DUBAI: Qatar Airways says it suffered a $69 million loss this year off revenue of $11.5 billion amid a boycott of Doha by four Arab nations.
The carrier made the announcement in a statement Tuesday, over a year after the boycott saw Qatar Airways locked out the airspace of Bahrain, Egypt, Saudi Arabia and the United Arab Emirates.
Qatar Airways also adjusted its profit in 2017 to $766 million off revenue of $10.7 billion.
The airline's chief executive, Akbar al-Baker, said: "This turbulent year has inevitably had an impact on our financial results, which reflect the negative effect the illegal blockade has had on our airline."
The four Arab nations are boycotting Doha in a political dispute. Mediation by Kuwait and the United States hasn't managed to stop the boycott.
Qatar Airways announces $69 million revenue loss this year
Qatar Airways announces $69 million revenue loss this year
Bank of Japan ends negative rates, farewells era of radical policy
TOKYO: The Bank of Japan ended eight years of negative interest rates and other remnants of its unorthodox policy on Tuesday, making a historic shift away from a focus of reflating growth with decades of massive monetary stimulus, according to Reuters.
While the move was Japan’s first interest rate hike in 17 years, it still keeps rates stuck around zero as a fragile economic recovery forces the central bank to go slow in any further rise in borrowing costs, analysts say.
The shift makes Japan the last central bank to exit negative rates and ends an era in which policymakers around the world sought to prop up growth through cheap money and unconventional monetary tools.
“The BOJ today took its first, tentative step toward policy normalization,” said Frederic Neumann, chief Asia economist at HSBC in Hong Kong, adding: “The elimination of negative interest rates in particular signals the BOJ’s confidence that Japan has emerged from the grip of deflation.”
In a widely expected decision, the BOJ ditched a policy put in place since 2016 that applied a 0.1 percent charge on some excess reserves financial institutions parked with the central bank.
The BOJ set the overnight call rate as its new policy rate and decided to guide it in a range of 0-0.1 percent partly by paying 0.1 percent interest to deposits at the central bank.
The central bank also abandoned yield curve control, a policy that had been in place since 2016 that capped long-term interest rates around zero.
But in a statement announcing the decision, the BOJ said it will keep buying “broadly the same amount” of government bonds as before and ramp up purchases in case yields rise rapidly.
The BOJ additionally decided to discontinue purchases of risky assets like exchange-traded funds and Japanese real estate investment trusts.
“We judged that sustainable, stable achievement of our price target came in sight,” the central bank said in a statement explaining the decision to dismantle former Governor Haruhiko Kuroda’s massive stimulus program.
With inflation having exceeded the BOJ’s 2 percent target for well over a year, many market players had projected an end to negative interest rates either in March or April.
In a sign any future rate hike will be moderate, the BOJ said in the statement that it expects “accommodative financial conditions will be maintained for the time being.”
The language compared with the more dovish guidance that was removed from the statement, in which the BOJ pledged to ramp up stimulus as needed, and keep increasing the pace of money printing until inflation stably exceeded 2 percent.
Japanese shares were volatile on Tuesday. The yen fell to almost 150 per dollar, as investors took the BOJ’s dovish guidance as a sign the interest rate differential between Japan and the US likely will not narrow much.
Markets are now focusing on Governor Kazuo Ueda’s post-meeting news conference for clues on the pace of further rate hikes.
The stakes are high. A spike in bond yields would boost the cost of funding Japan’s huge public debt which, at twice the size of its economy, is the largest among advanced economies.
An end to the world’s last remaining provider of cheap funds could also jolt global financial markets as Japanese investors, who amassed overseas investments in search of yields, shift money back to their home country.
Under previous Governor Kuroda, the BOJ deployed a huge asset-buying program in 2013, originally aimed at firing up inflation to a 2 percent target within roughly two years.
The central bank introduced negative rates and yield curve control in 2016 as tepid inflation forced it to tweak its stimulus program to a more sustainable one.
As the yen’s sharp falls pushed up the cost of imports and heightened public criticism over the demerits of Japan’s ultra-low interest rates, however, the BOJ last year tweaked yield curve control to relax its grip on long-term rates.
Oil Updates – prices slip as Russia lifts supplies, jet fuel demand stirs caution
SINGAPORE: Oil prices dipped on Tuesday due in part to the prospect of rising supply from Russia, slower-than-expected downstream demand in sectors such as jet fuel, and cautious trading ahead of the Fed’s decision on US interest rates, according to Reuters.
The Brent crude oil futures contract for May delivery slipped 15 cents to $86.74 a barrel as at 7:33 a.m. Saudi time, while US West Texas Intermediate prices fell 14 cents to $82.02. The WTI April contract, with expires tomorrow, fell 15 cents to $82.57.
