Saudi Arabia

Aramco Plans to Buy Non-Saudi Crude in Global Trading Expansion

20 Sep 2017   Saudi Arabia

Saudi Aramco plans to expand its trading business by buying and selling non-Saudi crude as the world’s biggest exporter prepares for what could be a record initial public offering. (Bloomberg) — Saudi Aramco plans to expand its trading business by buying and selling non-Saudi crude as the world’s biggest exporter prepares for what could be a record initial public offering. The state-owned company is putting crude marketing and refined-product trading under the same management, according to Ibrahim Al-Buainain, chief executive officer of Saudi Aramco Products Trading Co. The enlarged unit will trade crude that it doesn’t own, helping Saudi Aramco supply refineries more efficiently and make more profit, he said. “We’ll keep selling our own oil as normal, and we want to get into trading third-party crude,” Al-Buainain, who will head the expanded unit, said in an interview in Fujairah in the United Arab Emirates. Aramco, known formally as […]

Will Low Oil Prices End Saudi Arabia’s Gas Subsidies?

19 Sep 2017   Saudi Arabia

Although Saudi Arabia has managed to narrow its budget deficit, the Kingdom continues to feel the fiscal pressure of low oil prices, and is mulling over the phasing out of gasoline subsidies, and making gas prices level with varying international prices, Bloomberg reported on Monday, citing a person familiar with the plan. Under the plan, Saudi Arabia is said to be studying raising gasoline prices by the end of 2017 to bring them to parity with international prices—which would mean a rise of about 80 percent for octane-91 grade gasoline compared to current prices. A decision is expected this month or next, Bloomberg quoted the person with knowledge of the issue as saying. According to Bloomberg’s source, the Saudis are planning a one-time hike of gasoline and jet fuel by the end of this year, while other fuel prices would be gradually increased between 2018 and 2021. The Saudi […]

Saudis May Raise Domestic Gasoline Prices by 80%

18 Sep 2017   Saudi Arabia

Plan would boost gasoline to parity with international prices Increases in other Saudi energy prices seen early next year Saudi Arabia is considering a plan to raise domestic prices for gasoline and jet fuel in November at the latest, as the world’s biggest oil exporter pushes a program to curtail spending and reduce dependence on crude after a global slump in prices. The government would boost gasoline to parity with varying international prices under the plan, according to a person with knowledge of the matter. At current price levels, this could result in a hike for octane-91 grade gasoline to about 1.35 riyals per liter (0.36 cents) from 0.75 riyals, or an increase of about 80 percent, the person said, asking not to be identified because the matter isn’t public. The government plans to delay increases in other energy prices until early 2018, the person said. Authorities are expected […]

Why Aramco Delayed Its IPO

15 Sep 2017   Saudi Arabia

International news reports have stated that the Saudi government is currently putting together contingency plans for a possible delay to the biggest IPO ever. The listing of 5 percent of Saudi Arabia’s crown jewel, the world’s largest oil company Saudi Aramco, could bring in around $300-$400 billion, based on a valuation of Aramco at between $1.5-2 trillion. The cash generated by the IPO has already been earmarked for the coffers of the Saudi Public Investment Fund (PIF), to be used as financial support for Saudi Vision 2030, the economic diversification program proposed and pushed for by Crown Prince Mohammed Bin Salman (MBS). Doubts about the valuation have been strong, but a success story for this particular once-in-a-lifetime IPO is all but guaranteed. International interest is growing and media reports are stumbling over each other to assess, criticize or support the IPO strategy. Presently, international advisors and banks have already […]

Saudis Prepare for Possible Aramco IPO Delay to 2019

15 Sep 2017   Saudi Arabia

Government still aims for 2018, but timetable is getting tight Decision on where to list overseas may come in late October Saudi Arabia is preparing contingency plans for a possible delay to the initial public offering of its state-owned oil company by a few months into 2019, according to people familiar with the matter. While the government is still aiming for a Saudi Aramco IPO in the second half of next year, that timetable is increasingly tight for what’s likely to be the biggest share sale in history, the people said, asking not to be named discussing internal deliberations. Saudi Aramco said in statement the IPO “remains on track. The IPO process is well underway and Saudi Aramco remains focused on ensuring that all IPO related work is completed to the very highest standards on time.” It didn’t give a timeframe. The comment was echoed by a Saudi government […]

Saudi Arabia Detains Critics as New Crown Prince Consolidates Power

15 Sep 2017   Saudi Arabia

Crown Prince Mohammed bin Salman in Riyadh, Saudi Arabia, last year. Some Saudis see some see him as a power-hungry upstart who is overturning decades of tradition. BEIRUT, Lebanon — Saudi Arabia has begun a wide-ranging crackdown against perceived opponents of the policies of the kingdom’s new crown prince, Mohammed bin Salman. Over the last week, 16 people were held, their friends, relatives and associates said in interviews. They include prominent Islamic clerics, academics, a poet, an economist, a journalist, the head of a youth organization, at least two women and one prince, a son of a former king. Some of them were taken from their homes in unannounced raids by security forces, and their computers, cellphones and personal papers were seized, the friends and relatives said. Those arrested have been held incommunicado, and it is not clear if they have been formally charged with crimes. Saudi Arabia has […]

