Aramco CEO: Attacks had no impact on IPO plans

Attacks on the Saudi Aramco oil facility in Abqaiq on Sept. 20 sent oil prices up as much as 20 percent. (Reuters)
Updated 10 October 2019

Aramco CEO: Attacks had no impact on IPO plans

  • The oil company is on track to regain its maximum production capacity of 12 million bpd by the end of next month

LONDON: Saudi Aramco’s chief executive said on Wednesday there would be no impact on the stock market listing plans of the state oil giant after attacks on its installations last month, which he blamed on Iran.

Attacks such as those on Sept. 14, which sent oil prices up as much as 20 percent, may continue if there is no concerted international response, Amin Nasser told the Oil & Money conference in London.

The attacks targeted the Abqaiq and Khurais plants at the heart of Saudi Arabia’s oil industry, causing fires and damage and shutting down 5.7 million barrels per day (bpd) of production — more than 5 percent of global oil supply.

“An absence of international resolve to take concrete action may embolden the attackers and indeed put the world’s energy security at greater risk,” Nasser said.

“You heard the minister of foreign affairs and I think he spoke enough about (where) the attacks (are) coming from. It’s instigated by Iran for sure, there’s no doubt.”

Yemen’s Houthi group claimed responsibility for the attacks, but a US official said they originated from southwestern Iran. Riyadh blamed Tehran. Iran, which supports the Houthis in Yemen’s war, has denied any involvement.

Saudi Arabia has maintained supplies to customers at levels seen before the attacks by drawing from its huge oil inventories and offering crude grades from other fields.

Nasser added that the attacks had no effect on Aramco’s revenues because the company continued to supply customers as planned. The attacks also had “no impact on the (initial public offering) whatsoever,” he said.

Saudi Arabia is pressing ahead with plans to sell between 1 percent and 2 percent of Aramco through a local listing, which might be followed by additional share sales internationally.

Nasser said Aramco was on track to regain its maximum oil production capacity of 12 million bpd by the end of November and that October crude output stood at 9.9 million bpd.

The Kingdom’s crude oil production capacity is now 11.3 million bpd, the Saudi energy minister, Prince Abdulaziz bin Salman, said last week.

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Japan lower house passes US trade deal but auto tariffs still in limbo

Updated 19 November 2019

Japan lower house passes US trade deal but auto tariffs still in limbo

  • There is uncertainty over how much progress Japan can make in negotiating the elimination of US tariffs on its cars and car parts
  • Japan has estimated the initial deal will boost its economy by about 0.8 percent over the next 10-20 years

TOKYO: Japan’s lower house of parliament approved on Tuesday a limited trade deal Prime Minister Shinzo Abe agreed with the United States, clearing the way for tariff cuts next year on items including US farm goods and Japanese machine tools.
But there is uncertainty over how much progress Japan can make in negotiating the elimination of US tariffs on its cars and car parts, casting doubt on Abe’s assurances the deal he signed with US President Donald Trump was “win-win.”
Japan and the United States last month formally signed the limited trade deal to cut tariffs on US farm goods, Japanese machine tools and other products while staving off the threat of higher US car duties.
The government’s proposal to ratify the trade deal will next be brought to the upper house for a vote but its passage in the powerful lower house increases the chances it will come into force in January.
The deal will give Trump a success he can trumpet to voters but Abe has said it will bring as much benefit to Japan as to the United States.
Japan has estimated the initial deal will boost its economy by about 0.8 percent over the next 10-20 years, when the benefits fully kick in. It also estimated ¥212.8 billion of overall tariffs on Japan’s exports to the United States will be reduced.
But the figures were based on the assumption the United States would eliminate its tariffs on Japanese autos and auto parts — a major sticking point.
Without those tariff cuts, the reduction in overall US tariffs on Japanese goods would be a little over 10 percent of the government’s projection, according to an estimate by Japan’s Asahi newspaper and Mitsubishi UFJ Research and Consulting.
After the deal is ratified, Japan and the United States have four months to consult on further talks, and Trump has said he wants more trade talks with Japan after the initial deal.
But Japanese government sources familiar with the talks say the momentum to negotiate a deeper deal appears to have waned for now with Washington preoccupied with talks with Beijing.
“It’s unclear whether Washington seriously wants to continue trade talks,” one of the sources said.
“The question is how much time the United States can allocate for talks with Japan, even if we start negotiations. There’s limited time to conclude talks before the presidential elections.”
Japan and the United States already appear to have different interpretations of what was agreed on car tariffs.
Japan has said it has received US assurance that it would scrap tariffs on Japanese cars and car parts, and that the only remaining issue was the timing.
But Washington has not confirmed that.
US Trade Representative Robert Lighthizer has said cars were not included in the agreement, and that it was only Japan’s ambition to discuss car tariffs in the future.
A US document only said customs duties on autos and auto parts “will be subject to further negotiations with respect to the elimination of customs duties.”
“The deal was left vague on the issue of tariff cuts on Japanese auto and auto parts. Otherwise, we couldn’t have reached the agreement,” another source said.
There is also uncertainty on whether Trump will drop threats to impose steep tariffs on Japanese car imports under “Section 232” that gives him authority to do so on national security grounds.
Abe said he had got an assurance from Trump that he would not do that, though analysts say the president could always change his mind, or at least keep Japan guessing.
Opposition parties have attacked Abe for a deal they say is unfair. Critics say Trump could drag his feet on further negotiations unless he is sure he can win more concessions.
“There’s a chance Trump will put pressure on Japan on trade to appeal to his voters,” said Junichi Sugawara, senior research officer at Mizuho Research Institute. “There’s a possibility he could renew his threat over auto tariffs.”