Saudi Arabia to drive oil and gas production increases this decade as majors remain wary – Fitch

Saudi Arabia will add more crude, condensate and natural gas liquids than any other country through 2030, according to Fitch. (Reuters)
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Updated 07 August 2021

Saudi Arabia to drive oil and gas production increases this decade as majors remain wary – Fitch

  • Saudi Arabia seen increasing production by 2.24 million barrels a day between 2021 and 2030
  • Investment by IOCs will contract 3.6 percent this year

RIYADH: Saudi Arabia will lead increases in oil and gas production globally through 2030 as international energy majors remain wary of fluctuating demand and focus on short-term profit, according to Fitch Ratings.

The Kingdom will increase production of crude oil, condensate and natural gas liquids by 2.24 million barrels a day between 2021 and 2030, ahead of Iran’s 2.17 million barrels the UAE’s 1.61 million, Libya’s 1.04 million and Kuwait’s 966,000 barrels, Fitch wrote in its Oil & Gas Global Capex Outlook.

Iraq is also expected to see a considerable gain, of 691,000 barrels, while Qatar’s will be more modest, at 127,000 barrels. Bahrain and Oman will both see a contraction in output.

The bulk of Libya, Iran and Iraq’s output gains are “due to the recovery of barrels temporarily shut-in due to domestic instability (Libya) or international sanctions (Iran), or as a result of the unwinding of the OPEC+ production cut agreement (Iraq),” Fitch analysts wrote in the report. “The only markets in which we forecast substantial gains above pre-pandemic levels are Saudi Arabia, the UAE and Kuwait.”

Such was the size of last year’s oil market crash when global oil and gas capex slumped 25.9 percent to $423 billion, investment will not return to 2019 levels until 2025, Fitch said. This year will see 12.8 percent growth to $477 billion, followed by a similar-sized increase in 2022, to $505 billion.

Investment by international oil companies will contract 3.6 percent this year, to $79.35 billion before rebounding 12.6 percent in 2022 to $89.34 billion, Fitch predicts.

“Middle Eastern NOCs, at least those in the GCC, are very well placed to exploit current market conditions,” Emma Richards, a senior oil and gas analyst at Fitch told Arab News. “Because of the nature of the resource base, they can compete on the basis of both cost and carbon intensity and they’re not coming under the same regulatory pressures as companies in Europe and North America.”

“As we see greater restrictions on supply coming into force in those markets, there will be a sizeable gap for the Middle East to fill,” Richards said.

The report also looked at the energy transition with a focus on the emerging hydrogen-production industry.

While low-carbon investment by the Middle East’s national oil companies is likely to take only a negligible share of capex for the coming years, Saudi Arabia and the UAE have the opportunity to gain a first-mover advantage in the markets for clean hydrogen and ammonia, Fitch said.

Saudi Arabia ranks 8th and the UAE 7th in Fitch’s blue hydrogen index, which assesses the suitability of a given market for the development of a blue hydrogen industry.

Blue hydrogen is created from natural gas through traditional methods but the carbon is captured, while green hydrogen is produced through electrolysis of water. Hydrogen is converted to ammonia for long-distance transport before being turned back into hydrogen.

“We expect hydrogen to be a big growth market in the GCC,” Richards said. “They have a strong resource endowment, so are well-placed to 1ompete with others once the market matures.”

Saudi Arabia has been a first mover in the hydrogen and ammonia markets. Saudi Aramco partnered with SABIC on the world’s first shipment of blue ammonia to Japan in September last year.

“Over the longer run, green hydrogen is likely to dominate, but I don’t think the near-term cost advantages of blue hydrogen should be underplayed,” said Richards. It depends on the market, but where natural gas is cheap and abundant, blue hydrogen makes a lot of sense.”

Saudi eateries give tough competition to foreign outlets

Updated 25 sec ago

Saudi eateries give tough competition to foreign outlets

  • The Saudi capital has seen the birth of 288,000 square meters of new developments since 2016

RIYADH: More than two-thirds of Riyadh’s new restaurants are Saudi, dwarfing American and Lebanese influenced eateries, according to a report from real estate firm Knights Frank.