Houthis Threaten Saudi Oil Tankers

15 Sep 2017   Saudi Arabia, Yemen

Houthi leader Abdel-Malek al-Houthi said his rebel alliance would begin attacking Saudi oil tankers should the Kingdom begin an offensive against the key Yemeni port of Hodeidah, according to a new report by Reuters. “We could target Saudi oil tankers and we could do anything, we have not done this before,” he said. The speech, which was televised across the Houthi leader’s territory, added that Yemeni missiles could reach the Emirati capital of Abu Dhabi, as well as anywhere in Saudi Arabia, though Reuters reports that the group’s technical capability to enforce such a threat is questionable. Abdel Malek insisted that Yemen fired a test missile towards Abu Dhabi earlier this month. The UAE is no longer safe for the country’s citizens, the leader said. Two years of civil war between Houthi rebels and Saudi-backed President Abdrabbuh Hadi has left Yemen’s economy wrecked. The KSA is on a mission […]

Baker Institute expert: crude-oil production increase a risky strategy for Saudi Arabia

15 Sep 2017   Saudi Arabia

« German government awards €4.1M to Fastned to build 25 fast charging stations | Main | Mobileye and Munich Re partnering to reduce commercial fleet collisions » A number of factors are pushing Saudi Arabia to raise its crude-oil production capacity, but the wide range of potential outcomes suggests that such an increase is a risky strategy for the kingdom and the global environment, according to a new article by an expert from Rice University’s Baker Institute for Public Policy. Most notably, a rise in Saudi crude-oil output could trigger a damaging period of global oversupply, said Jim Krane, the Wallace S. Wilson Fellow for Energy Studies in the Baker Institute’s Center for Energy Studies. This glut could be exacerbated by future carbon taxes and other policy restrictions on fossil fuels, he said. Krane’s paper is published in the journal Energy Policy . As recently as 2015, Saudi energy […]

Saudi Arabia Pushes OPEC on New Tack to Curb Oil Supplies

14 Sep 2017   Saudi Arabia

Saudi Arabia’s energy minister, Khalid al-Falih, right, wants OPEC to focus more on exports in a bid to lift oil prices. Above, Mr. Falih with Russian Energy Minister Alexander Novak, left, and OPEC Secretary-General Mohammad Barkindo at the cartel’s May meeting. OPEC has cut nearly one million barrels a day of oil output in the past year. But that isn’t how the global crude market sees it. Oil exports from member countries have also declined, but by a significantly smaller margin than production cutbacks. The unusual discrepancy is muting the impact of a November 2016 deal aimed at curtailing oil supplies in a bid to lift prices, traders and analysts say. It has also galvanized officials from Saudi Arabia, the world’s biggest crude exporter and the main driver behind OPEC policies. They are now pushing for monitoring of exports, rather than just production, at a Sept. 22 meeting of […]

Saudi Arabia Clamps Down as Crown Prince Consolidates Power

14 Sep 2017   Saudi Arabia

Saudi Arabia is stamping out traces of internal dissent in a far-reaching campaign targeting influential clerics, liberal thinkers and even princes as Crown Prince Mohammed bin Salman moves to consolidate power ahead of his expected accession to the throne. In the past week, Saudi authorities have detained more than 30 people, roughly half of them clerics, according to activists and people close to those who have been detained. The campaign goes beyond many of the government’s past clampdowns, both in the scope of those targeted and the intense monitoring of social media posts by prominent figures. It is not known if any charges have been filed. “This is unlike anything Saudis have experienced before,” says Jamal Khashoggi, a Saudi political commentator who left the kingdom recently and now lives in self-imposed exile in […]

Saudi Arabia Pushes OPEC on New Tack to Curb Oil Supplies

13 Sep 2017   Saudi Arabia

Saudi Arabia’s energy minister, Khalid al-Falih, right, wants OPEC to focus more on exports in a bid to lift oil prices. Above, Mr. Falih with Russian Energy Minister Alexander Novak, left, and OPEC Secretary-General Mohammad Barkindo at the cartel’s May meeting. OPEC has cut nearly one million barrels a day of oil output in the past year. But that isn’t how the global crude market sees it. Oil exports from member countries have also declined, but by a significantly smaller margin than production cutbacks. The unusual discrepancy is muting the impact of a November 2016 deal aimed at curtailing oil supplies in a bid to lift prices, traders and analysts say. It has also galvanized officials from Saudi Arabia, the world’s biggest crude exporter and the main driver behind OPEC policies. They are now pushing for monitoring of exports, rather than just production, at a Sept. 22 meeting of […]

Saudi Aramco Boosts Crude Oil Stockpiles In Japan

12 Sep 2017   Japan, Saudi Arabia

Saudi Aramco will fill on Wednesday all of its 8.18 million barrels of leased crude storage capacity in southwestern Japan, a source at the Japanese Ministry of Economy Trade and Industry told S&P Global Platts on Monday, as the Saudis are trying to keep hold of their North Asian customers amid OPEC’s production cuts and low oil prices. Aramco has received a fully loaded very large crude carrier (VLCC) with 1.89 million barrels at Okinawa, which it will add to the 6.29 million barrels it is currently storing there. Aramco has been using storage capacity at Okinawa since 2011 under agreements with Japan and Japanese companies. The Saudi company uses the storage capacity free of charge in exchange for Japan having the right to claim first the stockpiles in case of an emergency. In July this year, Japan said that it would lift the storage capacity it allows Aramco […]

Saudi Arabia Says It’s Open to Another OPEC Cuts Extension

12 Sep 2017   OPEC, Saudi Arabia

Saudi Arabian Energy Minister Khalid Al-Falih agreed with his Venezuelan, Kazakh and UAE counterparts to keep all options open in their push to re-balance world oil markets. (Bloomberg) — Saudi Arabian Energy Minister Khalid Al-Falih agreed with his Venezuelan, Kazakh and U.A.E. counterparts to keep all options open in their push to re-balance world oil markets, including the possible extension of output cuts beyond next March. Al-Falih agreed in separate talks with the ministers in the Kazakh capital Astana that steps taken by OPEC and other major crude producers such as Kazakhstan have contributed to better market stability, according to three emailed statements from the Saudi energy ministry. Saudi Arabia and Venezuela, both members of the Organization of Petroleum Exporting Countries, agreed to consider prolonging production cuts “beyond the first quarter of 2018, if needed,” the Saudi ministry said in one of the statements. The kingdom and Kazakhstan said […]

