Saudi Arabia a ‘pioneer’ in energy transformation, minister tells Davos

Prince Abdulaziz bin Salman told delegates that Saudi Arabia was a 'pioneer' in many areas of clean energy production and usage, and that it had taken big steps toward diversifying its energy mix. (AFP)
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Updated 23 January 2020

Saudi Arabia a ‘pioneer’ in energy transformation, minister tells Davos

  • Prince Abdulaziz says Kingdom has a duty to play its part in the energy transformation away from fossil fuels
  • He pledges that Saudi Arabia’s entire power sector will change to gas and renewable energy by 2030

DAVOS: Saudi Energy Minister Prince Abdulaziz bin Salman mounted a strong defense of the Kingdom’s record on climate change and clean energy production at a special event during the annual meeting of the World Economic Forum in Davos.

On a panel titled, “The Future of Fossil Fuels,” with other energy industry leaders, the prince told delegates that Saudi Arabia was a “pioneer” in many areas of clean energy production and usage, and that it had taken big steps toward diversifying its energy mix.

“My job is to promote Saudi Arabia, of course, but on this issue I’m proud to do so, because we are doing it all,” he said, before outlining “clean energy” policies in detail.

“We have developed the idea of the circular carbon economy, and we are pioneers of carbon sequestration at Aramco, as well as measures on upstream and downstream efficiency. We have the lowest carbon cost in production and extraction.

“We have reduced domestic consumption and the energy intensity of our economy by many percentage points. We are converting cars to be more efficient, as well as other gadgets, to be more efficient than any in the world. And we manufacture them too,” he added.

Climate change and environmental concerns have dominated the opening two days of the Davos gathering, with fears expressed by corporate executives as well as environmental activists about what some have called an impending “catastrophe.”

Prince Abdulaziz, at his first Davos as energy minister, said that the Kingdom, as one of the world’s biggest oil producers and exporters, had a duty to play its part in the energy transformation away from fossil fuels, but had other responsibilities as well.

“We are involved in a transformative effort to combat climate change. But we will preserve our liquids (crude oil) because we owe it to the world to export our liquids. We are converting our power sector and its energy mix to a point where by 2030 I am confident we will become one of the top producers of solar energy and renewables.

“I am keen to deliver on this because I have a boss called (Crown) Prince Mohammed bin Salman who is all over me to ensure we become one of the top producers. I can make a pledge and a commitment that by 2030 we will see our entire power sector, with the exception of some remote areas, changing to gas and renewable energy,” he added.

He spoke of the embryonic nuclear industry in the Kingdom, where Saudi policymakers were seeking international partners for the peaceful use of nuclear power. “We’re also getting involved in nuclear, because we want to have all our options open.”

But he also warned about setting unrealistic targets for moving away from fossil fuels, with some environmental campaigners calling for an immediate reduction in fossil-fuel usage to cut carbon emissions and reverse climate-change trends.

“Honestly we have to be realistic. Some people say that in two years from now oil consumption would have to start coming down. Can anybody in this room say with a sensible mind how you come to that reality?” the minister said.

Also on the panel, moderated by Daniel Yergin, the eminent historian of the energy industry, were Maria Fernanda Suarez, energy minister of Columbia, Patrick Pouyanne, chairman and chief executive of French oil company Total, and Wan Zulkiflee Wan Ariffin, president and chief executive of Malaysian energy giant Pertronas.

All were united in their desire to make the global energy community more aware of and effective in dealing with climate change.

Suarez said: “Ending energy emissions is the most important challenge the energy industry can address.” The Colombian government is facing opposition over plans to develop its considerable shale oil reserves.

Colombia is also keen to move toward more gas production in place of oil, which was a transition echoed by Pouyanne and Ariffin, though there were challenges with production of liquefied natural gas against a background of rising supply and falling prices. “I think we will be oversupplied in the period 2024 to 2027 when lots of new gas projects will come on stream, so short term there will be weaker prices, but longer term there could be a step up in prices,” the Malaysian business leader said.

Pouyanne backed the Saudi view on the importance of balancing global energy demands with environmental needs. “The world needs more energy. We have a growing population and people want social and economic development. The challenge is how to produce more energy with less emissions,” he said.