Both benchmarks reached four-month highs in the previous session, buoyed by lower crude exports from Saudi Arabia and Iraq and signs of stronger demand and economic growth in China and the US.
Regarding Russia, supply concern stemming from increased exports following Ukrainian attacks on the country’s oil infrastructure continued to pressure prices downward.
“Attacks will likely reduce Russian crude runs by up to 300 kbd (thousand barrels per day), in addition to scheduled maintenance closures ... Lower primary runs, however, would lead to higher crude oil exports, helping Russia to simultaneously achieve output cuts while keeping exports flat,” JP Morgan analysts wrote in a client note.
Russia will increase oil exports through its western ports in March by almost 200,000 barrels per day against a monthly plan for 2.15 million bpd, while on a daily basis, shipments will increase by 10 percent compared to its initial plan for March, Reuters calculations showed.
Prices were weighed down by uncertainty about how US interest rates would pan out ahead of the Federal Reserve meeting on March 20 at 9:00 p.m. Saudi time.
“The market may be in consolidation mode awaiting signals on rate cuts from this week’s FOMC meeting,” said DBS Bank energy sector team lead Suvro Sarkar in an email, adding: “Oil prices are already up quite a bit over the last two weeks, factoring in higher geopolitical risk premium after the attacks on Russian refineries ... There could be some profit-taking at these levels as we doubt price movements above $85/bbl will be sustainable in near term for Brent.”
On the demand side, analysts were slightly cautious on demand growth coming from the jet fuel sector ahead of the summer traveling season in the third quarter of the year.
Global jet fuel prices are likely to be “higher by 5.4 percent over our previous forecast to $111/bbl as soft demand is expected to give way to peak summer travel and stronger prices,” BMI analysts wrote in a client note.
“However, a global economic slowdown will temper consumption of air travel and weigh on jet fuel prices limiting price upside,” they added.
China discovers 100m tonne oilfield in Bohai Sea
- Chinese state oil company raises its 2024 production target by about 8 percent
RIYADH: China’s CNOOC Ltd. has made a major oilfield discovery in the Bohai Sea, adding over 100 million tonnes of oil equivalent proved in-place volume, the state-owned oil and gas giant said on Monday.
The discovery was made at the Qinhuangdao 27-3 oilfield located in the north-central waters of the Bohai Sea, the company said in a statement. The field has been tested to produce about 742 barrels of crude oil per day from a single well, it added.
Earlier in the month, CNOOC announced the discovery of a new reserve in the South China Sea, which contains over 100 million tonnes of oil equivalent proved in-place.
The announcements come as CNOOC invests heavily in the development of China’s offshore oil and gas reserves as part of a broader push to offset declining output from aging onshore fields.
The oil and gas giant in January raised its 2024 production target by about 8 percent to a record 700 million to 720 million barrels of oil equivalent, citing higher annual capital spending, with production reaching about 675 million boe in 2023.
Industrial output
China’s factory output and retail sales beat expectations in the January-February period, marking a solid start for 2024 and offering some relief to policymakers even as weakness in the property sector remains a drag on the economy and confidence.
Monday’s data join recent better-than-expected exports and consumer inflation indicators, providing an early boost to Beijing’s hopes of reaching what analysts have described as an ambitious 5 percent gross domestic product growth target for this year.
FASTFACTS
• The discovery was made at the Qinhuangdao 27-3 oilfield located in the north-central waters of the Bohai Sea.
• The field has been tested to produce about 742 barrels of crude oil per day from a single well.
• The announcements come as CNOOC invests heavily in the development of China’s offshore oil and gas reserves.
“China’s activity data broadly stabilized at the start of the year. But there are still reasons to think some of the strength could be one-off,” said Louise Loo, China economist at Oxford Economics.
Industrial output rose 7 percent in the first two months of the year, data released by the National Bureau of Statistics showed on Monday, above expectations for a 5 percent increase in a Reuters poll of analysts and faster than the 6.8 percent growth seen in December. It also marked the quickest growth in almost two years.
Retail sales, a gauge of consumption, rose 5.5 percent, slowing from a 7.4 percent increase in December but beating an expected 5.2 percent gain.
The eight-day Lunar New Year holiday in February saw a solid return of travel, which supported revenue of tourism and hospitality sectors. That also led to a 3 percent growth in oil refinery throughput to meet strong demand for transport fuels.
Property sector
A protracted crisis in the property sector, a key pillar of the economy, remains a major concern for policymakers, consumers and investors.
Monday’s data offered little relief on that front with declines in property investment narrowing in January-February, but still far from levels of reaching stability.
The frailty of the sector was highlighted by the poor demand. Property sales by floor area logged a 20.5 percent slide in January-February from a year earlier, compared with a 23 percent fall in December last year.
