Saudi Arabia

Kemp: Saudi Arabia Eases Austerity Just As Oil Prices Decline

22 Jun 2017   Saudi Arabia

Saudi Arabia’s decision to reverse some of last year’s austerity measures coincides with a renewed decline in oil prices and complicates the financial and economic outlook. (John Kemp is a Reuters market analyst. The views expressed are his own) LONDON, June 21 (Reuters) – Saudi Arabia’s decision to reverse some of last year’s austerity measures coincides with a renewed decline in oil prices and complicates the financial and economic outlook for the kingdom. All allowances, bonuses and financial benefits for civil servants and military personnel cancelled, amended or suspended in September 2016 have been restored and backdated by a royal decree issued by King Salman (“Saudi Arabia slashes ministers’ pay, cuts public sector bonuses”, Reuters, Sept. 26, 2016). The decision coincides with the alteration of the succession in favour of the king’s son Mohammad bin Salman and relieves the previous crown prince of all his posts. The distribution of […]

Oil Market Sees Increased Conflict Risk in Saudi Power Shift

22 Jun 2017   Saudi Arabia

New Crown Prince has taken confrontational stance against Iran More aggressive foreign policy won’t change oil plans: Sen After Mohammed bin Salman’s appointment as crown prince, energy markets need to brace for an even more assertive Saudi Arabian foreign policy that could threaten regional stability in the heart of the global oil industry. The 31-year-old has already supported the kingdom’s involvement in a war in Yemen and broken diplomatic ties with fellow OPEC member Qatar. Both moves were driven by a confrontational stance toward Iran, and MbS, as the prince is known, has already let the intensifying regional rivalry spill into oil policy — last year, he intervened to sink a deal to freeze production because Iran refused to participate. Nonetheless, his government will need higher crude prices to push ahead with his plans to reform the kingdom’s economy, and that makes an immediate change in oil policy unlikely. […]

Saudis Overtake U.S. In Recoverable Oil Resources

21 Jun 2017   Saudi Arabia

Saudi Arabia has regained its top position ahead of the U.S. and Russia as the holder of the world’s biggest recoverable oil resources, as reduced tax rates for state giant Saudi Aramco have added 73 billion barrels of recoverable oil, Norway-based consultancy Rystad Energy said on Tuesday in its annual review of global recoverable oil resources. Saudi Arabia’s recoverable oil resources are now estimated at 276 billion barrels, Rystad said, adding that the Kingdom’s “ revised fiscal regime should incentivize more aggressive exploration and development drilling in the country.” In March this year, Saudi Arabia cut the tax rate on Aramco to 50 percent from 85 percent. The high tax rate was one of the main reasons why international industry experts had not been valuing Aramco nearly as high as the US$2 trillion that Saudi officials have been claiming. Back then, Rystad Energy said that the tax rate cut […]

Saudi Arabia’s Mohammed bin Salman appointed Crown Prince: SPA

21 Jun 2017   Saudi Arabia

Saudi Crown Prince Mohammed bin Nayef has been relieved of his post and replaced by Deputy Crown Prince Mohammed bin Salman, a royal decree published by state news agency SPA reported. (Reporting by Stephen Kalin, Writing by William Maclean; Editing by Himani Sarkar)

Saudi King Salman Ousts Nephew as Crown Prince, Installs Son

21 Jun 2017   Saudi Arabia

Saudi Arabia’s King Salman named his son as the country’s new crown prince, the country’s state news agency said Wednesday, a move that carries far-reaching implications for the monarchy and the biggest economy in the Middle East. Saudi Arabia’s new crown prince, Mohammed bin Salman, known by his initials MbS, is seen as the architect of Saudi Arabia’s attempt to overhaul the kingdom’s oil-dependent economy and carve out a…

Why Is Saudi Arabia Desperate For Higher Oil Prices?

21 Jun 2017   Saudi Arabia

As OPEC’s most significant member and one of the largest crude oil producers in the world, Saudi Arabia typically exerts considerable power over global energy market trends. Yet for the last year, the oil giant has been largely reacting to events outside of its control: surging U.S. shale production, OPEC-member cheating and non-compliance, uncertain demand and a persistent supply glut that has kept prices at or below $50 a barrel. Now, questions are being raised over the state of Riyadh’s big next move: the IPO of Saudi Aramco, the world’s largest and most valuable oil company, which Crown Prince Mohammed bin Salman once projected as being worth $2 trillion. Analysts have doubted the veracity of the official Saudi estimate, with third-party valuations coming in much lower. The Financial Times has estimated the company to be worth between $880 billion and $1.1 trillion, while last March Bloomberg thought an IPO […]

Saudis Foil Attack By Unknown Enemy On Offshore Oil Field

20 Jun 2017   Saudi Arabia

After last week’s attack on several vessels in the Bab Al Mandab, Middle East offshore oil operations again have been hit. According to Saudi Arabia’s national news agency SPA an attack on a major offshore oil field has been prevented. Saudi military sources have reported that the Al Marjan offshore oilfield was attacked by three boats “bearing red and white flags”. Warning shots have been fired, one vessel has been captured, while two others have escaped on Friday. The Saudi military reported that the captured boat “was loaded with weapons for (a) subversive purpose.” No details were given by the Saudi officials on a possible group or country behind the attack. (Click to enlarge) The continuing remarks about a ‘red and white flag’ on the boats could however be a hint to a possible Qatari involvement, as the latter’s flag holds these colors. This would mean a direct military […]