Prince Abdulaziz said that it was important for more developed countries not to tell emerging economies how to conduct their energy affairs.

“This is not about promoting oil, or gas, or renewable, it is about promoting prosperity and sustainability. There is a lot of growth that needs to happen, in terms of wellbeing of the economies of Africa, Asia and elsewhere. These places need to move away from poverty toward a pattern of sustainable development and a level of industrialization. They don’t need to carry the burden of the previous industrialization. It is not fair; it is not equitable.

“I always hated the idea of top-to-bottom approaches. There is this element of condescension but (developed countries) are only attending to their own interests, and it does not address those economies at a different level of development and aspiration,” the prince added.

He said that Saudi Arabia would not be “intimidated” by activists telling it how to manage its energy policy. “We’re cool and calm in Saudi Arabia and attend to our own agenda. I have always to advise people to avoid being manipulated and intimidated.”

On the question of oil prices, he refused to be drawn into making a forecast, but hinted that the “dark, pessimistic time” was lifting after the attacks on Saudi Aramco oil facilities last September.

“Since when have we seen a market where an entire country’s oil production has virtually come to a halt, and we see prices come down? It only happened because when we have Opec+,” he said, in reference to the agreement between oil exporters led by Saudi Arabia and Russia to limit crude output.

He noted that on the supply side, Libyan worries, Middle East tensions and American shale oil output would dominate oil market thinking in 2020.


ADNOC boosts size of drilling unit IPO to $1.1bn

Updated 22 September 2021

ADNOC boosts size of drilling unit IPO to $1.1bn

DUBAI: State oil giant Abu Dhabi National Oil Co. (ADNOC) has increased to 11 percent of share capital the size of the initial public offering (IPO) of its drilling unit, ADNOC Drilling, because of oversubscription, the firm said on Wednesday.

ADNOC had previously targeted a minimum stake of 7.5 percent in the IPO of ADNOC Drilling, at 2.3 dirhams ($0.6262) per share.

In a statement it said the price had not changed but the number of ordinary shares offered was raised to 1.76 billion from 1.2 billion, which would correspond to a $1.1 billion transaction, according to Reuters calculations.

“The new offering size was determined by ADNOC, as the selling shareholder, based on significant investor demand and the considerable oversubscription across all tranches,” it said.

“The enlarged offering will enable a broader investor base to obtain exposure to ADNOC Drilling’s highly attractive value proposition.”

ADNOC will continue to own an 84 percent majority stake in the unit, while Baker Hughes will retain its 5 percent shareholding.

The IPO subcription period will end on Thursday for United Arab Emirates retail investors and on Sunday for domestic and international institutional investors.

Listing is expected on or around Oct. 3, ADNOC said.


Saudi group wins Subway master franchise deal in UAE

Updated 22 September 2021

Saudi group wins Subway master franchise deal in UAE

  • In Europe, Middle East, and Africa, Subway plans to double its number of restaurants across the region in the coming years

DUBAI: Saudi Arabia’s Kamal Osman Jamjoom Group on Tuesday signed a master franchise agreement with Subway in the UAE as the restaurant brand seeks to expand its footprint in the region.

The deal marked the start of a new chapter for Subway in the UAE as it seeks to expand its footprint and remain competitive in the market.

“Subway is making bold and impressive changes to continue to grow its presence in markets around the world,” said Hisham Al-Amoudi, Group CEO of Kamal Osman Jamjoom Group.

“As Subway continues to expand internationally, we are focused on attracting well-established, large-scale operators in regions where they can leverage market expertise to help our brand thrive,” said CEO John Chidsey.

Established in 1987, Kamal Osman Jamjoom Group is a major franchise industry player in the Middle East with 675 stores across seven countries, making it one of the largest franchise networks in the region. They are a valued partner to some of the world’s most iconic brands, such as The Body Shop, LEGO, and Early Learning Center.

The group’s “deep knowledge of the Middle East and experience strengthening and expanding other global franchisee brands makes them the ideal partner in the UAE,” Mike Kehoe, EMEA president at Subway.

