Saudi Arabia spearheading the energy transition in Middle East

Riyadh is all set to host the 44th International Association for Energy Economics International Conference on Feb. 4-9 as the entire world is looking forward to the developments the region will witness during the event. File
Riyadh is all set to host the 44th International Association for Energy Economics International Conference on Feb. 4-9 as the entire world is looking forward to the developments the region will witness during the event. File
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Updated 01 February 2023

Saudi Arabia spearheading the energy transition in Middle East

Saudi Arabia spearheading the energy transition in Middle East
  • Kingdom’s initiatives are revolutionizing the entire region’s green journey

RIYADH: The need for energy security has never been more critical in the history of mankind. Amid heightened political tensions, energy diversification programs and sustainability initiatives are a key part of the global agenda today, and countries are working hard to achieve their net-zero targets within the stipulated deadline.

As the world continues its journey to achieve zero emission targets, Saudi Arabia, a country that has been dependent on oil for several decades, is spearheading the energy transition mission in the Middle East region.

Saudi Green Initiative and the wider Middle East Green Initiative are revolutionizing the entire green journey in the region, and they are adequately supported by the Public Investment Fund’s Regional Voluntary Carbon Market Co. which auctioned off 1.4 million tons of carbon credits during the 6th edition of the Future Investment Initiative conference held in Riyadh in October last year.

And now, Riyadh is all set to host the 44th International Association for Energy Economics International Conference on Feb. 4-9 as the entire world is looking forward to the developments the region will witness during the event.

FASTFACTS

Saudi Arabia’s ACWA Power and its partners are working steadily in NEOM to complete the construction of the world’s largest green hydrogen project.

The first phase of its green hydrogen facilities is expected to come online in 2025.

The $500-billion megacity will be powered entirely by clean energy and will cover 10,000 sq. miles, an area 33 times the size of New York.

Paul Sullivan, lecturer at Johns Hopkins University and a senior associate fellow at King Faisal Center for Research and Islamic Studies Energy and Environmental Security, told Arab News that Saudi Arabia is steadily progressing with greater energy efficiency and resilience, in line with the goals outlined in Vision 2030.

“Saudi Arabia is progressing via Vision 2030, the Saudi Green Initiative, leading the Middle East Green Initiative, inter alia. It is making progress with solar energy. It will do a lot more on the many colors of hydrogen. It will likely start to develop a nuclear energy program further,” said Sullivan.

Joe Rahi, partner, McKinsey & Co., told Arab News that Saudi Arabia is playing a key role in ensuring an orderly energy transition.

“Saudi Arabia accounts today for the largest share of global oil exports — and it has the potential to become a significant exporter of clean, reliable and affordable energy in the future,” said Rahi.

He further pointed out that the Kingdom has unique access to competitive natural resources both in the form of natural gas to produce blue hydrogen, as well as solar resources and land to develop green hydrogen.

Meanwhile, Saudi Arabia’s ACWA Power and its partners are working steadily in NEOM to complete the construction of the world’s largest green hydrogen project.

In 2022, NEOM’s CEO Nadhmi Al-Nasr had noted that the first phase of its green hydrogen facilities is expected to come online in 2025. The $500-billion megacity will be powered entirely by clean energy and will cover 10,000 sq. miles, an area 33 times the size of New York.

Sullivan further noted that Saudi Arabia could be the leader of energy transition in the region by developing joint investments, research programs, training and education throughout the Middle East and North Africa region.

“The region and the world really are small. Much more can be learned by working together and not against each other. Just giving money is not enough. The whole region needs to move forward in all aspects of the transition and how the transition affects the energy-water-food-security-economy nexus,” said Sullivan.

Rahi pointed out that Saudi Arabia should create national champions who can develop, produce and scale low-carbon energy to achieve energy transition goals.

According to Rahi, countries in the Middle East could promote investments to scale the supply of carbon capture, utilization and storage technologies along with low-carbon hydrogen and ammonia.

“The region has significant untapped potential here since the geological characteristics of its sedimentary basin could make it a global hub for carbon storage,” he said.

Rahi added: “Stakeholders could boost the development of renewables, including upgrading the supporting infrastructure. Incentives could help accelerate the move to electrification and energy efficiency in buildings, industry and the transportation sector.”

He further noted that the energy transition in the region is creating an opportunity to innovate, which includes creating a startup ecosystem for clean technologies.

Reiterating the views of top industry experts, Sullivan noted that energy transition in a sustainable manner will not happen quickly, and it demands time to materialize the green goals.

