Oil giants are far apart on eve of crucial output talks

The oil price, which has rebounded from lows this week after the intervention of US President Donald Trump, gave few clues to the market’s view. (Reuters)
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Updated 09 April 2020

Oil giants are far apart on eve of crucial output talks

  • Saudi Arabia, Russia believe deal can be done but ‘significant bridges’ must be crossed[

DUBAI: Big oil producers are divided over the way forward on the eve of two days of “virtual” talks aimed at rebalancing the global market.

Industry sources in Saudi Arabia and Russia told Arab News on Tuesday they were still hopeful of an agreement to cut oil output at a meeting on Thursday of OPEC and non-OPEC members, the so-called OPEC+ group.

But they said issues remained to be resolved, and a full agreement may be delayed until after Friday’s meeting of G20 energy ministers under the Saudi presidency.

The oil price, which has rebounded from lows this week after the intervention of US President Donald Trump, gave few clues to the market’s view. Trading in Brent crude, the Middle East benchmark, was quiet until a late surge of nearly 4 percent to nearly $34 a barrel.

Trump has said he “expected” cuts in oil output of up to 15 million barrels a day, but most experts believe that is impossible, even if US producers join in.

Reports from Moscow suggested Russia was considering cuts of 1.6 million barrels a day, but President Vladimir Putin’s spokesman said there were significant differences to be bridged before a deal could be done, especially with regard to US involvement.

“There are different concepts and they cannot be equated,” he said. “The natural decline in US oil production cannot be compared with reductions to stabilize oil markets.” US producers have slashed capital expenditure and oil output in the face of plunging global demand.

The Texas oil and gas regulator, Ryan Sitton, said US producers were likely to “organically” cut 4 million barrels of oil per day over the next three months, but cuts of 20 million barrels were needed from OPEC+ countries. Industry experts said this was unlikely.

“Trump has made a big mistake by blaming Saudi Arabia and Russia. He will be shocked when oil prices remain low even if we have a 10 million barrel cut,” said Anas Al-Hajji, managing partner of Texas oil consultancy Energy Outlook Advisers.  

JP Morgan, the big US bank with a long-standing relationship with Saudi Arabia, said the most it expected from the OPEC+ talks was a commitment to cut 4.3 million barrels a day.

“The Saudis want to keep pressure on oil prices in order to gain a larger market share and concessions from Washington,” the bank said.

Influential energy expert Daniel Yergin predicted cuts of 10 million barrels, including America’s “natural decline.”

“The collapse in world oil demand and low prices are driving large spending cuts among oil companies around the world. The largest cuts in percentage terms so far are coming from north America,” he said.

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SABIC posts net profit of SR1.09 billion in third quarter

Updated 25 October 2020

SABIC posts net profit of SR1.09 billion in third quarter

  • SABIC’s ongoing fight to help the world overcome the pandemic continued playing a central role this quarter as part of the company’s global CSR program

RIYADH: Saudi Basic Industries Corp. (SABIC) on Sunday reported a 19 percent increase in its third quarter earnings as compared to the previous quarter.

The company’s revenue for the third quarter of the current fiscal year reached SR29.3 billion ($7.81 billion). SABIC recorded a net profit of SR1.09 billion.

Earnings before interest, taxes, depreciation and amortization (EBITDA) at SR5.67 billion also represented a 62 percent increase quarter over quarter and a 26 percent decrease as compared to Q3 of the previous year.

Income from operations amounted to SR2.1 billion, which was reportedly higher than the loss from operations of SR1.26 billion in the previous quarter and lower than the profit from operations in the third quarter of 2019.

However, the revenues plunged by 11 percent year-on-year due to the coronavirus disease (COVID-19) pandemic.

Yousef Al-Banyan, SABIC vice chairman and CEO, said: “The third quarter of 2020 benefited from an improvement in economic activity and an increase in oil price, which translated into higher product prices. During this time, the strength of our global supply chain continued to allow us to meet the challenges facing the global economy, while our business and operational performance continued to demonstrate resilience. This reflected in higher sales volumes and improved margins in the third quarter of 2020.”

He said faced with the pandemic, the whole world had to adapt to a "new normal."

“We recognize the important role that the chemical industry plays in the recovery of the global economy and our role within that. As the road to recovery continues, we will remain focused on protecting the health and welfare of our employees, supporting the business requirements of our customers, and collaborating with governments and health authorities around the world,” the CEO said.

The third quarter also saw SABIC commence the implementation phase of its alignment as the chemical arm of Saudi Aramco, positioning it well to achieve long-term growth and to create and deliver value for its stakeholders.

Al Benyan said: “The portfolios of SABIC and Saudi Aramco complement one another, and we are both global organizations with a deep understanding of the worldwide marketplace. Together, we have embarked on a new journey based on shared values. We share the responsibility of defining the path of both companies and realize the vital importance of creating and delivering value for our shareholders.”

The reporting period witnessed numerous examples of SABIC’s ongoing collaboration with its partners to deliver sustainable solutions.

In September, Aramco, SABIC and the Institute of Energy Economics, Japan, demonstrated the successful production of blue ammonia and the world’s first shipment of the product from Saudi Arabia to Japan. Another major milestone was reached through a groundbreaking initiative with Spanish energy leader Iberdrola to transform its polycarbonate facility in Cartagena, Spain, into the world’s first large-scale chemical production site to run entirely on renewable power.

During the same month, SABIC partnered with a leading UK supermarket chain, Tesco, to conduct a trial proving that soft plastic — that would typically go to waste — can be recycled multiple times into new food grade plastic as part of a closed loop recycling system.

SABIC’s ongoing fight to help the world overcome the pandemic continued playing a central role this quarter as part of the company’s global CSR program. To date, the company has delivered 191 global programs in 22 countries, aimed at reaching over 32 million beneficiaries.

In Saudi Arabia, SABIC’s NUSANED initiative has supported local industry development and SABIC’s localization agenda. It also signed a SR37 million JV deal to manufacture sustainable wood plastic composites.