Middle-East Tensions Soar After Critical Phone Call

12 Sep 2017   Qatar, Saudi Arabia

The last bilateral contact between the Emir of Qatar Tamim Bin Hamad and Saudi Crown Prince Mohammed Bin Salman last Friday is the best example. After some recent indications of a detente between the two Arab leaders, a crucial phone-call on Friday destroyed hopes of improving relations between Saudi Arabia and Qatar. The two rival nations could be headed towards a real showdown. No real information has been released on what was discussed between the two Arab leaders, but insiders indicated that the Qatari Emir offered to sit down to discuss the ongoing dispute with members of the quartet, which includes Saudi Arabia, Egypt, Bahrain, and the UAE. Since June these four have cut diplomatic ties with Qatar, accusing Doha of cuddling up to Iran, embracing non-state players that spread terror throughout the Arab World, allying themselves with the Muslim Brotherhood and supporting Qatari state-funded Al Jazeera TV. The […]

Saudi to supply full crude allocations to most Asian refiners: sources

11 Sep 2017   Saudi Arabia

Saudi Arabia will supply full contracted volumes of crude oil to at least five north Asian term buyers in October, while a sixth regional refiner was notified of cuts to its October Arab Extra Light supplies, sources familiar with the matter said on Monday. The October allocations are in contrast to the steep cuts in the September allotments and reaffirms Saudi Arabia’s desreaffirmintain its Asian market share. Saudi Arabia is the world’s biggest crude exporter. Saudi Arabia is likely taking advantage of the lower refinery run rates and ample crude inventories in the United States in the wake of Hurricane Harvey, to redirect the allocation cuts from Asia to the United States, a trader who specializes in Middle East crude supplies said. “Saudi allocations are all about the math. They can cut U.S. allocations and supply that to Asia,” the trader added. A source […]

Will Saudi Aramco deliver world record profit for next year’s IPO?

9 Sep 2017   Saudi Arabia

When oil giant Saudi Aramco discloses its financials for the first time next year, it must either surprise investors with world record profits or reduce its aspirations for a $2 trillion valuation in its initial public offering (IPO). [IPO-ARMO.SE] Investors have long debated whether Aramco could be valued anywhere close to $2 trillion, the figure suggested by Saudi Crown Prince Mohammed bin Salman, who wants to raise cash through the IPO to finance investments aimed at helping wean the world’s biggest oil exporting nation off dependency on crude. Based on Aramco’s oil reserves of 266 billion barrels and a valuation of $7 to $8 per barrel in line with recent industry acquisitions – such as Total’s (TOTF.PA) purchase of Maersk’s oil assets – Aramco warrants close to the $2 trillion valuation. But that is not the only metric for an energy firm’s worth. By other measures, […]

Saudi Arabia plans to cut crude oil allocations in Oct by 350,000 bpd

8 Sep 2017   Saudi Arabia

Saudi Arabia will cut crude oil allocations to its customers worldwide in October by 350,000 barrels per day, an industry source familiar with Saudi oil policy told Reuters on Thursday. The cuts in allocations are in line with Saudi Arabia’s commitments to the OPEC-led supply reduction pact, under which the top oil exporter is required to cut 486,000 bpd. “Despite refiners’ request for more crude, the decision was made to maintain cuts,” the source said. Despite “healthy and robust” demand and refining margins in Asia, state oil giant Saudi Aramco will cut supplies to the world’s biggest oil consuming region by 1.8 million barrels in October, with the reductions affecting mostly customers in Japan, the source said. The deepest cuts in October were made to major oil companies where supplies were reduced by 225,000 bpd, while allocations to customers in Europe were lower by 70,000 bpd, […]

Will Saudi Aramco deliver world record profit for next year’s IPO?

8 Sep 2017   Saudi Arabia

When oil giant Saudi Aramco discloses its financials for the first time next year, it must either surprise investors with world record profits or reduce its aspirations for a $2 trillion valuation in its initial public offering (IPO). [IPO-ARMO.SE] Investors have long debated whether Aramco could be valued anywhere close to $2 trillion, the figure suggested by Saudi Crown Prince Mohammed bin Salman, who wants to raise cash through the IPO to finance investments aimed at helping wean the world’s biggest oil exporting nation off dependency on crude. Based on Aramco’s oil reserves of 266 billion barrels and a valuation of $7 to $8 per barrel in line with recent industry acquisitions – such as Total’s (TOTF.PA) purchase of Maersk’s oil assets – Aramco warrants close to the $2 trillion valuation. But that is not the only metric for an energy firm’s worth. By other measures, […]

Saudi Arabia redrafts crown prince’s transformation plan

7 Sep 2017   Saudi Arabia

Saudi Arabia is redrafting its main reform plan just over a year after its much-hyped launch, stripping out some areas earmarked for change and extending the timeline of other targets. The move suggests that Riyadh may have realised that some of the objectives in its National Transformation Plan were over ambitious. The government has been reworking the NTP, centrepiece of Crown Prince Mohammed bin Salman’s efforts to overhaul the oil-dependent economy, since July. An internal document seen by the Financial Times says the amended plan, dubbed NTP 2.0, will “change existing initiatives and add new ones”. “The timeline of the NTP will continue to 2020, but the plan requires implementation of objectives for 2025 and 2030,” it says. Reforms that had been under the NTP have shifted to other programmes as the government seeks to develop a more manageable agenda. Core elements of the original plan included privatising state assets, creating 1.2m private sector jobs and reducing unemployment from 11.6 per cent to 9 per cent by 2020. The partial privatisation of Saudi Aramco, the state oil company, sits outside the NTP, but is critical to Prince Mohammed’s overall plans. No suggestion is made that the NTP’s redrafting will affect the initial public offering of 5 per cent of Aramco, planned for next year.