“All major transitions take time. The energy transition is no different. It has to be timed and developed for every place in a way that allows peace, prosperity, energy security and climate security,” said Sullivan.

He added: “If it is pressed on too quickly, severe energy, economic insecurity and instability could result. If it is allowed to be delayed too long, then the world and regional climates and environments could be significantly damaged. Extremism is the enemy of energy transitions, much like it is the enemy of society in general.”

Rahi opined that affordable conventional energy is still required to ensure socioeconomic growth, especially for developing countries, and added that low carbon and renewable energy such as hydrogen and solar will continue to play an increasingly important role in the growing energy system.

“To move to large-scale deployment of renewables, countries would also need to invest in grid stabilization and storage to ensure the reliability of supply and integrate renewables into existing systems,” he added.

As Saudi Arabia continues its sustainability journey, events like IAEE International Conference could catalyze the speed of the energy transition, which will ultimately make the world green and beautiful for humankind.


Closing bell: Saudi stocks close higher for third consecutive day

Closing bell: Saudi stocks close higher for third consecutive day
Updated 27 March 2023

Closing bell: Saudi stocks close higher for third consecutive day

Closing bell: Saudi stocks close higher for third consecutive day

RIYADH: Saudi Arabia’s Tadawul All Share Index rose for the third session in a row on Monday as it went up 4.25 points – 0.04 percent – to 10,463.61, as investors’ confidence grew on encouraging market conditions. 

On Monday, parallel market Nomu also went up, by 16.15 points or 0.908 percent, to close at 19,247.78, while the MSCI Tadawul 30 Index went down by 0.23 percent to 1,420.29. 

The total trading turnover of the benchmark index was SR7 billion ($1.86 billion).

Takween Advanced Industries Co. led the gainers, as its share prices went up 9.95 percent to SR8.62. 

Other top gainers of the day were Al Kathiri Holding Co. and Zain KSA, whose share prices rose 9.89 percent and 7.43 percent respectively. 

SABIC Agri-Nutrients Co. was the worst performer, with its share price dropping 8.61 percent to SR127.40. 

On the earnings front, Arab Sea Information System Co. incurred a net loss of SR10.43 million in 2022, compared to a net profit of SR21.6 million in 2021. Despite the loss reported, the company’s share prices surged by 3.95 percent to SR81.50. 

Another firm that reported losses in 2022 was Sadr Logistics Co. The company reported a net loss of SR7.2 million, versus a net profit of SR3.6 million a year earlier. Even though the firm incurred loss, its share prices rose 2.94 percent to SR35. 

Wafrah for Industry and Development Co. revealed its net profit in 2022 was SR19 million, compared to the SR11 million net loss incurred in 2021. Driven by the rise in profit, its share prices rose by 1.20 percent to SR33.60. 

Meanwhile, Alamar Foods Co. also reported a net profit of SR115.25 million in 2022, down 1.83 percent from 117.40 in 2021. The company’s share prices closed at SR141.00, down 7.11 percent. 

Savola Group's net profit hit SR742.8 million, up 234.75 percent, compared to SR221.9 million in 2021. Driven by the rise in profits, the company’s directors recommended a 6.6 percent dividend payout, or SR0.66 per share, for 2022, according to a Tadawul statement. The company’s share prices were intact on Monday at SR27. 

The net profit of Saudi Networkers Services Co. also surged by 13.99 percent in 2022 to SR32.32 million. As the profit of the company surged, the company’s share prices increased by 1.08 percent to SR56. 


Qatar launches new derivatives exchange framework

Qatar launches new derivatives exchange framework
Updated 27 March 2023

Qatar launches new derivatives exchange framework

Qatar launches new derivatives exchange framework

RIYADH: Qatar’s stock exchange will introduce a new derivatives market that allows the trading of options and future contracts on local stocks and the main equity index, the country’s financial center regulatory authority announced on Monday.

After a three-month consultation with investors and market participants, the Qatar Financial Centre Regulatory Authority announced the new regulatory framework for listed derivatives.  

“The launch of the derivatives exchange will be an important milestone in the development of the Qatar capital markets and Qatar’s ambition to move to developed market status,” said the stock exchange’s acting CEO, Abdulaziz Al-Emadi.  

Option contracts give their holders the right, but not the obligation, to buy or sell shares of the underlying company at a specific price on or before a certain date, usually referred to as the expiration day.

