LAUNCESTON, Australia: Saudi Aramco probably won few friends among Asian refiners when it defied expectations and raised the official selling prices of its crude oil grades for February cargoes.
The increase was the third in a row of increases that have contributed to a cut in refining margins in region, which takes about two-thirds of the crude shipped by Aramco.
If there is a silver lining to the cloud of higher prices for refiners, it's that OSPs could be lowered from March, assuming that current market trends continue.
Saudi Aramco increased the premium on its main Arab Light grade to $ 3.45 a barrel over regional benchmark Oman/Dubai crude for February, up from $ 3.30 in January.
The heavy grade was raised to a discount of $ 1.10 a barrel in February from January's bigger $ 1.40 discount.
Both price increases were outside the expectations of traders surveyed by Reuters before the Jan. 4 announcement, with a medium forecast of a rise of 10 cents a barrel for Arab Light, and a 25-cent widening in the discount of Arab Heavy.
Aramco doesn't disclose its thinking for movements in OSPs, but one possible reason the prices were raised when the market was expecting a reduction is that Dubai crude's discount to Brent widened considerably in December.
As Aramco is believed to try and keep prices more or less the same for customers in various regions, a widening of the Dubai-Brent exchange for swaps would seem to justify increasing the OSPs for Asia while cutting them slightly for Europe.
Brent was $ 5.20 a barrel higher than Dubai on Jan. 7, which represents a gain of 37 percent since the $ 3.83 on Dec. 7 last year.
But the premium has narrowed from $ 5.40 a barrel on Jan. 2, a trend that could continue, given the adequate supplies of light crude globally and economic weakness in Europe, a major consuming centre.
The end of the current cold weather in North Asia, which has boosted demand for kerosene, and the start of refinery maintenance season, may also combine to curtail demand for heavier crude grades in coming months.
This will encourage Aramco to lower OSPs in a bid to keep volumes healthy.
Lower refining margins will also eventually encourage lower OSPs, especially if refiners are able to switch to alternative, cheaper crudes.
Abu Dhabi National Oil Co. and Yemen cut their OSPs, Qatar trimmed its retroactive price for December, while Iran and Iraq have yet to release their prices for Asia.
However, while Saudi Arabia is the biggest supplier to Asia, other crude producers will be keen to sell extra cargoes if they are able to undercut Aramco's prices, even by a small margin.
Refining margins in Asia have recovered slightly in recent days to stand at around $ 7.18 a barrel over Dubai crude, Reuters data shows.
This is up from the average of $ 6.02 a barrel for the past 15 days, but still 3.2 percent below the 365-day moving average of $ 7.42.
Also, margins are now being supported by the demand for kerosene for heating out of Japan, which has boosted middle distillates such as jet fuel.
This means margins are likely to come under pressure again, once the winter demand eases.
Another factor that may lead to a lowering of the Saudi OSPs is the narrowing backwardation of Dubai crude.
The first to second month spread was 44 cents a barrel on Jan. 7, less than half the $ 1.01 it was at the end of October last year.
The easing of the backwardation suggests the premium buyers are willing to pay for immediate cargoes is easing, a sign strong demand seen recently may be easing.
Pulling together the various market signals presents a picture of current robust Asian crude demand easing slightly in coming months as winter ends and refineries go into maintenance.
Against this there is stronger economic growth, especially in China, as a bullish factor for crude demand in the region.
However, on balance, it seems fair to expect that the increase in Saudi OSPs in February won't be repeated in March.
— Clyde Russell is a Reuters market analyst. The views expressed are his own.
Asia refining margins likely to come under pressure
Asia refining margins likely to come under pressure
Mideast sets record in renewable energy capacity, Saudi Arabia reaches 2.6 GW: IRENA
RIYADH: Renewable energy capacity in the Middle East soared to a record high in 2023, with the addition of 5.1 gigawatts, marking a 16.6 percent increase from the previous year.
According to the latest data released by the International Renewable Energy Agency, this new addition brought the region’s total renewable energy capacity to 35.54 GW, with Saudi Arabia accounting for 2.68 GW.
The data showed that global green power capacity reached 3,870 GW in 2023, marking a 13.9 percent increase over the previous year. This represents the largest surge in sustainable energy capacity to date, with the addition of 473 GW.
Green sources constituted a record-breaking 86 percent of global power additions, primarily driven by substantial expansions in solar and wind energy.
Solar power alone contributed nearly three-quarters of renewable additions, totaling a record 346 GW, while an additional 116 GW of wind energy was incorporated, the report added.
Francesco La Camera, director general of IRENA, said: “Despite these unprecedented renewable additions in 2023, the world is still falling short of what is required to achieve the goal adopted at COP28 to triple installed renewable power capacity by 2030 to reach 11 TW.”
With one less year to meet the goal, he emphasized that the world now requires additions of approximately 1,050 GW each year for the remainder of this decade to align with the World Energy Transitions Outlook scenario and maintain a trajectory toward limiting global warming to 1.5 degrees Celsius.
The growth of sustainable energy is unevenly distributed globally, with Asia leading the expansion with a 473 GW increase, primarily propelled by China’s 63 percent surge to 297.6 GW. This highlights a notable discrepancy with other regions, particularly developing countries. While Africa saw some growth, it was modest at 4.6 percent, reaching 62 GW.
By the end of 2023, Camera said, renewable energy sources comprised 43 percent of the global installed power capacity.