Oil market fundamentals heading in right direction – Saudi’s Falih

20 Jun 2017   Saudi Arabia

File Photo – Saudi Energy Minister Khalid al-Falih attends a session of the St. Petersburg International Economic Forum (SPIEF), Russia, June 2, 2017. Saudi Energy Minister Khalid al-Falih said the oil market is heading in the right direction but still needs time to rebalance, the London-based newspaper Asharq al-Awsat reported on Monday. “In my opinion, market fundamentals are going in the right direction, but in light of the large surplus in stockpiles over the past years, the cut needs time to take effect,” he told the newspaper, referring to a global deal to curb oil production. “Current expectations indicate the market will rebalance in the fourth quarter of this year, taking into account an increase in shale oil production,” he said. Asked about the recent drop in oil prices, Falih said: “Markets determine prices but are themselves driven by unpredictable variables beyond the control of producing nations.” “Short-term volatility […]

Oil market fundamentals heading in right direction – Saudi’s Falih

19 Jun 2017   Prices, Saudi Arabia

File Photo – Saudi Energy Minister Khalid al-Falih attends a session of the St. Petersburg International Economic Forum (SPIEF), Russia, June 2, 2017. Saudi Energy Minister Khalid al-Falih said the oil market is heading in the right direction but still needs time to rebalance, the London-based newspaper Asharq al-Awsat reported on Monday. “In my opinion, market fundamentals are going in the right direction, but in light of the large surplus in stockpiles over the past years, the cut needs time to take effect,” he told the newspaper, referring to a global deal to curb oil production. “Current expectations indicate the market will rebalance in the fourth quarter of this year, taking into account an increase in shale oil production,” he said. Asked about the recent drop in oil prices, Falih said: “Markets determine prices but are themselves driven by unpredictable variables beyond the control of producing nations.” “Short-term volatility […]

Are Russia And The Saudis Planning A Natural Gas Cartel?

The fledgling production cut strategy of OPEC (Saudi Arabia) and non-OPEC (Russia and the FSU) shows that a new strategy is needed to counter the ongoing doubts in the markets. At the same time, Russia and Saudi continue to give indications of a possible OPEC 2.0 scenario, in which a possible Russian membership is on the table. This would confront the market with a renewed and stronger oil cartel, although the overall strategies need to be adjusted. At the same time, Saudi Arabia, via its oil giant Aramco has openly stated to be interested in global gas investment opportunities, starting in Russia’s Siberian region. While the media still looks at the current discussions as a pure crude oil cooperation strategy, some see another development on the horizon. The real power of OPEC, non-OPEC cooperation would increase if they would not only include a crude oil production cut, but also […]

Saudi Arabia’s oil exports seen below 7 million bpd in summer: sources, data

15 Jun 2017   Saudi Arabia

Saudi Arabia’s crude exports are expected to fall below 7 million barrels per day this summer, according to industry sources familiar with the matter, and shipping data so far supports those figures. Saudi Energy Minister Khalid al-Falih said in May shipments were set to drop from June, particularly to the United States, as the top OPEC producer aims to limit supply to help balance the market. Exports in May, when the kingdom’s total production was 9.880 million bpd, averaged below 7 million bpd, three industry and shipping sources told Reuters. Early indications suggest that remains the case this month, one of the sources said. “I’m only looking at the first week of June, and on the face of it there’s not much change,” said Roy Mason of Oil Movements, a UK-based firm that estimates supply by tracking tanker shipments. Indicating lower Saudi exports, he said tanker movements suggested […]

Saudi Aramco IPO Plans Slowed Over Where to List

15 Jun 2017   Saudi Arabia

A divide between Saudi Arabia’s ruling family and executives of the kingdom’s oil company over where to list the company’s shares is slowing the march toward a planned 2018 initial public offering, according to people familiar with the matter. Executives at Saudi Arabian Oil Co., known as Saudi Aramco, are pushing Saudi Arabia’s king and his son, Deputy Crown Prince Mohammed bin Salman, on the merits of listing the state-owned oil company on the London Stock Exchange. Executives believe that listing in the U.S. would…

Asian refiners receive full Saudi crude oil allocations for July

14 Jun 2017   Saudi Arabia

Saudi Aramco’s major buyers in Asia are receiving full allocations for Saudi crude oil loading in July, with some Japanese refiners even getting higher volumes, according to market sources. Traders at several key Asian end-users said their July nominations were met and they were not aware of cuts to any refiners in the region. At least two traders with two Japanese refiners said they had received incremental volumes, with one even getting “slightly more Arab Extra Light.” A Singapore-based crude trader with a North Asian refiner said that there were some adjustments to the allocation but “overall, the volume was the same.” Article continues below… Platts Fujairah Oil Inventory Storage Data S&P Global Platts is exclusively publishing weekly oil inventory data for the Fujairah Oil Industry Zone, including an aggregate breakdown of heavy distillates and residues, middle distillates, and light distillates. The data is now freely available to access […]