Future contracts on the other hand are types of derivatives whereby the involved parties transact shares of a specific company at a predetermined future date and price.

The exchange also plans to set up an entity that will provide clearing and settlement services for trades in options and derivative contracts, QFCRA said in a statement.

The market will allow options, contracts linked to underlying assets, and futures, contracts set at a future date, to be traded in local stocks and the market’s equity index. 

Michael Ryan, CEO of the QFCRA, added: “The regulatory authority looks forward to working with the Qatar Stock Exchange to launch the new derivatives exchange, as this exchange will provide opportunities that allow investors to better manage and diversify their financial portfolios.” 

The bourse’s rules also enable the central clearing house to manage settlement risks and ensure an efficient settlement process. 

Al-Emadi added: “The issuance of the Derivatives Markets and Exchanges Rules for the year 2023 establishes the necessary regulatory framework for the Qatar Stock Exchange to move forward with its plans to establish a derivatives exchange and the counterparty to the central clearing house.” 

According to the American finance company and index benchmarker MSCI, Qatar, is still identified as an emerging market. The leading liquefied natural gas exporter is now redirecting its focus to the development of its equities market by opening it up to a wider investor base and introducing more listings.  

In January, Qatar’s bourse welcomed its first initial public offering, IT services firm MEEZA, in almost three years under new regulations which allowed companies to offer a price range to test investor appetite and determine pricing.


UAE In-Focus – Abu Dhabi’s Presight AI raises $496m in IPO  

UAE In-Focus – Abu Dhabi’s Presight AI raises $496m in IPO  
Updated 27 March 2023

UAE In-Focus – Abu Dhabi’s Presight AI raises $496m in IPO  

UAE In-Focus – Abu Dhabi’s Presight AI raises $496m in IPO  

RIYADH: Presight AI, a data analytics firm owned by Abu Dhabi’s G42 Group, has listed and started trading its shares on the First Market of the Abu Dhabi Stock Exchange.  

The initial public offering, which raised roughly 1.822 billion dirhams ($496 million) in proceeds, witnessed strong demand from retail and professional investors.  

The IPO was oversubscribed by 136 times, excluding the commitment from the company’s cornerstone investor, International Holding Corporation.  

Presight’s shares are also certified to be Shariah compliant, according to an announcement by the Shariah Board of Dubai Islamic Bank, the IPO’s lead manager.

“We are delighted to have completed Presight’s IPO, and to begin our next chapter as only the second technology company to be listed on the ADX, reinforcing our position as a pioneer in the industry,” Mansoor Al Mansoori, chairman of Presight, said.  

Presight’s IPO now gives investors the opportunity to own a share of the data analytics company powered by AI, hence enabling positive societal impact. The company’s products are used in three major industries with significant impact and market development potential including public services, finance and sports.  

Al Ansari completes IPO  

UAE-based exchange house Al Ansari Financial Services announced that the final offer price for its IPO has been set at 1.03 dirhams per share, which is at the top of the previously indicated price range from 1.00 dirhams per share.  

The statement comes after the book-building and subscription processes for its IPO on March 24, have been completed. Al Ansari raised 773 million dirhams with its IPO.  

Last week, the company expanded the size of its retail offering from 5 percent of the share capital to 7.5 percent in response to strong investor demand.  

The dividend yield will be at least 7.8 percent at the listing price, and the market value of the group will be 7.73 billion dirhams.  

Following the completion of the IPO, Al Ansari Holding will continue to own 90 percent of the group’s issued share capital.  


Saudi Electricity Co. plans capital expenditure increase to $9.3bn for 2023

Saudi Electricity Co. plans capital expenditure increase to $9.3bn for 2023
Updated 27 March 2023

Saudi Electricity Co. plans capital expenditure increase to $9.3bn for 2023

Saudi Electricity Co. plans capital expenditure increase to $9.3bn for 2023

RIYADH: State-owned Saudi Electricity Co. has announced that it intends to allocate between SR30 billion ($8 billion) and SR35 billion for its 2023 capital expenditure, according to the company’s 2022 financial presentation. 

This is at least 10 percent higher than the electric power distribution firm’s 2022 capex which stood at SR27.4 billion. 

Even though SEC did not provide a clear breakdown of the allocated amount, it is projected that expenditure in transmission and distribution infrastructure will be a priority considering that they dominated the firm’s capital expenditure for the past three years.  

In addition to this, SEC shed light on plans to further grow and expand its fleet, develop its distribution as well as transmission pipelines, and potentially achieve 23 percent automation within its distribution grid.  