The Saudi capital has seen the birth of 288,000 square meters of new developments since 2016, when the National Transformation Plan was announced, the research says.  “The Kingdom’s capital is beginning to morph into a foodie’s treasure trove and we’re not done yet,” Faisal Durrani, head of Middle East research at Knight Frank said. 

This growth is led by homegrown restaurants and cafes, he added, with 68 percent of Riyadh’s new outlets being Saudi — 21 percent of which specialize in international cuisine. 

“American food outlets account for 16 percent of food and beverage outlets, while Lebanese restaurants are the third most prevalent at 13 percent,” Durrani said. 

The US and the UAE are the second and third largest sources of restaurant chains in Riyadh, respectively, he added.

“International brands must adapt their proposition across the full spectrum to suit demand, both in terms of operational aspects, as well as the actual menu offering itself,” said Pedro Riberio, head of retail advisory KSA at Knight Frank. The Kingdom’s capital will further benefit from upcoming tourism developments, including the Bujairi Terrace and Diriyah Gate, which the Knight Frank report said will add “15,000 sq. meters of lifestyle retail space to the capital when its 17 restaurants open their doors in 2022.”

This rapid growth and competition are putting pressure on older developments, the report indicated, with some operators struggling to keep vacancy rates and footfall up.

Saudi desalination corporation reveals environmental sustainability road map

Updated 06 December 2021

Saudi desalination corporation reveals environmental sustainability road map

  • Kingdom’s plans for improving environment, combating climate change, reaching carbon neutrality shared at global industry forum

JEDDAH: A Saudi government institution responsible for the desalination of seawater has revealed its road map to achieving environmental sustainability at a major international industry conference.

Officials from the Saline Water Conversion Corp. shared their Saudi Green Initiative action plans — aimed at improving the environment, combating climate change, and reaching carbon neutrality ­— at a recent forum in London attended by more than 90 global leaders and investors.

By taking part in the event, the SWCC not only hoped to strengthen its world leadership role in the desalination industry, but also look at ways to further reduce production costs while increasing the involvement of relevant Saudi companies and organizations in current and future projects.

Saudi Ambassador to the UK Prince Khalid bin Bandar bin Sultan was among forum delegates who heard how the corporation was focused on enhancing the use of clean energy sources in place of thermal heating systems.

Addressing the meeting, Saleh Al-Mana, the SWCC’s assistant deputy governor for technical affairs and projects, said that by reusing water and recycling filters in production systems, and developing engineering principles in technical designs for beneficiaries including the agriculture, industrial, and urban sectors, the transition to low carbon activated the circular economy.

The corporation has been working on initiatives to achieve environmental sustainability in all areas of desalination supply, from production to transportation.

At the Saudi Green Initiative forum held in Riyadh in October, the Kingdom revealed its blueprint for dealing with climate change by increasing the reliance on clean energy, protecting the environment, and offsetting millions of tons of carbon emissions annually by 2030.

The country was investigating more ways to produce, treat, and distribute water locally using energy systems that ensured sustainable growth.

The initiative aims to protect the marine environment by investing in zero liquid discharge systems, a wastewater management system that extracts salts and minerals and converts them into products of high economic value for use in the industrial sector.

Earlier this year, the SWCC set a world record for the lowest energy consuming desalination plant.

The transition to a low-carbon future will be a complex process. Alternatives will take significant time and sustained investment to meet the rising global energy demand.

Egypt to launch natural gas-powered bus fleet in 2022

Updated 05 December 2021

Egypt to launch natural gas-powered bus fleet in 2022

CAIRO: Egypt will launch its first fleet of buses powered by natural gas next year, Minister of Public Enterprise Hisham Tawfik has said.

About 70 percent of the components used in the manufacturing of the buses will be sourced locally, in cooperation with several Egyptian companies, he said.

Tawfiq said that the fleet will include buses that can accommodate 14 to 50 passengers, and that the goal of the project is to localize technology and transport production.

“Our strategy is to work in the production of environmentally friendly vehicles, whether they run on natural gas or electricity,” he added.

A delegation from the Belarusian Minsk Automobile Plant signed a contract to supply production materials for the project.

Production is expected to begin in mid-2022, with a target of 250 buses completed per year.

