation on development of  nuclear energy

DUBAI: The International Atomic Energy Agency, the global overseer of the nuclear industry, says it is collaborating with Saudi Arabia to assist the Kingdom in developing its nuclear power production sector.

Given its key role in the regional energy landscape, there is a pressing need for production to transition from fossil fuels to low-carbon or zero-carbon emitting sources.

Wei Huang, director at the Department of Nuclear Energy of IAEA told Arab News in an interview on the sidelines of the 2023 Climate Change Conference that the Kingdom’s “very fast development” towards nuclear energy has been noticed by the agency.

“Now they are in the bidding process to try to get nuclear power into their energy mix. So, we hope we can see a substantial outcome of this process. We are seeing quite strong interest in this region in using nuclear power to improve the energy mix and the security energy mix, but also help to decarbonize the greenhouse gas emissions in the region,” he said.

Huang noted it is encouraging that the countries in this region, which are rich in fossil fuels, are now looking at nuclear energy as an alternative to minimize carbon emissions. He added that the IAEA supports member nations looking to develop nuclear power production. 

“Our agents provide a lot of technical support to make sure the country can be prepared well before they are moving toward nuclear power, including help them to review their infrastructure.”

He added that there are 19 milestones that every country must achieve before taking the nuclear route and that IAEA assists them in reaching these landmarks, which cover a vast spectrum from nuclear, finance, funding, human resources, safety and safeguards.

Huang welcomed statements from US Special Envoy on Climate Change John Kerry, voicing his appreciation for Kerry’s emphasis on global collaboration in nuclear fusion. He highlighted the proactive engagement of the IAEA in nuclear fusion technology alongside its partners and member states.

“We see quite a significant development in this area. Of course, compared to fission, which has been widely used over decades, there is still a lot of work to be to be done to make sure that fusion can be really be deployed in the coming decades. And so our agency has, you know, discussed with our member states and also partner to see how much we can do. We are now working on how to transfer nuclear fusion from mainly the science focus to more engineering-focused activities, including the regulatory framework on the fusion. So this is what the agency is doing now and there will be a lot of work to be done in a couple of years to make sure all the aspects had been prepared well for,” Huang said.

While Saudi Arabia is at the initial stage of nuclear power development, its neighbor, the UAE, has already established three operational units at its Barakah Nuclear Power Station, while the fourth unit is in the pipeline. 

“At Barakah, we have four units, of which three are operational. The fourth unit will come online soon. Together, the four units will produce about 5.6 gigawatts of electricity, which is equivalent to 25 percent of the total electricity production in the UAE. At Barakah, we have used APR1400 reactors, a Generation 3+ nuclear reactor built with Korean technology, constructed to the highest level of safety and quality. Moving forward, we would like to invest in other nuclear power plants and will examine all options,” Khaled Al-Shehhi, nuclear fuel quality surveillance manager at Emirates Nuclear Energy Corp., which owns Barakah, told Arab News.

The Barakah Nuclear Power Station is a $20 billion project bagged by the Korea Hydro & Nuclear Power Co., a state-owned enterprise and one of the world’s largest operators of nuclear power plants. The company says it is also looking to develop its exports in other markets.

“We are here at COP28 to introduce our Korea Small Modular Reactor known as i-SMR. They are really sustainable energy solutions that will help nations to reach net zero goals. Regarding the development and export of our i-SMR, KHNP is actively engaged in discussions with various countries, including Philippines and the UAE. The adoption of our i-SMR is expected to accelerate the journey toward a carbon neutrality, especially in countries facing infrastructure limitations for large nuclear power plants such as South East Asia region and some regions which have difficulties in tapping renewable energies,” Sonia Sunyoung Hong, SMR overseas business team manager at KHNP told Arab News.

She added that KHNP’s relationship with the UAE could be a perfect example for other nations in the region, including Saudi Arabia. 

“Our relationship with the UAE is a good example of how we get countries with no nuclear experience. For instance, when we began working with the UAE in 2009, the UAE government had no experience of nuclear industry. They did not have any regulations, guidelines at all. KHNP helped and supported the government in developing concrete regulations and guidelines for the nuclear power plant implementation for the first time for the world,” Hong said.