Saudi Arabia Shortlists 25 Bidders For First Utility-Scale Wind Plant

30 Aug 2017   Saudi Arabia, Wind

Saudi Arabia has shortlisted 25 companies that qualify to bid for proposals to build a 400-MW wind power plant in the northern part of the Kingdom, in what would be the first utility-scale wind power project, the Renewable Energy Project Development Office (REPDO) of Saudi Arabia’s Energy Ministry said on Tuesday. REPDO has qualified 25 companies—including major players in renewables such as Acciona, Enel Green Power, EDF Energies Nouvelles as well as technology giants such as GE, units of Siemens, Marubeni, and Mitsui, among others—to bid for the 400-MW Dumat Al Jandal project. The qualified companies will proceed to the Request for Proposals (RFP) stage as either ‘managing members’ or ‘technical members’ – or both – based on their experience in delivering IPP projects of this scale, the Saudi ministry said. Saudi Arabia invited initial bids in July, and the interested companies had until August 10 to present their […]

The Aramco IPO: A Geopolitical Game Of Thrones

29 Aug 2017   China, Saudi Arabia

The already strong bilateral relations between Saudi Arabia and China are hitting new levels, as the Kingdom and the Chinese Tiger have decided to set up a joint US$20 billion investment fund. The fund was announced by Saudi minister of energy Khalid Al Falih, after meeting with Chinese vice-prime minister Zhang Gaoli in Jeddah. Falih indicated that both countries will share the total investments and will be splitting the revenues of the fund, which is going to target projects in infrastructure, energy, mining and materials. This is not a surprise, as Saudi Arabia has already been heavily investing in energy and petrochemicals in China the last decades. Saudi Aramco’s main downstream investments lately almost all have been focusing on increasing the Saudi footprint in downstream China, mainly to lock in Chinese demand for crude and products. Falih also reiterated that both countries will sign around $20 billion in value […]

Saudis Expects To Exceed Renewable Energy Targets

25 Aug 2017   Saudi Arabia

Riyadh plans to surpass its commitment to generate 9.5 gigawatts of energy from renewables in order to boost its commitment to green energy and climate-friendly initiatives, according to a government official who spoke to Reuters. “We plan to exceed 9.5 gigawatts,” Turki al-Shehri of the Renewable Energy Project Development Office said during a Sino-Saudi investment forum in Jeddah. “The whole idea of this is to give investors a sense of comfort that the Kingdom has a long-term vision for renewable energy.” Saudi plans to meet its 9.5 GW goal by 2023 by investing between $30 billion and $50 billion in 60 green energy projects. The end goal is to generate 30 percent of the Kingdom’s electricity from renewable sources by 2030, with the remainder to come from natural gas. Shehri did not offer more details on the extent of the KSA’s plan to surpass this goal. The Saudi government […]

The Fate Of Vision 2030 Rests On Saudi Aramco IPO

23 Aug 2017   Saudi Arabia

It has been two months since Prince Mohammed Bin Salman’s ascendance to the role of heir to the Saudi Arabian throne, and the preliminary effects of his aggressive economic diversification and anti-Iran platforms are beginning to show. The influence of Bin Salman (widely known as MBS) on foreign policy can most readily be seen in Iraq, where Iranian support for the war against the Islamic State has carved out a special niche for Tehran. While Riyadh had been preoccupied with battling Shiite Houthi rebels in Yemen, Ayatollah Ali Khamenei and the Iranian government strengthened their commitment to a unified Iraq, free from ISIS and free from the threat of an independent Kurdistan. But now the tides are changing . Emirati and Saudi politicians are making their rounds in Baghdad, rekindling old Gulf ties that have suffered since dictator Saddam Hussain invaded Kuwait in the 90s. Riyadh announced the inauguration […]

Despite Sanctions, Qatar Outpaces Saudi Arabia In Economic Growth

22 Aug 2017   Qatar, Saudi Arabia

Despite the torrent of reports attesting to the non-impact of the Saudi Arabia-led diplomatic boycott of Doha, new estimates by Bloomberg’s economic survey predict that 2017 will be Qatar’s slowest year of GDP growth since 1995. A previous study in June forecasted 3.1 percent and 3.2 percent growth for this year and next, respectively. New figures reduce those numbers to 2.5 percent for 2017 and 3.2 percent for 2018. The deficit figures jump to 5.1 percent for the current period, compared to previous estimates at 4.6 percent. The current feud between Gulf monarchies began on June 5 th , when Saudi Arabia expressed its indignation at an insubordinate Qatar. Energy interests, most notably Doha’s shared custody of the South Pars gas field – the largest of its kind – prevent Qatar from cutting relations with Shiite Iran, the Sunni Saudi government’s main rival in the Middle East. “Even before […]

Saudi Arabia crude oil exports fall slightly in June: JODI

17 Aug 2017   Saudi Arabia

Saudi Arabia’s crude oil exports in June fell slightly to 6.889 million barrels per day (bpd), 35,000 bpd lower than the May level, official data showed. OPEC’s biggest producer also pumped 10.070 million bpd in June, up 190,000 bpd from May, according to a posting on the Joint Organizations Data Initiative (JODI) website. The kingdom increased direct-burn crude used for power generation in June as demand for electricity increases during the hot summer months. It used 680,000 bpd of crude oil to generate power in June, up 76,000 bpd from May. The Muslim fasting month of Ramadan, when the use of electricity surges, ran from May 27 to June 25 this year. Saudi demand for oil products rose to 2.634 million bpd in June, up from 2.535 million bpd in May. The kingdom also continued to draw crude oil from its inventories, which fell […]