Tawfiq welcomed cooperation with the Belarusian side, especially in light of the distinguished relations between the two countries, which have developed significantly in recent years.


IMF likely to lower its global economic growth estimates due to omicron threat

Updated 05 December 2021

IMF likely to lower its global economic growth estimates due to omicron threat

WASHINGTON: The International Monetary Fund is likely to lower its global economic growth estimates due to the new omicron variant of the coronavirus, the global lender’s chief said at the Reuters Next conference on Friday in another sign of the turmoil unleashed by the ever-changing pandemic.
Omicron has spread rapidly to at least 40 countries since it was first reported in South Africa last week, officials say, and many governments have tightened travel rules to try to keep it out.
“A new variant that may spread very rapidly can dent confidence, and in that sense, we are likely to see some downgrades of our October projections for global growth,” IMF Managing Director Kristalina Georgieva told the conference.
Much remains unknown about omicron. Researchers said it could have picked up genetic material from another virus, perhaps one that causes the common cold, which would allow it to more easily evade human immune system defenses.
Georgieva said the fund is also looking at all of its research processes in order to ensure the its data integrity in the wake of a data-rigging scandal at the World Bank.
“Is there something more that can be done, and we are looking at all the processes — are they sufficiently up to date with what others are doing?” Georgieva said.

YouGotaGift — region’s first marketplace for digital gift cards

Updated 06 December 2021

YouGotaGift — region’s first marketplace for digital gift cards

YouGotaGift is the region’s first marketplace for digital gift cards. It is an end-to-end digital platform that connects prepaid cards from top retail brands to consumers and businesses. 

Its prepaid cards are completely digital, meaning customers can buy them online and have them delivered instantly by email or SMS. 

It works with over 700 retail brands, reaches over 5 million users and serves over 2,000 corporates.  

YouGotaGift was originally founded in 2013 in the UAE by CEO, Husain Makiya, Marketeer Abed Bibi, and Honeybee Tech Ventures (incubator), and further backed by a major regional VC, namely MEVP (Middle East Venture Partners).

It began operating in Saudi Arabia in 2014, with its first significant banking client in the Kingdom. It is now operating across the Gulf Cooperation Council and beyond with multiple offices across the region. “Our consumer business offers our global users the convenience to send personalized e-gift cards to celebrate friends, family, and colleagues,” Makiya told Arab News.

“As a fully registered Saudi company, we have massively expanded our business in the Kingdom and greatly scaled up our team on the ground over the last 18 months, spearheaded by Fawziah Al-Hoshan, as general manager,” he added.

Al-Hoshan is a Saudi woman with a decade-long career in business and HR with Saudi corporates and multinationals, including Olayan Group and Pepsico. Makiya said the Kingdom is witnessing tremendous economic growth and the emerging talent pool is highly energized to engage in new roles and career opportunities offered by such companies as YouGotaGift. 

He said YouGotAGift is the first to bring this category of gift cards to the Kingdom. “Our collection of gift cards were first incorporated by National Commercial Bank for their loyalty program LAK,” he said. “It was a pivotal move toward adding a digital redemption process for customers who were used to traditional physical products or gift cards as a reward for their loyalty toward a program.”

Since then, it has integrated with over 800 businesses in the Kingdom to digitize their rewards and incentives programs for both employees and customers.

“With Saudi Vision 2030 well on its way, tremendous efforts from the government to push digitization in every aspect of life has also contributed to a ‘never-before’ level of interest for e-gift cards amongst consumers,” he said.

Makiya explained that corporates and individual customers have both identified various ways to use these cards over the last 18 months; from traditional incentives and rewards to sending Eidiya or just helping the ones in need during the pandemic.

“It’s a clear sign that they’re here to stay,” he said. Makiya said the global gift card business is expected to cross $2 trillion by 2027, adding: "In our part of the world, we expect the eGift Card market alone to reach $1.2 billion dollars by 2024, of which at least $700 million will be attributed by the Kingdom."

“For businesses and government entities, e-gift cards are the No.1 most in-demand method to reward their employees and customers, and the adoption rate of these cards in the Kingdom outweighs that of the entire region driven by the digital transformation of Vision 2030,” he added.