Op-Ed: $1 Trillion on the Line, and Saudi Aramco IPO Riddled with Risk

14 Jun 2017   Saudi Arabia

One trillion dollars, one trillion problems: Saudi Aramco weighs which exchange is worth the gamble for its IPO. Around the world, investment bankers rub their hands together, giddy with visions of barrels full of cash accompanying Saudi Arabian Oil Co.’s initial public offering (IPO). But first things first. Saudi Arabia’s decision of where the kingdom will place Saudi Aramco’s record-shattering IPO – expected to value the company up to $1 trillion – remains unclear. A year ago, it would’ve been a diplomatic snub for Saudi to list anywhere but on the New York Stock Exchange. But as the company grapples with a far more stringent U.S. reporting environment than seen in the Middle East, the Aramco IPO’s place in New York becomes less certain. And beyond the transparency laws, the United States’ litigation-heavy culture could make New York the most perilous place in the world for Saudi Aramco to […]

Saudis Cut Oil Exports to U.S. to Ease Global Glut

14 Jun 2017   Saudi Arabia

Saudi Arabia is slashing its U.S. oil exports to a nearly three-decade low for this time of the year, intensifying its efforts to reduce a global supply glut that has been pummeling crude prices. State-owned Saudi Arabian Oil Co. expects sales to the U.S. will drop below 1 million barrels a day in June, then slide to about 850,000 barrels a day in July, according to people familiar with the matter. The July figure would be its lowest…

Saudis accelerate plans for renewable energy

13 Jun 2017   Saudi Arabia

President of the OPEC Conference and Saudi Arabian Energy, Industry and Mineral Resources Minister Khalid Al-Falih speaks during a news conference at OPEC headquarters in Vienna, Austria, on May 25. Photo by Lisi Niesner/EPA June 12 (UPI) — The Saudi government is making good on its pledge to introduce solar and wind power into the kingdom’s energy mix so that renewable energy becomes a growing part of the feedstock for the country’s electricity generation. This will free up more of the Gulf country’s crude products and natural gas for export sales. In April, Riyadh announced the names of 51 companies, primarily foreign, that have been shortlisted for two renewable energy projects: 27 firms were selected to bid on a 300 megawatt solar project to be developed in the northern part of the kingdom and 24 firms were chosen to vie for a 400 MW wind farm project in the […]

Saudi Arabia says oil inventory drawdown to accelerate in coming three to four months

12 Jun 2017   Saudi Arabia

Saudi Arabia’s Energy Minister Khalid al-Falih, talks to journalists before the beginning of a meeting of the Organization of the Petroleum Exporting Countries (OPEC) in Vienna, Austria, May 25, 2017. A drawdown in crude oil inventories will accelerate in the next three to four months, Saudi Arabian Energy Minister Khalid al-Falih said on Sunday. Falih, speaking to reporters in the Kazakh capital of Astana, also said Saudi Arabia planned to grow exports to the United States in the long-term. “The U.S. market will always be key (to us), in the long term we will continue and grow exports to the Unites States, today the United States is well supplied,” Falih told a briefing. (Reporting by Olzhas Auyezov; writing by Maria Kiselyova; editing by Jack Stubbs)

Saudis Have a Lot to Lose in Fight With Qatar, Even If They Win

10 Jun 2017   Qatar, Saudi Arabia

Saudi camp has the numbers but standoff could scare investors A new faultline emerges in Middle East already torn by war Saudi Arabia dwarfs Qatar on almost any measure, yet there are plenty of ways the tussle between the Gulf neighbors could end up hurting the world’s biggest oil exporter — even if it wins. All week the Saudis and their allies have ratcheted up pressure on Qatar, cutting diplomatic ties and imposing a blockade by land, sea and air. The stated goal is to force Qatar to stop cozying up to Saudi Arabia’s rival Iran and bankrolling Islamist groups across the region. Qatar says it’s being punished for things it didn’t do, and the U.S. signaled Friday that it wants the embargo eased. The disagreement over Qatar is longstanding. The scale of the current crisis is new, and it’s erupted into a Middle East already polarized by war. […]

Saudi’s Falih says no immediate need to adjust oil pact

10 Jun 2017   OPEC, Saudi Arabia

There is no evidence the global oil producers’ pact needs to be adjusted now, Saudi Arabian Energy Minister Khalid al-Falih said on Saturday, describing the recent weakness in crude prices as the market overreacting to statistical glitches. “I am convinced that the overall trend for the market is that of rebalancing,” he told reporters on a visit to Kazakhstan. (Reporting by Olzhas Auyezov; editing by David Clarke)

Saudis Blowing Smoke

5 Jun 2017   Saudi Arabia

It was a dismal day for OPEC when it met in Vienna to extend its output deal. Despite an agreement to limit supply for another nine months — a move it had signaled well in advance — the price of crude fell by around 5 percent. The one bright moment came when Saudi Energy Minister Khalid Al-Falih announced that his country would cut crude sales to the U.S. Prices rallied briefly, adding as much as 50 cents. But a closer look at his comments reveals they may lack teeth. Unless the Saudis get serious about depriving customers of crude they want to buy, pessimism on OPEC’s ability to rebalance the market is warranted. Here’s what he actually said during the press conference after the meeting between the group and its friends on May 25: “As a result of certain marketing developments, including separating the assets of Motiva and Aramco […]

Saudi Arabia’s New Deal With The US: Averting Implosion?