Between 2021 and 2022, the firm experienced a 0.6 percent surge in generation capacity from 83,036 MW to 83,539 MW.  

Similarly, total load also rose 1.8 percent in the same period to reach 65,301 MW in 2022, up from 64,161 in 2021.  

On the other hand, the energy produced increased 2.6 percent to hit 191,964 GW in 2022, up from 168,985 GW a year earlier.  

Meanwhile, SEC’s fuel consumption hit 348 million barrels of oil equivalent, or mmboe, per day in 2022, reflecting an 8.1 percent boost compared to 2021’s 332 mmboe a day. 

As for the total number of substations, they rose to reach 1,209 in 2022 in comparison to the 1,190 reported back in 2021. Consequently, this accounted for a 2.8 percent increase in transformers’ capacity.  

With regard to the number of registered customers, the company registered a 4 percent jump to reach 10.9 million in 2022, up from 10.5 million in 2021.  

Established in 2000, SEC has monopolized generation, transmission and distribution of electric power in the Kingdom through 45 power generation plants in the country. 

The firm’s vision revolves around achieving integration of the environment, economy and social issues into the firm’s corporate cultural and economic values in order to accomplish the greater objectives of sustainable development. 


New law allowing foreigners to buy all kind of properties in KSA soon: Top official

New law allowing foreigners to buy all kind of properties in KSA soon: Top official
Updated 27 March 2023

New law allowing foreigners to buy all kind of properties in KSA soon: Top official

New law allowing foreigners to buy all kind of properties in KSA soon: Top official

RIYADH: Saudi Arabia is planning to relax its property ownership laws for foreigners as the Kingdom eyes attracting investments into the real estate sector as part of its strategy to diversify its economy. 

The new law that will allow foreigners to buy all kinds of real estate properties is “in its final stages and will be made public in a short period,” revealed the Kingdom’s Real Estate General Authority chief Abdullah Alhammad. 

This comes after Saudi Arabia issued a directive in 2021 allowing non-Saudis, legal residents of the country to buy single property with some conditions.  

But the REGA CEO pointed out that the new law will be “broader and more comprehensive than the current law” for real estate ownership, as foreigners will be able to buy any kind of property including commercial, residential, and agricultural in accordance with the regulations. 

The earlier law had prohibited foreigners from buying properties in holy cities, but Alhammad said, “the initial reading of the law shows that it allows foreigners to own property everywhere in the Kingdom, including Makkah and Madinah.” 

He clarified that any concerns about the negative effects of foreign ownership of the property were monitored in advance while solutions were developed for all problems and unacceptable practices. 

Saudi Arabia is looking to transform its real estate sector by bringing in new laws while making the sector attractive to foreign investors as the Kingdom eyes to improve the sector’s contribution to the national gross domestic product.  

The Kingdom’s latest move can open up new investment destinations for expats and global investors looking for green pastures, away from traditional markets, including the UAE.  

Amid rising urbanization, Saudi Arabia’s major cities including Riyadh and Jeddah have been chronically under-supplied – something that industry reports suggest is driving property prices high, making it unaffordable to many.  

Saudi Arabia’s Real Estate General Authority acknowledged that real estate prices in Saudi Arabia are high on a supply-demand imbalance. 

Expressing concern about the rising property prices, the REGF chief said high prices negatively impact the real estate sector. 

He pointed out that the majority of people looking for real estate today lack the means to buy and the price of the property today is more than the purchasing power, making it challenging to find a suitable property. 

“The investors were also affected by the high prices of the real estate,” noted Alhammad. 

He explained that the landowners are unable to make easier transactions due to the high prices of the land. "When the landowner wants to sell, he reduces prices to be able to sell it.”  

According to Alhammad, the real estate market is an open market subject to supply and demand. 

The authority’s chief also noted that the initiative to impose taxes on white lands was taken in 2017.  

White land is basically vacant land that is allocated for residential, or commercial residential use, and located within the urban boundary limits in the Kingdom. 

In 2016, Saudi Arabia decided to capitalize on undeveloped land in urban areas, which makes up 30 percent of those areas. The government decided to impose a 2.5 percent tax, based on land value, on landowners who had purchased plots but left them undeveloped. 

By way of imposing the White Land Tax, the government wants to increase the volume of plots available for development in urban areas.  

REGA chief added that the Ministry of Municipal and Rural Affairs started working on plans to boost or raise the efficiency of fees by an additional 10 percent.