Along with KHNP and the IAEA engaging in discussion with Saudi Arabia to help the country realize its nuclear ambitions, the World Nuclear Association, the global nuclear industry trade body, has also been holding talks with the Kingdom, said King Lee, head of policy and industry engagement at WNA.

“Saudi Arabia has been planning to deploy nuclear energy, and they have been planning that for some time. It is really aimed to address that quality need for clean power. Currently, most of the electricity generated from Saudi Arabia is from fossil fuels, from both burning of gas and oil. So nuclear power can help to generate clean power for Saudi Arabia. So Saudi Arabia is looking for both large reactors and the small, more advanced technology, small modular reactors. So, both the technologies are being considered for Saudi Arabia. We have been discussing with the Saudi government and institutions,” the official told Arab News.

When discussing fusion energy, he agreed with Huang of IAEA that it was still an evolving technology. 

 “Fusion is a technology that is currently under development, and we continue to support the research and development so that, hopefully, fusion reactors will become technically and commercially deployable. Research is going on in many countries, but we don’t have a timetable on as to when it may become available,” the WNA executive added.

Saudi Arabia’s 2024 budget set to aid the Kingdom’s successful trajectory, says finance minister

Saudi Arabia’s 2024 budget set to aid the Kingdom’s successful trajectory, says finance minister
Updated 06 December 2023

Saudi Arabia’s 2024 budget set to aid the Kingdom’s successful trajectory, says finance minister

Saudi Arabia’s 2024 budget set to aid the Kingdom’s successful trajectory, says finance minister


RIYADH: Saudi Arabia’s 2024 budget is set to sustain the Kingdom’s positive economic momentum, with an emphasis on strategic  capital expenditure aligned with approved national strategies, according to the Minister of Finance.

In a statement following the 2024 budget approval, Mohammed Al-Jadaan highlighted the success of the ongoing economic transformation spearheaded by the government of the Kingdom.

The 2024 budget, according to the minister, is poised to continue the trajectory of success, aligning with the national strategies closely linked to the goals outlined in Saudi Vision 2030 and national priorities, reinforcing the commitment to long-term sustainable development.

Responding to a question by Arab News on Expo 2030, the minister said: “The country that is capable of receiving and building the infrastructure to accommodate 150 million individuals, can host our guests at Expo 2030 without increasing costs.”

Al-Jadaan emphasized Saudi Vision 2030 and the set of projects, initiatives, and measures included in the vision. He also highlighted the Kingdom’s initial plan to welcome 100 million visitors and revealed that the number will increase to 150 million by 2030.

In his response to Arab News, the minister revealed that: “The infrastructure and projects planned for construction in the Kingdom, particularly in Riyadh, from now until 2030 as outlined in the early stages of the vision, including the transportation and logistical services strategy, tourism strategy, expansion in hotel construction, and also the expansion of water projects, will be sufficient to provide the necessary infrastructure for hosting the expo and potentially three other expos.”

He added: “Expo village is going to be a commercial property, built by commercial companies and will be invested in beyond the six months,” adding: “That site will be a commercial site, it will not be wasted. And it will be obviously built sustainably.”

The minister said in a statement that the government is working on continuing borrowing according to the approved annual borrowing plan to finance the expected budget deficit and repay the outstanding debt by 2024.

The minister also revealed that since the inception of Saudi Vision 2030, the country has undergone considerable economic and structural reforms, resulting in the gross domestic product an increase, reaching more than SR4.1 trillion today, with an expected growth average at a rate of 6 percent from now until 2030.

Following the budget approval, he also stated in a press conference that the Kingdom’s economy created more than 1 million jobs during 2023, adding that oil price fluctuations that previously affected the budget have become much less affected thanks to non-oil revenues.

Highlighting the pivotal role of the Saudi citizens in the nation’s development, Al-Jadaan emphasized their contribution, saying: “The Saudi citizen plays a vital role in achieving comprehensive and sustainable economic development, as well as in accomplishing progress in various promising fields and sectors.”

The minister underscored the government’s commitment to social welfare through its ongoing efforts to conduct regular reviews of social support and benefit system initiatives to enhance these programs continually, ensuring access for the intended target groups and fostering an environment of inclusivity.

As Saudi Arabia charts its course into 2024, the government remains steadfast in its commitment to building a robust and diversified economy that not only meets the goals of Saudi Vision 2030 but also ensures a sustainable and prosperous future for its citizens.