5 Jun 2017   Saudi Arabia

Saudi Arabia’s de facto head of government, Deputy Crown Prince and Defense Minister Prince Mohammed bin Salman bin ‘Abd al-’Aziz al Sa’ud, has gambled the survival of the House of Sa’ud on winning US support for the transformation of the Kingdom’s strategic fortunes. The commitment of some $200- to $350-billion in investment in, and purchases from the United States — including some $110-million of defense procurement over 10 years outlined during the visit by US Pres. Donald Trump to Riyadh on May 20, 2017 — was made during the visit by the Deputy Crown Prince (the King’s son, often referred to as “MBS”) to Washington on March 17, 2017. Trump White House sources had been unimpressed with the young Prince, who had engineered the Kingdom’s highly-expensive military intervention into Yemen, but were willing to accept his offer. The essence of the deal which Prince Mohammed reportedly felt that he […]

Saudis: OPEC May Discuss Deeper Cuts In November

3 Jun 2017   OPEC, Saudi Arabia

OPEC and the non-OPEC producers that are part of the production cut deal may consider deepening the output cuts at the cartel’s next meeting in Vienna in November, Saudi Arabia’s Energy Minister Khalid al-Falih said in an interview with Russia’s TASS news agency on the sidelines of the St. Petersburg International Economic Forum on Friday. “If for whatever reason we need to do more we will consider doing more. I’ve said that before that we will do whatever is necessary, including extensions, including deeper cuts,” TASS quoted al-Falih as saying. The Saudi minister reiterated OPEC’s goal to draw inventories down to the industry’s five-year average. “Let’s monitor how close we are, what the trajectory is, and based on that we will decide,” al-Falih told TASS. Asked about the possibility to deepen the cuts in November, Saudi Arabia’s top oilman said: “Nothing is off the table.” But on the other […]

‘Axis of love’: Saudi-Russia detente heralds new oil order

A meeting between the two men who run Russia and Saudi Arabia’s oil empires spoke volumes about the new relationship between the energy superpowers. It was the first time that Rosneft ( ROSN.MM ) boss Igor Sechin and Saudi Aramco chief Amin Nasser had held a formal, scheduled meeting – going beyond the numerous times they had simply encountered each other at oil events around the world. Their conversation also broke new ground, according to two sources familiar with the talks in the Saudi city of Dhahran last week who said the CEOs discussed possible ways of cooperating in Asia, such as Indonesia and India, as well as in other markets. The sources did not disclose further details, but […]

Saudi Arabia’s $5.2 Billion Maritime Project Boosts Lamprell

1 Jun 2017   Saudi Arabia

Lamprell to partner with Aramco for maritime yard project Shares in builder of oil rigs surge as much as 14 percent Shares in Lamprell Plc gained the most in more than two years after the builder of oil rigs partnered with Saudi Aramco to develop the biggest maritime yard in the region. Saudi Arabian Oil Co., also known as Aramco , established a joint venture with the kingdom’s national shipping company Bahri, South Korea’s Hyundai Heavy Industries Co. Ltd. and Lamprell to develop and operate the $5.2 billion project located at Ras Al-Khair on the east coast. Lamprell shares gained as much as 14 percent to 115 pence and traded at 111.75 pence at 11:01 a.m. in London. “The integrated maritime yard will be the largest in the region in terms of production capacity and scale,” according to Aramco’s statement . The facility will serve “offshore oil and gas […]

Tillerson Present as Exxon Signed Major Deal with Saudi Arabia During Trump Visit

31 May 2017   Saudi Arabia

During his recent trip to Saudi Arabia, President Donald Trump announced an array of economic agreements between the U.S. and the Middle Eastern kingdom, saying it would usher in “ jobs, jobs, jobs ” for both oil-producing powerhouses. While the $350 billion, 10-year arms deal garnered most headlines, a lesser-noticed agreement was also signed between ExxonMobil and the state-owned Saudi Basic Industries Corporation (SABIC) to study a proposed co-owned natural gas refinery in the Gulf of Mexico . Under the deal, signed at the Saudi-U.S. CEO Forum , the two companies would “conduct a detailed study of the proposed Gulf Coast Growth Ventures project in Texas and begin planning for front-end engineering and design work” for the 1,300-acre, $10 billion plant set to be located near Corpus Christi, Texas, according to an ExxonMobil press release. In addition, ExxonMobil’s press release for the agreement mentions that Darren Woods, the company’s […]

Putin, Saudi Prince to Meet After Extending Oil-Supply Curb Deal

30 May 2017   Russia, Saudi Arabia

Talks likely to focus on oil-market cooperation, Syria Two biggest oil producers put aside rivalry to prop up prices Russian President Vladimir Putin is to meet with Saudi Arabia’s Deputy Crown Prince Mohammed bin Salman in Moscow Tuesday after the world’s biggest oil exporters reached a deal to prolong supply cuts for another nine months. Prince Mohammed, who met Putin on the sidelines of the Group of 20 summit in China in September, left Saudi Arabia for meetings in Russia with Putin and other top officials, the state-run Saudi Press Agency said on Twitter Tuesday. While on opposite sides of the six-year Syrian civil war, with Russia and Iran backing Syrian President Bashar al-Assad against rebels supported by Saudi Arabia and other allies, cooperation between the crude producers has proven key to an accord aimed at propping up global oil prices. OPEC and its partners on Thursday agreed to […]

Is This Saudi Arabia’s Newest Strategy To Boost Oil Prices?

