Saudi Aramco announces regulatory approval of Al-Jafurah gas field

Saudi Aramco on Saturday announced the regulatory approval of the development of the Al-Jafurah unconventional gas field in the Eastern Province. (Saudi Aramco)
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Updated 22 February 2020

Saudi Aramco announces regulatory approval of Al-Jafurah gas field

  • Aramco expects field’s production to commence early 2024
  • Also expect field to produce 550,000 barrels per day

RIYADH: Saudi Aramco on Saturday announced the regulatory approval of the development of the Al-Jafurah unconventional gas field in the Eastern Province, the largest non-associated gas field in the Kingdom of Saudi Arabia to date.

A statement from the company said the field development plan was subject to usual governance process.

On the occasion, the chairman of Saudi Aramco’s board of directors, Yasser bin Othman Al-Rumayyan, expressed his thanks to Crown Prince Mohammad bin Salman.

Al-Rumayyan said the development of Al-Jafurah is expected to enhance the company’s position in the global energy sector, and help achieve its goal of being the world’s pre-eminent integrated energy and chemicals company.

Saudi Aramco president and CEO, Amin H. Nasser, also expressed his gratitude and thanks to the crown prince and to Prince Abdulaziz bin Salman bin Abdulaziz, Minister of Energy for their support.

Al-Jafurah has a length of 170km and a width of 100km, and the volume of gas resources in the field is estimated at 200 trillion cubic feet of rich raw gas, which will provide the petrochemical and metallic industries.

Aramco expects the field’s production, which will commence early 2024, to reach approximately 2.2 billion standard cubic feet per day of sales gas by 2036, with an associated approximately 425 million standard cubic feet per day of ethane, representing about 40 percent of current production. Aramco also expects the field to produce approximately 550 thousand barrels per day of gas, both liquid and condensate.

The company also plans to develop Al-Jafurah in accordance with the highest environmental standards and expects it will have a positive financial impact in the long term, which will start to show on the company’s financial results in phases concurrent to the field’s development.


Oil-rich wealth funds seen shedding up to $225 billion in stocks

Updated 30 March 2020

Oil-rich wealth funds seen shedding up to $225 billion in stocks

  • Risking more losses is not an option for some funds from oil-producing nations

LONDON: Sovereign wealth funds from oil-producing countries mainly in the Middle East and Africa are on course to dump up to $225 billion in equities, a senior banker estimates, as plummeting oil prices and the coronavirus pandemic hit state finances.

The rapid spread of the virus has ravaged the global economy, sending markets into a tailspin and costing both oil and non-oil based sovereign wealth funds around $1 trillion in equity losses, according to JPMorgan strategist Nikolaos Panigirtzoglou.

His estimates are based on data from sovereign wealth funds and figures from the Sovereign Wealth Fund Institute, a research group.

Sticking with equity investments and risking more losses is not an option for some funds from oil-producing nations. Their governments are facing a financial double-whammy — falling revenues due to the spiraling oil price and rocketing spending as administrations rush out emergency budgets.

Around $100-$150 billion in stocks have likely been offloaded by oil-producer sovereign wealth funds, excluding Norway’s fund, in recent weeks, Panigirtzoglou said, and a further $50-$75 billion will likely be sold in the coming months.

“It makes sense for sovereign funds to frontload their selling, as you don’t want to be selling your assets at a later stage when it is more likely to have distressed valuations,” he said.

Most oil-based funds are required to keep substantial cash-buffers in place in case a collapse in oil prices triggers a request from the government for funding.

A source at an oil-based sovereign fund said it had been gradually raising its liquidity position since oil prices began drifting lower from their most recent peak above $70 a barrel in October 2018.

In addition to the cash reserves, additional liquidity was typically drawn firstly from short-term money market instruments like treasury bills and then from passively invested equity as a last resort, the source said.

It’s generally a similar trend for other funds.

“Our investor flows broadly show more resilience than market pricing would suggest,” said Elliot Hentov, head of policy research at State Street Global Advisers. “There has been a shift toward cash since the crisis started, but it’s not a panic move but rather gradual.”

The sovereign fund source said the fund had made adjustments to its actively managed equity investments due to the market rout, both to stem losses and position for the recovery, when it comes.

Exactly how much sovereign wealth funds invest and with whom remain undisclosed. Many don’t even report the value of the assets they manage.

On Thursday, the Norwegian sovereign wealth fund said it had lost $124 billion so far this year as equity markets sunk but its outgoing CEO Yngve Slyngstad said it would, at some point, start buying stocks to get its portfolio back to its target equity allocation of 70 percent from 65 percent currently.

Slyngstad also said that any fiscal spending by the government this year would be financed by selling bonds in its portfolio.