In Europe, Middle East, and Africa, Subway plans to double its number of restaurants across the region in the coming years and will continue to seek strong partners to support the brand on its journey.

The agreement will enable significant growth in the UAE in the coming years  including accelerated deployment of restaurant remodels — featuring a new, modern “Fresh Forward” design — as well as improved, consistent guest experiences, both on- and off-premise.


France’s OVHCloud takes first step toward IPO and hopes to raise around $470m

Updated 20 September 2021

France’s OVHCloud takes first step toward IPO and hopes to raise around $470m

  • OVHCloud hopes the IPO will “accelerate its growth trajectory and consolidate its European leadership position while continuing to expand in North America and Asia”

PARIS: French cloud computing services provider OVHcloud said it was hoping to raise 400 million euros ($468.64 million) via the issuance of new shares as part of a planned initial public offering (IPO) on the Paris stock market.
OVHCloud hopes the IPO will “accelerate its growth trajectory and consolidate its European leadership position while continuing to expand in North America and Asia,” the company said, as it released its IPO registration document.
The family-owned company added on Monday that it was targeting a revenue growth of 10-15 percent for 2022 and an organic revenue growth rate in the mid-twenties by 2025.
These growth targets would be achieved while maintaining an adjusted EBITDA (earnings before interest, tax, depreciation and amortization) margin in line with the fiscal 2020 level.
No dividend payments were anticipated in the mid-term with cash-flows expected to be re-invested in line with the company’s accelerating growth trajectory, it added.
Following the IPO, the Klaba family will retain a substantial majority stake in OVHcloud.
The company had initially announced its IPO plans in March, two days before a major blaze destroyed one of its data centers in eastern France — a disaster that had raised concerns about its capacity to go public.
In June, OVHCloud re-committed to an IPO but provided no timetable.


ACWA Power bets big on Uzbekistan growth

Updated 19 September 2021

ACWA Power bets big on Uzbekistan growth

  • ACWA has invested about $1.2 billion in Uzbekistan thus far
  • ACWA plans to contribute to $100 million Uzbekistan fund

MOSCOW/RIYADH: In the crowded corridors of the Hilton Tashkent City, ACWA Power Chairman Mohammad Abunayyan talks quietly with key delegates of the Islamic Development Bank’s annual meeting in Uzbekistan, who approach him one after another.

Abunayyan, a lean, middle-aged, intelligent-looking man is celebrating with the bank's officials the launch of the $100 million Economic Empowerment Fund for Uzbekistan earlier this month. 

ACWA Power is planning on becoming one of the Saudi investors that will make up 45 percent of the fund, which is also being financed with money from the Islamic Development Bank and the Uzbek government.

ACWA’s contribution would be the latest in a long line of investments in the Central Asian nation, where the utility now has assets worth $4.6 billion having invested about $1.2 billion, according to the prospectus for its initial public offering that was launched earlier this month.

Although that is less than one tenth of the SR248 billion ($66 billion) of assets ACWA has accumulated globally since it was established in 2004 with what Abunayaan describes as a small equity investment. Abunayaan joined the board in 2008.



Beyond its home market in Saudi Arabia, ACWA also owns assets in Oman, UAE, Bahrain and Jordan.

Still, Uzbekistan is an important market for ACWA Power.

In 2020, the company was awarded three projects: Sirdarya Combined-Cycle Gas Turbine (CCGT) independent power producer (IPP) with 1,500 MW of gross contracted power capacity; the 500 MW Bash Wind IPP; and the 500 MW Dzhankeldy Wind IPP.

The company’s fourth and largest Uzbek asset in Uzbekistan is the Karakalpakstan 1,500 MW Wind IPP project, valued at $2 billion. The Karakalpakstan, Bash and Dzhankeldy projects are at advanced stages of development and Sirdarya IPP is under construction.



ACWA Power’s investments in Uzbekistan represent a sizeable chunk of total foreign direct investment (FDI) that the country has received in recent years.

“Uzbekistan attracted $2 billion in FDI in 2020 and targets another $5 billion this year,” Atabek Nazirov, director general of the Direct Investment Fund of Uzbekistan, told Arab News on the sidelines of the IDB’s two-day conference on Sept. 3.