30 May 2017   Saudi Arabia

OPEC’s new strategy to balance the oil market is to cut oil exports to the U.S., a move intended to drain near-record-high crude oil inventories. OPEC originally thought that six months of combined production cuts would be sufficient to balance the oil market, but the market still looks oversupplied. Not everyone agrees on this. The IEA has argued that we probably have already reached “balance,” which is to say, demand has caught up with supply . The energy agency says that the market is moving into a supply deficit situation in the second half of this year, if it hasn’t already. But the problem is that the one metric that OPEC officials themselves have held up as the key barometer to watch is the level of global crude oil inventories, rather than the immediate supply/demand balance. And on that front, they sort of shot themselves in the foot by […]

Saudis Take Aim at Swollen U.S. Oil Stockpiles in Strategy Shift

29 May 2017   Saudi Arabia

Minister promises marked drop in Saudi crude sales to U.S. Kingdom shipped more crude to U.S. so far this year than 2016 After sparing its prized U.S. market from oil-output cuts, Saudi Arabia plans to “markedly” reduce exports to its political ally in the coming weeks in an effort to reduce swollen and highly visible crude inventories in the world’s biggest consumer. “Exports to the U.S. will drop measurably,” Energy and Industry Minister Khalid Al-Falih told reporters after chairing a meeting between OPEC and other major producers in Vienna on Thursday. Saudi crude shipments to the U.S. will fall below 1 million barrels a day next month, said two people briefed on the kingdom’s oil policy, a reduction of more than 15 percent from the average so far this year. Al-Falih spoke after the group of 24 nations agreed to extend their production curbs for another nine months until […]

Saudi Reports Quarterly Budget Deficit of 26.2 Billion Riyals

12 May 2017   Saudi Arabia

First quarter revenue rises 72% to 144 billion riyals Revenue from oil more than doubles, non-oil revenue up 1.3% Saudi Arabia reported a first quarter budget deficit of 26.2 billion riyals ($7 billion) as oil revenue surged, the Ministry of Finance said. Revenue for the three months to March rose 72 percent from a year earlier to 144.1 billion riyals, while expenses fell 2.7 percent to 170 billion riyals, the ministry said in a report on Thursday. Oil revenue more than doubled to 112 billion riyals from 52 billion riyals, while non-oil revenue was 1.3 percent higher at 32.1 billion riyals. The Saudi government is shifting to quarterly statements on the economy — having typically reported only annually — to boost transparency as it implements its long-term blueprint for life after oil. Repairing public finances after the drop in crude prices since 2014 is crucial to the plan, which […]

NYSE executives to woo Aramco IPO in upcoming Saudi visit

11 May 2017   Saudi Arabia

A New York Stock Exchange (NYSE) delegation will visit Saudi Arabia in late May to try to lure a listing by state oil giant Saudi Aramco, industry sources familiar with the matter said. The visit will follow a similar trip to Riyadh last month by London Stock Exchange (LSE) CEO Xavier Rolet, as top exchanges around the world vie to win slices of Aramco’s initial public offering, expected to be the largest in history. Aramco plans to list about 5 percent of its shares, mostly on the Saudi stock market, the Tadawul, and the rest likely on one, two or even three international exchanges, industry sources have previously said. Saudi officials have said the IPO, planned […]

Saudi Reports Quarterly Budget Deficit of 26.2 Billion Riyals

11 May 2017   Saudi Arabia

First quarter revenue rises 72% to 144 billion riyals Revenue from oil more than doubles, non-oil revenue up 1.3% Saudi Arabia reported a first quarter budget deficit of 26.2 billion riyals ($7 billion) as oil revenue surged, the Ministry of Finance said. Revenue for the three months to March rose 72 percent from a year earlier to 144.1 billion riyals, while expenses fell 2.7 percent to 170 billion riyals, the ministry said in a report on Thursday. Oil revenue more than doubled to 112 billion riyals from 52 billion riyals, while non-oil revenue was 1.3 percent higher at 32.1 billion riyals. The Saudi government is shifting to quarterly statements on the economy — having typically reported only annually — to boost transparency as it implements its long-term blueprint for life after oil. Repairing public finances after the drop in crude prices since 2014 is crucial to the plan, which […]

Saudis fear Aramco flotation amounts to selling the cash cow

10 May 2017   Saudi Arabia

Saudis often liken Aramco, the kingdom’s state oil company, to a fat cow or productive hen. The company has for decades been the bedrock of the economy and the enabler of the government largesse to which Saudis have grown accustomed. Now its future has become a source of concern as disquiet grows over plans by Mohammed bin Salman, the deputy crown prince, to sell a 5 per cent stake in Aramco. In recent weeks the hashtag “Mohammed has sold the chicken” has been trending on Twitter, as social media has become the platform for an outpouring of discontent. “What showered us in riches and goods has been sold,” said one anonymous post. “What is left for us apart from the unknown, oh Prince? Of course, for us the unknown and the future for you.” The criticism of Prince Mohammed and his plans underlines the challenges the powerful young leader faces as he tries to push through bold reforms intended to overhaul Saudi Arabia’s oil-dependent economy. The initial public offering of Aramco, which would be the world’s biggest IPO, is core to his plans. He hopes to raise $100bn through the sale, which is supposed to take place in 2018. But resistance to his plans, which include painful austerity measures as Riyadh tries to narrow a yawning fiscal deficit and counter the impact of low oil prices, is simmering. This month, the government reversed cuts to civil servants’ benefits, a surprising U-turn in the face of public pressure that included petitions and an online call for street protests.