With a wary eye on Iran, Saudi and Iraqi leaders draw closer

17 Aug 2017   Iraq, Saudi Arabia

It was an unusual meeting: An Iraqi Shi’ite Muslim cleric openly hostile to the United States sat in a palace sipping juice at the invitation of the Crown Prince of Saudi Arabia, the Sunni kingdom that is Washington’s main ally in the Middle East. For all the implausibility, the motivations for the July 30 gathering in Jeddah between Moqtada al-Sadr and Crown Prince Mohammed bin Salman run deep, and center on a shared interest in countering Iranian influence in Iraq. For Sadr, who has a large following among the poor in Baghdad and southern Iraqi cities, it was part of efforts to bolster his Arab and nationalist image ahead of elections where he faces Shi’ite […]

Saudi Arabia reports higher oil revenue

15 Aug 2017   Saudi Arabia

Second quarter oil revenue was up nearly 30 percent from last year on the back of general improvements in the energy market, the Saudi government reported. Saudi Arabia is the largest producer in the Organization of Petroleum Exporting Countries. It told OPEC economists last month that production was around 10 million barrels per day, an increase of about a half percent from the average during the second quarter, but still lower than the first quarter.  Saudi Arabia is leading in terms of production cuts outlined in an OPEC-led effort to ease the supply-side strains that pushed oil prices below $30 per barrel last year. Global oil inventories are still above the five-year average and the price for Brent crude oil, the global benchmark, was at $51.70 early Monday.

The Saudi Ministry of Finance said oil revenue for the second quarter was around $269 billion, a growth rate of 28 percent from the same time last year. The government attributed the gains to improved crude oil prices for the global market.  The price for Brent is about $4.40 per barrel, or about 9 percent, higher than this time last year.  Saudi Arabia has adopted a “whatever it takes” stance on the effort to balance the market. Officials issued a joint statement with Iraq last week that restated their full commitment to the OPEC-led effort to trim production until the markets reach a target level that would indicate balance. The official news agency said the kingdom was eager to export petroleum and petrochemicals to Iraq and “increase trade exchange at all levels.”

Saudis ready to export more oil to Iraq

12 Aug 2017   Iraq, Saudi Arabia

After discussions on compliance with an OPEC-led effort to balance the market, Saudi Arabia’s energy minister said Iraq could be the target for more exports. Saudi Arabia and Iraq are the top two oil producers among members of the Organization of Petroleum Exporting Countries. Saudi Arabia has taken a “whatever it takes” stance on a multilateral effort to balance an oversupplied market for crude oil with production declines, while Iraq is said to be the least compliant among parties to the arrangement. Saudi Energy Minister Khalid al-Falih said his country was willing to “open all fields” in order to improve bilateral relations with its ally, Iraq. “The minister said that the kingdom is keen to supply Iraq with Saudi exports of […]

Saudi Arabia: Deeper Cuts Are Still On The Table

12 Aug 2017   OPEC, Saudi Arabia

OPEC and its non-OPEC partners have not closed the door to the possibility of extending the production cut agreement or even lowering production levels, Saudi Oil Minister Khalid al-Falih told Saudi-owned newspaper Asharq Al-Awsat in remarks published on Friday. Al-Falih’s comments were aired just a day after OPEC confirmed reports that its crude oil production increase last month, reporting a daily rate of 32.869 million barrels , up by 172,600 bpd. Libya, Nigeria, and Saudi Arabia were the main drivers behind the OPEC production increase, with Libya raising its output by 154,300 bpd—by far the biggest increase among the cartel’s members. Nigerian oil production rose by 34,300 bpd to 1.748 million bpd, while Saudi Arabia’s went up by 31,800 bpd to 10.067 million bpd. “The possibility of continued production cuts is on the table, and the door to extension of reduction has not been closed. If further actions are […]

Saudi Crown Prince Favors New York Over London For Aramco IPO

12 Aug 2017   Saudi Arabia

Even though Saudi Arabia’s advisors are favoring London over New York for the foreign venue to list Aramco shares, Saudi Crown Prince Mohammad bin Salman and the Saudi government are more inclined to favor New York for the world’s largest IPO next year, Reuters reported on Friday, citing sources familiar with the plans. Crown Prince Mohammad bin Salman—who is overseeing Aramco’s listing plans—may pick New York over London due to “political consideration”, in view of the long-standing Saudi-U.S. relationship, according to Reuters’ sources, who noted, however, that the final choice would also take into account financial factors. “That is broadly correct,” a senior industry source told Reuters, referring to the NYSE option for Aramco’s listing. Responding to Reuters, Aramco said that “All options continue to be held under consideration. There is no timetable requirement for an immediate definitive decision.” A possible listing on the NYSE could give Saudi Aramco […]

Ex Minister: Unused Iraq-Saudi Pipeline Should Reopen

11 Aug 2017   Saudi Arabia

Iraq needs to regain access to a pipeline that was used in the past to export Iraqi crude oil via Saudi Arabia, according to Parliament member and former Iraqi oil minister, Ibrahim Bahr Al Olum. “I have discussed this issue before with the Saudi side,” Saudi newspaper Al Hayat quoted Al Olum as saying, as carried by Reuters on Thursday. The Iraqi Pipeline in Saudi Arabia (IPSA) has not been used to load Iraqi oil since the Iraqi invasion of Kuwait back in 1990. IPSA was laid across Saudi Arabia in the 1980s after both sides in the Iran-Iraq war attacked oil tankers in the Persian Gulf. Saudi Arabia confiscated the pipeline in 2001 in exchange for debts Iraq owed. In 2011, Iran threatened to block the Strait of Hormuz—which lies along the route of around 40 percent of the global seaborne oil exports—in retaliation to the Western sanctions. […]

