LONDON: Oil prices steadied on Wednesday, supported by news of a fall in Iranian crude supplies as US sanctions deter buyers, but held back by evidence of a rise in US inventories.
Benchmark Brent crude oil was unchanged at $75.95 a barrel by 0905 GMT. US light crude was 5 cents higher at $68.58 a barrel.
Iran’s crude oil and condensate exports in August are set to drop below 70 million barrels for the first time since April 2017, well ahead of the Nov. 4 start date for a second round of US economic sanctions, preliminary trade flows data on Thomson Reuters Eikon show.
Bowing to pressure from Washington, many crude buyers have already reduced orders from Iran, OPEC’s third-biggest producer.
Although Tehran is offering steep discounts, Iran’s August crude oil and condensate loadings are estimated at 2.06 million bpd, versus a peak of 3.09 million bpd in April.
“US sanctions toward Iran are now increasingly kicking in which will help to dry up the physical crude oil market,” said SEB Markets commodities analyst Bjarne Schieldrop.
US crude inventories rose by 38,000 barrels to 405.7 million barrels in the week to Aug. 24, the American Petroleum Institute said on Tuesday.
Official US fuel inventory and crude production data will be published later on Wednesday by the Energy Information Administration (EIA).
Traders said reports of potential investment in Venezuela’s struggling oil production also affected markets. Venezuelan crude exports have halved since 2016 to below 1 million barrels per day (bpd).
To stem tumbling output, Venezuelan state-run oil firm PDVSA said on Tuesday it had signed a $430 million investment agreement to increase production by 640,000 bpd at 14 oilfields, although some analysts doubted whether this investment would go through given the instability in the country.
Despite the risk of disruption, especially from OPEC-countries like Venezuela, Iran, Libya and Nigeria, Bank of America Merrill Lynch said global supply could climb toward the end of the year.
“Heading into 4Q18, we expect rising non-OPEC oil production as supply outages abate and greenfield projects ramp up,” the US bank said. “Non-OPEC supply outages are at a 15-month high of 730,000 bpd. However, nearly half of these volumes are in the process of being restored.”
Adding to that will be new production in Canada, Brazil and the United States, which the bank said “should provide a substantial boost to non-OPEC supplies” during the second half of the year “taming upside pressures on Brent crude oil prices.”
Oil steady on lower Iran exports, rising US supply
Oil steady on lower Iran exports, rising US supply
- Iran’s crude oil and condensate exports in August are set to drop below 70 million barrels for the first time since April 2017
- Bowing to pressure from Washington, many crude buyers have already reduced orders from Iran
ACWA Power inks $400m deal to develop desalination plant in Azerbaijan
RIYADH: Saudi utility giant ACWA Power has signed a public-private partnership agreement valued at SR1.5 billion ($400 million) to develop Azerbaijan’s first large-scale Caspian Sea water reverse osmosis desalination plant.
In a Tadawul statement, ACWA Power said the agreement was signed with the government of Azerbaijan, represented by the Azerbaijan State Water Resources Agency as the public partner, and Caspian Sea Azerbaijan Project Co. in its capacity as the project company.
The development aligns with ACWA Power’s expansion strategy as it seeks to establish itself as a key global player in renewable energy, water desalination, and green hydrogen through a growing portfolio of large-scale projects at home and abroad.
In the Tadawul statement, ACWA Power stated: “The Public Private Partnership Agreement along with a series of agreements were signed to deliver Azerbaijan’s first large-scale Caspian Sea Water Reverse Osmosis Desalination Plant.”
According to the statement, the contract term spans 27.5 years, including the construction period.
The agreement covers the design, engineering, construction, financing, ownership, operation, and maintenance of the desalination plant, with ACWA Power holding a 100 percent shareholding in the project company.
The financial impact of the contracted revenues is expected to be reflected after the early commercial operation date, which will be announced at the time of financial close. The company added that no related parties are involved in the transaction.
Earlier this month, ACWA Power signed a cooperation framework agreement with the African Development Bank to enhance collaboration on power generation and water desalination projects across Africa.
Under the agreement, the two parties will work together to identify, develop, and finance sustainable energy and water initiatives, with a target investment of up to $5 billion between 2025 and 2030.
In December, ACWA Power also completed the refinancing of the Rabigh 3 Independent Water Project in Saudi Arabia’s western region.
Rabigh 3 is a seawater desalination plant with a capacity of 600,000 cubic meters of potable water per day, using reverse osmosis technology.
The company said the refinancing was executed through a capital-markets-led approach, anchored by the issuance of a long-term senior secured project bond.