Saudi to cut June oil supply to Asia as local demand rises:

10 May 2017   Saudi Arabia

Saudi Aramco will reduce oil supplies to Asia by about 7 million barrels in June, a source said on Tuesday, as the oil giant cuts output as part of global supply pact and trims exports to meet rising domestic demand for power during hot summer months. An OPEC-led agreement to cut global oil supplies is currently due to end in June, although Saudi Arabia and other producers in the group of OPEC and non-OPEC states have indicated curbs could be extended to the end of 2017 or beyond. OPEC and other producers are expected to discuss an extension at a meeting on May 25. When OPEC announced the cuts, Saudi Arabia was quick to tell its customers in Europe and the United States that they would receive lower volumes but shielded most of Asia from the cuts. However, summer is a peak period for power demand in the desert […]

Saudi Arabia and Russia Signal Oil-Cuts Extension Into 2018

Prolonging cuts will speed up rebalancing of market: Novak Saudi Minister Al-Falih confident of agreement to extend Saudi Arabia and Russia signaled they could extend production cuts into 2018, doubling down on an effort to eliminate a supply surplus just as its impact on prices wanes. In separate statements just hours apart on Monday, the world’s largest crude producers said publicly for the first time they would consider prolonging their output reductions for longer than the six-month extension widely expected to be agreed at the OPEC meeting on May 25. “We are discussing a number of scenarios and believe extension for a longer period will help speed up market rebalancing” the Russian Energy Minister Alexander Novak said in a statement. Speaking in Kuala Lumpur earlier Monday, his Saudi counterpart Khalid Al-Falih said he was “rather confident the agreement will be extended into the second half of the year and […]

Saudi Arabia Says Oil Curbs Could Extend Beyond End of 2017

8 May 2017   OPEC, Saudi Arabia

Producer group determined to reach goal of reducing stockpiles U.S. shale output has slowed impact of OPEC’s production curbs Saudi Arabia’s oil minister said he’s confident that an agreement by producers to curb crude output and shrink a market glut will be extended into the second half of the year and possibly beyond. While U.S. shale output growth and the shutdown of refineries for maintenance have slowed the impact of cuts by OPEC and its partners, producers are determined to reach their goal of reducing bloated stockpiles, Khalid Al-Falih said at the Asia Oil and Gas Conference in Kuala Lumpur on Monday. He said he’s confident the global oil market will soon rebalance and return to a “healthy state.” Surging U.S. production has raised concern the Organization of Petroleum Exporting Countries and partners are failing to reduce an oversupply and prop up prices. Oil has surrendered all its gains […]

Saudi oil minister Falih confident output cut deal will be extended by 6 months

8 May 2017   OPEC, Saudi Arabia

Saudi energy minister Khalid al-Falih said Monday at an industry conference in Kuala Lumpur that he was confident that the crude oil output cut deal will be extended by six months or more as the market was moving towards rebalancing. “Based on the consultation I have had with participating members, I am rather confident that the agreement will be extended into the second half of the year and possibly beyond and that includes consultations I have had this morning with the Malaysian prime minister,” Falih said during the opening address at the 19th ASIA Oil and Gas Conference in Kuala Lumpur. The producer coalition is determined to do “whatever it takes to achieve our targets and bringing stock levels back to the five-year average.” Falih said he was pleased that OPEC and non-OPEC partners that agreed to the supply cuts are so far exhibiting discipline and adherence to the […]

Iran warns Saudi prince for bringing ‘battle’ to Iran remark

8 May 2017   Iran, Saudi Arabia

Iran’s defense minister on Monday lashed back at Saudi Arabia, slamming the kingdom’s deputy crown prince over belligerent comments last week that underscored the deep rivalries between the Sunni and Shiite power. In a wide-ranging interview, Saudi Prince Mohammed bin Salman said there was no space for dialogue with rival Iran due to its Shiite ambitions “to control the Islamic world.” Framing the tensions with Iran in sectarian terms, the prince said the Saudis would not sit and wait for war but would “work so that it becomes a battle for them in Iran and not in Saudi Arabia.” On Monday, Iran’s defense minister Gen. Hossein Dehghan was quoted as saying that Iran would advise against “such a stupidity” because in that case, nothing would be “left in Saudi Arabia except Mecca and Medina,” the two holy cities. Dehghan spoke to Al-Manar […]

Saudi Power Struggle Could Destabilize The Entire Middle East

4 May 2017   Saudi Arabia

Political instability in Saudi Arabia is growing as King Salman bin Abdulaziz begins to overhaul the Saudi government, putting a long list of family members into positions of influence while increasing the power of his son, Deputy Crown Prince Mohammad bin Salman. These actions have the potential to lead to a direct conflict with Crown Prince Mohammed bin Nayef. The expected internal power collision, predicted by many analysts, finally seems to be heating up. The real surprise, however, is that it is taking place while King Salman is still alive rather than during the succession period. King Salman’s royal decrees, in which he has appointed two of his other sons, Prince Abdulaziz and Prince Khaled as Minister of State for Energy Affairs and Ambassador to the United States respectively, has opened up Pandora’s box. At the same time, King Salman has decided to re-establish all allowances and benefits which […]