Saudi’s Falih doesn’t rule out more oil cuts but kingdom won’t take unilateral action: Al Sharq

11 Aug 2017   Saudi Arabia

Saudi Arabia’s Energy Minister Khalid al-Falih does not rule out another oil production cut but stressed that the kingdom will not take any unilateral action, the Saudi-owned Al Sharq Al Awsat newspaper reported on Friday. The prospect of continued output cuts is on the table, and if any further action is needed, whether to extend or change production levels, it will be studied in a timely manner and agreed upon by all the producers, the paper cited Falih as saying.

Saudi Arabia Builds Cities in the Sand to Move Beyond Oil

9 Aug 2017   Saudi Arabia

Kingdom is developing economic and entertainment hubs Developments aim to create jobs and boost investment After relying on oil to fuel its economy for more than half a century, Saudi Arabia is turning to its other abundant natural resource to take it beyond the oil age — desert. The kingdom is converting thousands of square kilometers of sand into new cities as it seeks to diversify away from crude, create jobs and boost investment. In the past month alone, the world’s biggest oil exporter has announced two major developments — one covering an area bigger than Belgium and another almost the size of Moscow. That’s on top of plans to build a series of so-called economic cities — special zones in logistics, tourism, industry and finance, an entertainment city and a $10 billion financial district. “The overall progress with the economic cities has been very slow, even before the […]

Saudi Arabia cuts crude oil allocations in September by more than its OPEC pledge

9 Aug 2017   Saudi Arabia

Saudi Arabia will cut crude oil allocations to its customers worldwide in September by at least 520,000 barrels per day, an industry source said on Tuesday, as the top oil exporter makes good on its pledge to help rein in a global supply glut. State oil giant Saudi Aramco will cut supplies to most buyers in Asia – the world’s biggest oil consuming region – by up to 10 percent in September to comply with a producers’ deal to cut output, multiple sources with knowledge of the matter told Reuters. The wider Saudi cuts come as some doubts have emerged about the effectiveness of the OPEC-led agreement. OPEC output hit a 2017 high in July, according to a Reuters OPEC survey, led by a rise in supplies from Nigeria and Libya, which are both exempted from the cuts. The deal to curb output propelled crude prices […]

Saudi Aramco awards first contract for planned shipyard complex

9 Aug 2017   Saudi Arabia

Saudi Aramco said it has awarded the first major contract in the planned construction of a $5.2 billion shipyard complex designed to reduce Saudi Arabia’s dependence on oil exports. The national oil company said on Tuesday it awarded the contract for dredging, reclamation and marine structures to a consortium comprising Saudi Archirodon Co and Huta Hegerfeld AG Saudia Co. Aramco, which is leading construction of the shipyard, did not reveal the value of the contract but said it would be completed by 2020. Among other things, it includes building 4,500 meters of concrete quay walls and wharves, as well as breakwaters, at Ras Al Khair on the east coast.

Chinese refiners receive 5%-10% Saudi crude oil allocation cuts for Sep

9 Aug 2017   China, Saudi Arabia

Various Northeast Asian end-users saw their crude oil term allocations from Saudi Arabia slashed for September, with two South Korean refining companies receiving around 10% cuts in monthly contract volumes for light and medium sour grades, market sources said Tuesday.  South Korea’s two biggest refiners SK Energy and GS Caltex have received around 10% September allocation cuts from Saudi Aramco, but Hyundai Oilbank is expected to be given full term volume that it had requested for the month, South Korean trade sources with direct knowledge of the matter told S&P Global Platts.  The sources indicated that the reduction in crude allocations for September affected various sour grades including Saudi Arab Extra Light, Arab Light and Arab Medium.  “Luckily, [Hyundai Oilbank] did not see any notable cuts in September Saudi crude allocation because [the company] only nominated [relatively] smaller amount for the month,” a company source said.

Goldman Sachs Vies For Role In Aramco IPO

3 Aug 2017   Saudi Arabia

Goldman Sachs has bought in the secondary market part of Saudi Aramco’s US$10-billion revolving credit facility as the U.S. investment bank vies for a role in what would be the world’s biggest IPO when the Saudis list 5 percent of their oil giant next year, Reuters reported on Thursday, quoting sources familiar with the deal. Goldman Sachs is said to be following the common market practice of establishing relations with a company via a loan transaction, before entering in other deals. According to two of Reuters’ sources, Goldman Sachs bought several million dollars of Aramco’s US$10-billion revolving credit facility from Australia and New Zealand Banking Group. Saudi Aramco signed the credit facility with 27 banks in March 2015. The list of the banks that signed the original loan included American, European, Asian, and Middle Eastern banks, but not Goldman Sachs. But units of banks such as Citi, Deutsche Bank, […]

Special Rules Won’t Fly For Aramco IPO

3 Aug 2017   Saudi Arabia

The UK Institute of Directors has criticized the Financial Conduct Authority’s proposal to amend listing rules that would accommodate Saudi Arabia’s oil giant Aramco, which is planning to list 5 percent in London next year. According to the organization, which brings together business leaders from all industries, such a rule change is not justified and it might compromise London’s reputation for corporate governance. The FCA, UK’s financial markets regulator, had previously proposed a new category within its rules for premium listings, “to cater for companies controlled by a shareholder that is a sovereign country.” The aim was to convince Aramco to go for the premium, rather than the standard, listing. Aramco wants to sell just 5 percent, but under FCA rules, a company qualifies for a premium listing only if it has a minimum 25 percent free float, meaning that Aramco’s 5-percent listing would fall significantly short of qualifying—that […]