“Yet, as we draw closer to a world in which renewable energy accounts for half of total capacity, many energy planning questions still need to be addressed to establish renewables as the most significant source of electricity generation - including in the context of grid flexibility and adaptation to variable renewable power,” he added.
ACWA Power signs $800m water purchase agreement with Senegal
RIYADH: Saudi energy giant ACWA Power has signed an SR3 billion ($800 million) agreement with Senegal’s Ministry of Water to develop a desalination plant.
The company, partly owned by the Public Investment Fund, announced the inking of a water purchase agreement for the construction of the facility in Dakar, Senegal in a statement on the Saudi Stock Exchange, Tadawul.
ACWA Power will be responsible for the infrastructure, design and financing as well as construction, operation and maintenance of the Grande Cote seawater desalination plant in the West African country.
The project will have a production capacity of 400,000 cubic meters per day, the statement said.
NEOM CEO lands in top 3 of Forbes’ Real Estate Leaders list
RIYADH: NEOM CEO Nadhmi Al-Nasr has been ranked third in Forbes Middle East’s “Most Impactful Real Estate Leaders” list, underlining the Kingdom's prominence in the sector.
The giga-project chief was placed beneath Mohamed Al-Abbar from the UAE-based Emaar Properties, and Talal Al-Dhiyebi from Abu Dhabi-headquartered Aldar Properties.
The Kingdom saw the second most entries on the list, with 23 Saudis landing on the publication’s ranking.
This is a testament to the major investments the nation has made in its real estate sector, a statement from Forbes noted.
“Governments, corporates, and semi-government developers are investing in real estate projects throughout the region, particularly in Saudi Arabia, Egypt, and the UAE. These projects are giving a huge boost to the regional construction sector, which also has a positive outlook over the next few years,” the statement said.
UAE, Japan to develop industrial steam and electricity cogeneration plant in Saudi Arabia
Abu Dhabi National Energy Co., also known as TAQA, together with JERA Co., Inc, Japan’s largest power generation company, announced Thursday that they have entered into a Power and Steam Purchase Agreement with Saudi Aramco Total Refining and Petrochemical Co., or SATORP, a joint venture company owned by Saudi Aramco and TotalEnergies.
According to the Emirates News Agency, they will develop a greenfield industrial steam and electricity cogeneration plant that will produce electricity and steam for the Amiral petrochemical complex to be developed in Jubail in the Eastern Province of Saudi Arabia.
The Amiral petrochemical complex is expected to house one of the largest mixed-load steam crackers in the Arab Gulf region.
The Amiral cogeneration plant will include state-of-the-art power and steam generation systems, gas and water receiving systems, and gas-insulated switchgear interconnections while meeting stringent efficiency standards imposed by the Saudi Energy Efficiency Centre.
The project also provides for the future installation of a carbon dioxide capture plant and is capable of hydrogen cofiring, WAM reported.
The Amiral cogeneration plant will be developed by a special purpose entity owned by TAQA, holding 51 percent, and JERA, holding 49 percent. It will operate on a build, own, and operate basis for 25 years, with the possibility of extension by five years upon mutual agreement.
TAQA and JERA will also undertake the operation and maintenance of the plant through an O&M special purpose entity.
Farid Al Awlaqi, CEO of TAQA Generation, said: “The signing of the offtake agreements for the cogeneration power and steam project at the Amiral petrochemical facility, a key downstream project being developed by two of the world’s leading energy companies, demonstrates the confidence in TAQA’s ability to deliver critical utilities, including power and steam effectively.
Together with our partner JERA, TAQA is looking forward to developing an efficient cogeneration plant that reduces carbon emissions and supports SATORP with its long-term decarbonization program. The agreement will bolster TAQA’s efforts in building on our growth and executing our 2030 goals.”
Steven Winn, chief global strategist of JERA, said: “We will be providing stable, highly efficient, clean and reliable power and steam to our customer SATORP. The Amiral Cogeneration plant will not only enhance the Amiral Complex’s operational efficiency, but also demonstrate our commitment to environmental stewardship and our growth ambitions for sustainable power generation solutions in the Kingdom of Saudi Arabia and the region.”
Saudi media giant SRMG’s revenue grows to $997m
RIYADH: Saudi Research and Media Group’s revenues hit SR3.74 billion ($997 million) in 2023, reflecting a 0.98 percent increase compared to 2022 figures.
According to a Tadawul statement, this increase in sales is primarily attributed to enhanced revenue generated by the publishing and visual and digital content segment, as well as other divisions.
However, the printing and packaging business witnessed a decline in revenues due to several planned projects not being secured.
The total shareholders’ equity for the parent company, after excluding non-controlling interest, as of Dec. 31, 2023, stands at SR3.08 billion, reflecting a 16.26 percent increase compared to the corresponding period a year earlier.
Meanwhile, SRMG’s net profits reached SR559 million by the end of last year, showing a decrease of 13.74 percent compared to the same period in 2022.
The decline was primarily attributed to the drop in revenue of the printing and packaging division, along with the goodwill impairment associated with the same segment, in addition to the operating costs of certain projects.
In January, SRMG, the largest integrated media group from the Middle East and North Africa region, announced the appointment of several new editors-in-chief, deputy editors-in-chief, and assistant editors-in-chief.
This announcement aligned well with SRMG’s digital transformation, growth, and expansion strategy, showcasing the group’s dedication to cultivating the next generation of journalists and media professionals to meet the demands of audiences worldwide.
Moreover, this decision reflected the significant shift in regional media consumption habits, particularly with the increasing popularity of digital, social, and audio-visual media platforms.