Aramco CEO calls for energy transition reset during keynote speech at CERAWeek 2024
- Amin H. Nasser: ‘We should abandon the fantasy of phasing out oil and gas and instead invest in them adequately, reflecting realistic demand assumptions’
- Nasser: ‘Despite the world investing more than $9.5 trillion on energy transition over the past two decades, alternatives have been unable to displace hydrocarbons at scale’
DHAHRAN: Aramco President and CEO Amin H. Nasser today emphasized the need for a new, realistic pathway for the energy transition that includes oil and gas. In a keynote speech at CERAWeek 2024 in Houston, Texas, Nasser said the current transition strategy “is visibly failing on most fronts as it collides with five hard realities.”
These hard realities include the need to reset global efforts to meet climate ambitions, the inability of alternatives so far to displace hydrocarbons at scale, the costs associated with alternatives, energy requirements of the Global South, and the potential for further emissions reductions from hydrocarbons.
On reducing emissions from oil and gas, Nasser said: “We should abandon the fantasy of phasing out oil and gas and instead invest in them adequately, reflecting realistic demand assumptions. We should ramp up our efforts to reduce carbon emissions, aggressively improve efficiency, and introduce lower carbon solutions. And we should phase in new energy sources and technologies when they are genuinely ready, economically competitive, and with the right infrastructure.”
On the energy transition’s impact on consumers, Nasser said: “As the current transition strategy increasingly impacts the majority, not just a tiny minority, consumers around the world are sending powerful messages that can no longer be ignored. We know they want energy with lower emissions, and rightly so. But many are struggling to afford the energy they need. And they worry about ample and reliable supply, which the recent energy crisis showed is not guaranteed … Unfortunately, the current transition strategy overlooks these broader messages from consumers. It focuses almost exclusively on replacing hydrocarbons with alternatives, more on sources than on reducing emissions.”
On the demand outlook for hydrocarbons, Nasser said: “Despite the world investing more than $9.5 trillion on energy transition over the past two decades, alternatives have been unable to displace hydrocarbons at scale… Global oil demand is expected to reach an all-time high in the second half of this year … Likewise, gas remains a mainstay of global energy, growing by about almost 70 percent since the start of the century … All this strengthens the view that peak oil and gas is unlikely for some time to come.”
CERAWeek is an annual conference that gathers leaders, ministers, public-policy officials and CEOs from around the world to share insights, innovative ideas and solutions to energy, climate and environmental challenges. More than 8,000 representatives of the energy, utilities, automotive, manufacturing, policy, financial, and technology fields attend CERAWeek, which features more than 1,400 expert speakers.
Saudi Arabia’s mining sector records 138% growth in exploitation licenses
RIYADH: Saudi Arabia’s mining sector is on an impressive upswing, recording a 138 percent increase in the issuance of exploitation licenses since the implementation of the new Mining Investment Law in 2021.
The number of permits rose from eight in 2021 to 19 last year as the Saudi Ministry of Industry and Mineral Resources actively works to boost mineral production and investment.
The strategic shift is part of the Kingdom’s efforts to transform mining into a foundational industrial pillar. The Kingdom’s mineral wealth is valued at an estimated SR9.4 trillion ($2.4 trillion), according to a press release from the ministry.
Data further revealed a surge in building materials quarry licenses, which rose from 158 in 2021 to 538 in 2023, and a leap in exploration licenses, from 58 to 259 during the same period.
These increases, 241 percent and 347 percent, respectively, are propelled by strategic undertakings like the Accelerated Exploration Program initiative and more efficient licensing procedures.
Saudi Arabia’s mining sector has been expanding both locally and internationally, with significant strides being made.
In January, the Royal Commission for Jubail and Yanbu signed a memorandum of understanding with Brazilian mining company Vale for the development of an iron ore briquettes project in the Kingdom.
The MoU was signed on the sidelines of the two-day Future Minerals Forum, during which the Brazilian company disclosed its plans for the Middle East.
The deal marked a key milestone in Vale’s journey in the region, spotlighting the upcoming state-of-the-art project in the Kingdom as a crucial part of its strategy to decarbonize the steelmaking industry.
Speaking in a panel discussion titled “Making Africa, Western and Central Asia Processing and Manufacturing Hubs,” Vale CEO Eduardo Bartolomeo highlighted the technological innovations and advancements planned within the mega hub in Ras Al-Khair Industrial City.
Vale said that its participation at the forum underscored the company’s pivotal role in the region’s sustainable mining sector, adding that it demonstrated a strong alignment with the Kingdom’s Vision 2030 in an emphasis to its project in Ras Al-Khair and commitment to net-zero emissions.