Saudi Aramco IPO Pits London Against New York

2 Aug 2017   Saudi Arabia

Saudis soon to choose foreign bourse for top oil exporter Hong Kong, Tokyo, Singapore, Toronto also vying for giant IPO Saudi Arabia aims to sell about 5 percent of Saudi Aramco in an initial public offering next year, and stock exchanges from the U.K. to Japan are vying for what may be the world’s richest IPO. The Saudi crown prince, Mohammed bin Salman, will soon decide where to sell the company’s shares after government officials heard a presentation on the listing process last week, according to people with knowledge of the matter. The kingdom plans to list on the Saudi stock exchange in Riyadh and choose to sell shares on at least one bourse outside the country. That choice pits the top global financial centers, London and New York, against each other for a sale that could value the largest oil exporter at as much as $2 trillion. Here’s […]

Saudi Arabia says calls for internationalization of holy sites ‘a declaration of war’

31 Jul 2017   Saudi Arabia

General view of the Kaaba at the Grand Mosque in Mecca, Saudi Arabia September 9, 2016. Ahmed Jadallah/File Photo DUBAI (Reuters) – Saudi Arabia’s foreign minister called Qatar’s demands for an internationalization of the Muslim hajj pilgrimage a declaration of war against the kingdom, Saudi-owned Al Arabiya television said on Sunday, although it was unclear whether Qatar had actually made any such demand. “Qatar’s demands to internationalize the holy sites is aggressive and a declaration of war against the kingdom,” Adel al-Jubeir was quoted saying on Al Arabiya’s website. “We reserve the right to respond to anyone who is working on the internationalization of the holy sites,” he said. However, it was unclear whether Qatar made the demand. It did accuse the Saudis of politicizing Hajj and addressed the United Nations Special Rapporteur on freedom of religion on Saturday, expressing concern about obstacles facing Qataris who want […]

Oil Prices Rise As Saudi Arabia Attacks The Glut

29 Jul 2017   Prices, Saudi Arabia

Back in late May, Saudi Oil Minister Khalid Al-Falih said that ‘exports to the U.S. will drop measurably ‘, as the OPEC Kingpin adjusted its focus to reducing exports to the world’s most transparent energy hub. Exports from Saudi to the U.S. take approximately seven weeks to arrive – hence, as we swiftly approach the end of July, we can see from Saudi deliveries this month that they are not just talkin’ the talk, but walkin’ the walk. We have regularly been assessing U.S. imports from Saudi Arabia here on the blog, given that production cuts should be reflecting through into lower flows . Imports in January reached nearly a three-year high, as the leading exporter from OPEC ramped up crude exports at the end of last year ahead of the January production cut. Imports remained strong through May, averaging over 1.2 million barrels per day for the first […]

Saudi Coalition Blocks Four Oil Tankers From Entering Houthi Port

28 Jul 2017   Saudi Arabia, Yemen

The Saudi Arabia-led coalition and the Yemeni government blocked four oil tankers from entering the Hudaidah port on the Red Sea, in a move that will likely worsen the health crisis occurring in the war-torn country. The Hudaidah port is currently controlled by the Houthi rebels, a Shiite militant group that is backed by Iran. The Saudi coalition is trying to contain the spread of Iranian influence in the region by fighting a proxy war for control of the Bab al Mandab strait, which controls oil traffic to the booming markets of sub-Saharan Africa. Yemen has reported over 400,000 cases of cholera in recent months. The disease is spread through polluted water, which require water pumps—which in turn require fuel to run. Oil is also required to power hospitals and other critical infrastructure. The tankers denied entrance to the port contained ten percent of Yemen’s monthly energy needs. Coalition […]

Exclusive: Saudi Aramco advisers favor London for historic IPO – sources

28 Jul 2017   Saudi Arabia

Saudi Aramco’s advisers have recommended London for the historic listing of the oil company, with U.S. disclosure rules a concern for Saudi authorities, sources familiar with the matter told Reuters. A final decision on the venue for what is expected to be the world’s biggest IPO and is targeted to raise $100 billion will be taken by Crown Prince Mohammad bin Salman, who is overseeing Saudi Arabia’s radical economic reforms, they said. Listing five percent of Aramco is a centerpiece of Saudi Arabia’s Vision 2030 plan to diversify beyond oil and financial considerations will not be the only factor in its decision, with Saudi authorities also taking the interests of shareholders and the company into account, the sources added. The advisers’ views on the […]

The Saudi Power Balance Is On A Knife-Edge

27 Jul 2017   Saudi Arabia

The sweltering heat of Saudi Arabian summer will feel like a cool breeze compared to the geopolitical fire that could soon take over the country if ongoing internal power struggles destabilize the Kingdom’s Royal Family and national security in the coming weeks. After his successful elevation to Crown Prince, Mohammed Bin Salman (MBS) has been appointed by King Salman to be in charge during his holiday to Morocco. The King’s holiday comes at a time of relative instability in the Kingdom, as the effects of the removal of former Crown Prince Mohammed Bin Nayef at the end of the Ramadan period continue to linger. King Salman’s choice to award his son the position of Crown Prince was expected, but insiders are warning that his predecessor still holds a great deal of influence. To put MBS in charge during this already very volatile period in the Gulf, as the Saudi-led […]