Saudis To Retain Full Control Over Aramco’s Oil After IPO

4 May 2017   Saudi Arabia

Saudi Arabia will continue to have full control over the oil wells and production of Aramco, after the much-anticipated initial public offering of around 5 percent of the Saudi oil giant next year, Deputy Crown Prince Mohammed bin Salman said on Tuesday. “The wells will still be owned by the government. The company only has the right to benefit from the wells. This is the same as before and there are no changes to that,” said the prince on state television, as quoted by Bloomberg . As for production levels, they will continue to be subject to the OPEC policies and global supply and demand, the prince noted. According to Financial Times , Mohammed bin Salman said on Saudi television that “production is not a political decision, it is an economic one set by supply and demand.” The prince also described the local Saudi criticism to the IPO plan […]

Saudi to Keep Full Control of Reserves, Output After Aramco IPO

3 May 2017   Saudi Arabia

Government will still own wells, deputy crown prince says Offering about 5% stake in Aramco’s concession in 2018 Saudi Arabia will retain full ownership of its oil and gas reserves and sole decision-making authority on production levels after Saudi Arabian Oil Co.’s long-awaited initial public offering, Deputy Crown Prince Mohammed bin Salman said in interview Tuesday on state-run television. Aramco, the world’s largest oil-exporting company, holds a concession to pump the kingdom’s oil and gas, and a stake in that venture is what will be sold in the offering of “not far from 5 percent” of its shares in 2018, the prince said. Analysts at Sanford C. Bernstein & Co. and Rystad Energy AS in March said the offering had a potential market value above $1 trillion. “The wells will still be owned by the government,” said the deputy crown prince, the son of King Salman bin Abdulaziz. “The […]

All Eyes On Saudi Arabia As OPEC Begins To Unravel

3 May 2017   OPEC, Saudi Arabia

Has OPEC failed? That’s the question analysts have begun to ask , approaching the group’s next meeting later this month. When the members gather at their headquarters in Vienna, it will likely be to agree on an extension of production cuts in place since January. Those cuts, originally intended to re-balance markets and boost prices, had an initial positive effect but their ultimate impact has been difficult to measure, as inventories have declined only gradually while global oil shipments have increased. New production from outside of OPEC, particularly in the United States, has kept global inventories high. It’s generally believed that OPEC members will recognize the need to extend cuts, with one observer calling it a “ 100 percent ” probability. There is some speculation that Russia, a non-OPEC state whose cooperation is crucial to the overall success of OPEC’s strategy, may prove intransigent when it comes to cutting […]

Aramco Cuts Asia Oil Pricing as Saudis Seen Losing Market Share

2 May 2017   Saudi Arabia

Saudi Arabia lowers pricing for June crude for sale to Asia State-owned Saudi Aramco raises pricing to all other regions Saudi Arabia, the world’s largest crude exporter, cut pricing for June oil exports to Asia as it fights to defend sales in its biggest regional market. The kingdom raised pricing to all other regions. State-owned Saudi Arabian Oil Co. , known as Saudi Aramco , lowered its official pricing for Arab Light crude to Asia by 40 cents to an 85 cent discount to the regional benchmark, it said in an emailed statement, in line with the median estimate in a Bloomberg survey of five refiners and traders in the region. Saudi Arabia has ceded market share to OPEC rivals Iran and Iraq by making deeper cuts in output than it promised under the group’s agreement to curb production. Analysts including Christof Ruehl of Abu Dhabi Investment Authority and […]

Saudis Further Discount Crude To Asia

2 May 2017   Saudi Arabia

In a bid to defend its Asian market share amid OPEC’s production cuts, Saudi Arabia is lowering yet again the official selling prices (OSPs) for the crude grades it sells to Asia in June, while pricing for all other regions was raised. Saudi Aramco, the state oil giant, has cut the OSP for its flagship Arab Light crude bound for Asia for June by US$0.40 to an US$0.85-discount to the regional benchmark, Oman/Dubai average, Bloomberg reported on Monday, citing an emailed statement by Aramco. The Saudi oil company is also cutting the pricing of all its crude varieties for Asia for June, including Super Light, Extra Light, Medium, and Heavy, Reuters reports. The biggest change in June over May is for the Super Light, whose OSP was lowered by US$0.70, while the Heavy crude price for Asia was reduced by the smallest amount, US$0.20, according to Reuters figures. A […]

Saudi Arabia may cut June light crude prices to nine-month low

1 May 2017   Saudi Arabia

Top oil exporter Saudi Arabia is expected to cut the price of its flagship Arab Light by 40-50 cents a barrel in June to the lowest in nine months, a survey of Asian refiners showed. Official selling prices (OSPs) are expected to fall across the board for Saudi crudes sold to Asia in June, after a fall in the Middle East benchmark Dubai crude due to ample oil supplies, the survey of five refiners found. “We expect Saudi OSPs to fall as the spot market has collapsed amid oversupply,” an analyst with a North Asian refiner said, adding that the June Arab Light OSP will drop by at least 50 cents a barrel. Reflecting weak demand, the spread for first and third month cash Dubai prices widened in contango in April from […]

