LONDON: Britain will provide $2 billion in credit guarantees to Saudi Aramco so it can buy British goods and services more easily, but denied it was part of efforts to persuade the energy giant to list its shares in London.
The loan agreement comes as London Stock Exchange, with backing from British Prime Minister Theresa May, competes to host part of Saudi Aramco’s initial public offering (IPO), which is expected to be the biggest float ever.
“This builds on previous support for UK exports as part of Saudi Aramco joint venture projects,” the government said in a statement on Thursday, while a spokesman for Britain’s finance ministry said the guarantees were not part of the country’s attempt to secure the IPO for London.
Saudi officials have said domestic and international exchanges, including New York, London, Tokyo and Hong Kong, have been considered for a partial listing of the state-run firm.
Britain’s financial regulator has proposed new rules to allow sovereign-controlled entities such as Saudi Aramco to have their own ‘premium listing’ category while being exempt from requirements such as how much of a company has to be floated.
The British government and the City of London are keen to win the listing as a boost to the country’s capital markets just as Britain is preparing to leave the EU.
However, some fund managers oppose the proposals, which they say would erode the rights of minority investors.
“(Britain’s government) guaranteeing a loan to Aramco would be a further lurch in descent to mercantilism,” Nick Macpherson, who was a top civil servant at the finance ministry until last year and is now chairman of C. Hoare and Co. private bank, said on Twitter.
Crown Prince Mohammed bin Salman said last month that the IPO, part of an ambitious plan to diversify the Saudi economy beyond oil, was on track to go ahead in 2018.
The $2 billion facility is being finalized by UK Export Finance, a ministerial department which works to increase British exports by providing finance to overseas buyers of the country’s goods and services.
Britain to provide Saudi Aramco with $2bn credit guarantees
Britain to provide Saudi Aramco with $2bn credit guarantees
European gas prices soar almost 50% as Iran conflict halts Qatar LNG output
- Analysts warn prolonged disruption could push prices higher
- Some shipments of oil, LNG through Strait of Hormuz suspended
- Benchmark Asian LNG price up almost 39 percent
LONDON: Benchmark Dutch and British wholesale gas prices soared by almost 50 percent on Monday, after major liquefied natural gas exporter Qatar Energy said it had halted production due to attacks in the Middle East.
Qatar, soon to cement its role as the world’s second largest LNG exporter after the US, plays a major role in balancing both Asian and European markets’ demand of LNG.
Most tanker owners, oil majors and trading houses have suspended crude oil, fuel and liquefied natural gas shipments via the Strait of Hormuz, trade sources said, after Tehran warned ships against moving through the waterway.
Europe has increased imports of LNG over the past few years as it seeks to phase out Russian gas following Russia’s invasion of Ukraine.
Around 20 percent of the world’s LNG transits through the Strait of Hormuz and a prolonged suspension or full closure would increase global competition for other sources of the gas, driving up prices internationally.
“Disruptions to LNG flows would reignite competition between Asia and Europe for available cargoes,” said Massimo Di Odoardo, vice president, gas and LNG research at Wood Mackenzie.
The Dutch front-month contract at the TTF hub, seen as a benchmark price for Europe, was up €14.56 at €46.52 per megawatt hour, or around $15.92/mmBtu, by 12:55 p.m. GMT, ICE data showed.
Prices were already some 25 percent higher earlier in the day but extended gains after QatarEnergy’s production halt.
Benchmark Asian LNG prices jumped almost 39 percent on Monday morning with the S&P Global Energy Japan-Korea-Marker, widely used as an Asian LNG benchmark, at $15.068 per million British thermal units, Platts data showed.
“If LNG/gas markets start to price in an extended period of losses to Qatari LNG supply, TTF could potentially spike to 80-100 euros/MWh ($28-35/mmBtu),” Warren Patterson, head of commodities strategy at ING, said. The British April contract was up 40.83 pence at 119.40 pence per therm, ICE data showed.
Europe is also relying on LNG imports to help fill its gas storage sites which have been depleted over the winter and are currently around 30 percent full, the latest data from Gas Infrastructure Europe showed. In the European carbon market, the benchmark contract was down €1.10 at €69.17 a tonne