Saudi Arabia Growing Nervous Over OPEC Compliance

27 Jul 2017   OPEC, Saudi Arabia

OPEC officials are hoping to limit the production of both Libya and Nigeria, as fears grow that the two exempted members are undermining cuts from the rest of the cartel. Saudi Arabia is also promising to lower its oil exports in order to take more supply off of the market. Saudi Arabia’s energy minister Khalid al-Falih reportedly cut short his vacation in order to attend the OPEC monitoring meeting in St. Petersburg on Monday, an unexpected move that put more weight on the details of the gathering. His attendance suggests OPEC is worried about the pace of rebalancing in the oil market, and also raises speculation about what OPEC might do next. OPEC’s Secretary-General Mohammad Barkindo said al-Falih decided to attend because of the meeting’s “strategic importance” and because of “the high expectations of the times,” the Wall Street Journal reported. The WSJ also said that al-Falih was “very […]

Reduced Saudi oil imports lead U.S. oil inventories lower

26 Jul 2017   Saudi Arabia, USA

The Khurais oil field in Saudi Arabia. Continued low imports to the United States of Saudi crude oil is a factor in the decline in U.S. oil inventories. File Photo by Ali Haider/EPA July 25 (UPI) — Low imports of crude oil from Saudi Arabia, coupled with firm domestic petroleum demand, will likely reduce U.S. oil inventories, analysts said Tuesday. U.S. commercial oil inventories are expected to fall in the week ending July 21, analysts surveyed by S&P Global Platts said in a report. U.S. crude oil stock has fallen nearly 19 million barrels in the past three weeks, as excess surplus is reduced. The supply, as of July 14, was 26 percent higher than the five-year average, but lower than the 37 percent surplus above the five-year average seen at the start of 2017. Sabotage was reported in Nigerian crude oil production on Tuesday, which came after Nigeria […]

China, India oil imports show Saudi Arabia is already carrying the burden of cuts:

26 Jul 2017   OPEC, Saudi Arabia

Saudi Arabia wants to do more to boost crude oil prices by taking a razor to its exports, but the kingdom is already doing much of the heavy lifting in Asia, where it is surrendering market share in the world’s top importing region. Saudi Energy Minister Khalid al-Falih said after a meeting of the Organization of the Petroleum Exporting Countries (OPEC) and its allies on Monday that his country would limit crude oil exports to 6.6 million barrels per day (bpd) in August, almost 1 million bpd below levels a year ago. This commitment is belated recognition that OPEC and its non-OPEC allies, including Russia, have to do more than just comply with their November agreement to cut output by a combined 1.8 million bpd. For the output restrictions to work by draining global oil inventories, the producers will also have to curb exports. Vessel-tracking […]

No Winners in Gulf Feud as Saudi, Qatari Assets Converge on Oil

24 Jul 2017   Qatar, Saudi Arabia
No Winners in Gulf Feud as Saudi, Qatari Assets Converge on Oil

 

Investors aren’t taking sides in the biggest political crisis in the Gulf in decades because their focus has already returned to oil.  Seven weeks after Saudi Arabia led a coalition of Arab states in cutting ties with Qatar over allegations that it supports terrorism, holders of both countries’ stocks and bonds are paying almost identical risk premiums. Their five-year credit default swaps converged for the first time in two years, stocks are valued at about 13.7 times’ projected earnings over the next 12 months, and their international bonds were almost level on Monday.

The Gulf dispute remains in stalemate after Qatar denied the charges and rejected the Saudi bloc’s demands, which include rolling back ties with Iran and shutting the Al Jazeera news channel. Meanwhile, the feud is taking a back seat to oil for investors, said analysts including Saad Siddiqui at JPMorgan Chase & Co. The price of crude is languishing under $50 a barrel, far below the level many Gulf producers need to balance their budgets.

IMF Sees 2017 Saudi Growth ‘Close to Zero’ on Oil Prices, Cuts

24 Jul 2017   Saudi Arabia

Saudi Arabia’s economy will stall this year with growth “close to zero” due to lower oil revenue, the International Monetary Fund said.  The fund lowered its 2017 growth forecast to 0.1 percent from 0.4 percent, citing OPEC production cuts, uncertainty over oil prices and the structural reforms the country is undertaking to reduce its reliance on crude, it said in a statement on Friday concluding its Article IV consultation. The IMF also lowered its non-oil growth projection to 1.7 percent from 2.1 percent — compared with actual growth of 0.2 percent in 2016.  Lower oil prices and austerity measures are weighing on Saudi Arabia’s economy, which contracted in the first quarter for the first time since 2009 — illustrating the scale of the challenge facing the country’s new heir, Crown Prince Mohammed bin Salman, as he implements his blueprint for a transition away from oil dependency. Even so, the fund said it welcomed the government’s direction, which it said would help the fiscal deficit “narrow substantially in the coming years.”  “Non‑oil growth is expected to pick up this year and overall growth is expected to strengthen over the medium term as structural reforms are implemented,” the IMF board said in the statement released on Friday. It cautioned the government to monitor the impact of the fiscal measures and to “make corrections if needed.”

Saudi Arabia Turns Off the U.S. Oil Tap

24 Jul 2017   Saudi Arabia

At last, Saudi Arabia seems to be doing what it takes to reduce the world’s most visible oil glut: the one in the U.S. Unfortunately, its renewed vigor comes as OPEC’s deal to reduce excess crude stockpiles starts to show signs of unraveling elsewhere, a subject that will be wrestled with by the group’s oil ministers as they and other producer nations meet in St Petersburg on Monday. Data published last week by the U.S. Energy Information Administration show that imports from Saudi Arabia in the week to July 14 fell to their lowest for seven years: just 524,000 barrels a day. For sure, one week’s number doesn’t mean much on its own, particularly when a single very large crude tanker could raise or lower that figure by half. But this isn’t an isolated figure. The EIA data show a clear drop in deliveries from Saudi Arabia since the […]