Saudi Aramco to boost oil loading capacity with reopened terminal

1 May 2017   Saudi Arabia

Oil tanks seen at the Saudi Aramco headquarters during a media tour at Damam city November 11, 2007. State oil giant Saudi Aramco plans to launch its overhauled Muajjiz oil terminal on the Red Sea next year, lifting its total loading and export capacity to as much as 15 million barrels per day, Saudi officials said. Located on the Red Sea, Muajjiz had been used as an export terminal for Iraqi crude through the Iraqi Pipeline in Saudi Arabia (IPSA), but it has not carried Iraqi crude since Saddam Hussein invaded Kuwait in 1990. The pipeline was confiscated by Saudi Arabia in 2001 as compensation for debts owed by Baghdad. Saudi Arabia had used the IPSA pipeline to transport gas to power plants in the west of the country for years before test opening it in 2012, giving Riyadh scope to export more of its crude should Iran try […]

Saudi Aramco CEO Says Peak Oil Demand Is a Misleading Theory

Petroleum use will keep growing for decades to come: Nasser World’s largest producer remains on track for IPO next year The boss of Saudi Arabia’s state oil company defended petroleum as the mainstay of the global economy, countering theories that demand will peak within years with his own forecast that consumption will keep growing for decades. “The global economy is forecast to double in size by 2050” so overall demand for energy will be higher, Saudi Arabian Oil Co. Chief Executive Officer Amin Nasser said at the International Oil Summit in Paris. The idea that oil demand is close to its maximum level is “equally as misleading” as now-discredited theories about peak oil supply, he said. Amin Nasser in Paris on April 27. His comments contradict recent opinions from some of the world’s largest oil companies. The surge in battery-powered vehicles will cause demand for oil-based fuels to peak […]

Saudi Forces Foil Attempted Attack on Aramco Oil Product Center

27 Apr 2017   Saudi Arabia

Remote-controlled boat laden with explosives intercepted Saudi Arabia building 400,000 barrels/day refinery in Jazan Saudi Arabia’s security forces foiled an attempt to blow up an oil product distribution center in Jazan, a province bordering Yemen in the kingdom’s southwest, according to the state-run news agency. A remote-controlled boat laden with explosives was spotted leaving a small island in Yemeni waters and later intercepted, the Saudi Press Agency said, citing an unidentified spokesman for the Ministry of Interior. Saudi security forces said they would stop any attacks by Houthi rebels, who are threatening shipping routes in the Red Sea with explosive-laden boats and mines. Saudi Arabia entered the conflict in Yemen in March 2015, leading a coalition that’s carried out intensive airstrikes and deployed a limited number of ground troops in an effort to defeat Shiite Houthi militants aligned with Iran. Since the start of the war, the Houthis have […]

Saudi Arabia Sees 7,000 Jobs Coming From Solar Program by 2020

27 Apr 2017   Saudi Arabia

Three tenders scheduled for 3.45 gigawatts of photovoltaics Aim is to cut domestic use of crude, diesel and fuel oil Saudi Arabia is hoping its solar-power program will generate 7,000 jobs and build a local manufacturing industry that can export products to the world, reducing domestic demand for its crude oil in the process. The Ministry of Energy and Natural Resources requires bidders seeking to build about 3.45 gigawatts of solar and wind plants by 2020 to spend 30 percent of the capital they invest through home-grown workers and companies, said Turki al-Shehri, head of the renewable project development office for the kingdom. “We want to create value,” Al-Shehri said in an interview at the Bloomberg New Energy Finance conference in New York on Tuesday. “We don’t just want to bring in companies that open up manufacturing facilities at a very high premium, which the consumer will end up […]

Saudi Arabia Seen Losing Market Share to Iran, Iraq on Oil Cuts

27 Apr 2017   Saudi Arabia

‘OPEC market share battle hasn’t gone away’: ENBD’s Bell China data for March show Iraq, Iran boosting crude sales Saudi Arabia, the world’s biggest crude exporter, is losing market share to Iraq and Iran as a result of OPEC’s agreement to curb supplies to bolster prices, according to the head of research at Abu Dhabi Investment Authority. “If you’re talking about winners, you can count Iran and Iraq,” Christof Ruehl said Wednesday at a conference in Dubai. The Organization of Petroleum Exporting Countries agreed to production limits for most of its members at a meeting in November and brought 11 other nations on board with the deal in December. Saudi Arabia, OPEC’s biggest producer, agreed to cut output by 486,000 barrels a day while Iraq said it would cut 210,000 barrels a day. Iran was permitted to increase output by 90,000 barrels a day, according to the OPEC accord. […]

Aramco Insiders Suggest The Company May Not Be Worth $2 Trillion

26 Apr 2017   Saudi Arabia

As Saudi Arabia’s deputy crown prince, Mohammad bin Salman Al Saud, pushes his nation’s Vision 2030 economic overhaul and crows of the $2 trillion Saudi Aramco valuation (ahead of its potential IPO), WSJ reports that officials at the state-owned oil company are applying internal value estimates of $1.3 to $1.5 trillion to the valuation, calling bin Salman’s estimate “unrealistic and mind blowing.” Since deputy crown prince, Mohammed bin Salman, announced the stock-offering plan and his $2 trillion estimate early last year. Insiders and outsiders have questioned how he arrived at that number. A team of about two dozen employees have been working since last year to try and figure how to take Aramco public while working with Western consultants to explore ways to restructure Aramco in order to maximize its value, say people familiar with the process. The team has determined several variables – what some call “ levers […]