Such investments mean a long-term relationship between ACWA Power and Uzbekistan.

“[In our projects] we need to lay the foundation for a long-term partnership, this is a relationship that lasts for 20, 25, 30 years,” Tom Teerlynck, executive vice president of ACWA Power, said during a panel discussion organized by the Islamic Corporation for Insurance of Investments and Export Credits.

“The early years go very smoothly because everybody is happy — agreements signed, infrastructure is being built, the services being provided,” he said. “But problems come in later when people in ministries or private companies change. So, it’s very important to lay very robust foundations.”

Uzbekistan officials are confident that ongoing reforms will propel economic growth, despite the global shock caused by COVID-19.

“In 2020, Uzbekistan was the only economy in the Central Asia region that did not have a negative gross domestic product [GDP],” said Direct Investment Fund of Uzbekistan’s Nazirov. “We were able to achieve just above 1 percent growth.”

The government is forecasting economic growth of 6.5 percent this year although that is a conservative scenario and it is hoping for closer to 7 percent, Ilhom Norkulov, Uzbekistan’s deputy minister of economic development and poverty reduction, told Arab News at the IDB meeting.

“For the next five years our target is to increase GDP to $100 billion so we are working to create conditions for the economy to grow 6-7 percent a year,” he said.

However, Uzbekistan’s economy is facing tailwinds in the form of a high inflation rate – expected at 10-11 percent this year – unemployment of 10.5 percent in 2020 (up from 5.8 percent in 2017) and a decline in average monthly wages to a low of $226 in the fourth quarter of 2018 from a peak of $415 in 2016, but back to $280 in the second quarter 2021, according to official data.

Government officials say they are fully aware of the issues, and maintaining economic reforms and income growth should ease the employment and wage conditions over the long run.


Lebanon’s soaring inflation led by 250 percent jump in fuel costs amid currency slump

Updated 18 September 2021

Lebanon’s soaring inflation led by 250 percent jump in fuel costs amid currency slump

  • Lebanese CPI jumped 123 percent in the year to July 2021
  • Food and non-alcoholic beverages prices rose 248 percent

DUBAI: Lebanese residents were forced to pay more than double for consumer goods in July compared with a year earlier as prices soared amid a partial lifting of fuel subsidies and a record plunge in the local currency.

The latest data from Lebanon’s Central Administration of Statistics shows the consumer price index leaped 123 percent year-on-year last month as officials struggled to contain an economic meltdown the likes of which have not been seen since the end of the country’s 1975-1990 civil war.

The biggest contributor to surging prices has been the cost of transportation, which soared by 253 percent from July 2020, reflecting the rise in fuel costs after the previous government priced gasoline at the exchange rate of 3,900 pounds to the dollar in June. Two months later, the central bank began providing fuel importers with dollars at an exchange rate of 8,000 pounds to the dollar.

The Lebanese pound has been officially pegged at 1,507.5 pounds to the dollar since 1997, but is worth a lot less on the black market. Following the resignation of former Prime Minister-Designate Saad Hariri in July, it plummeted to a record 24,000 per dollar.

This pushed prices of food and non-alcoholic beverages up by 248 percent in the year to July 2021, while health care services rose by 178 percent. Prices at restaurants and hotels grew 246 percent and clothing and footwear prices almost doubled.

The formation of Najib Mikati’s government last week, following a 13-month political vacuum, provided Lebanese with slight reprieve.

The pound stabilized at around 14,000 to the dollar on Thursday amid the new government’s pledges for reforms and a resumption of talks with the International Monetary Fund (IMF) which had hit a dead-end following bickering over the size of the banking sector’s losses.

Reforms demanded by the international community include a forensic audit of the central bank’s accounts and a restructuring of the banking sector.

On Thursday, a meeting took place at the Economy Ministry with the president of the syndicate of supermarket owners and the president of the syndicate of food importers to discuss lowering the prices of goods.

The meeting touched on a new pricing mechanism for goods in the wake of the Lebanese pound’s surge, with new economy minister Amine Salam saying that ” both unions have committed to start reducing the prices of commodities.”

“The ministry will not tolerate this issue and will be strict in monitoring price,” he said.