Putin bans Russian oil exports to countries that impose price cap

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Updated 27 December 2022
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Putin bans Russian oil exports to countries that impose price cap

  • G7, EU, and Australia agreed this month to a $60-per-barrel price cap on Russian seaborne crude oil effective from Dec. 5

MOSCOW: President Vladimir Putin on Tuesday delivered Russia’s long-awaited response to a Western price cap, signing a decree that bans the supply of crude oil and oil products from Feb. 1 for five months to nations that abide by the cap.
The Group of Seven major powers, the European Union and Australia agreed this month to a $60-per-barrel price cap on Russian seaborne crude oil effective from Dec. 5 over Moscow’s “special military operation” in Ukraine.
The cap is close to the current price for Russian oil, but well beneath the windfall price Russia was able to sell for this year and that helped offset the impact of financial sanctions on Moscow.
Russia is the world’s second largest oil exporter after Saudi Arabia, and a major disruption to its sales would have far reaching consequences for global energy supplies.
The decree, published on a government portal and the Kremlin website, was presented as a direct response to “actions that are unfriendly and contradictory to international law by the United States and foreign states and international organizations joining them.”
“Deliveries of Russian oil and oil products to foreign entities and individuals are banned, on the condition that in the contracts for these supplies, the use of a maximum price fixing mechanism is directly or indirectly envisaged,” the decree stated, referring specifically to the United States and other foreign states that have imposed the price cap.
“The established ban applies to all stages of supply up to the end buyer.”
The decree, which includes a clause that allows for Putin to overrule the ban in special cases, stated: “This...comes into force on Feb. 1, 2023, and applies until July 1, 2023.”
Crude oil exports will be banned from Feb. 1, but the date for the oil products ban will be determined by the Russian government and could be after Feb. 1.
Wider deficit
The price cap, unseen even in the times of the Cold War between the West and the Soviet Union, is aimed at crippling Russian state coffers and Moscow’s military efforts in Ukraine.
Some analysts have said that the cap will have little immediate impact on the oil revenues that Moscow is currently earning.
However, Finance Minister Anton Siluanov said on Tuesday that Russia’s budget deficit could be wider than the planned 2 percent of GDP in 2023, with the oil price cap squeezing export income, an extra fiscal hurdle for Moscow as it spends heavily on its military campaign in Ukraine.
Russia has been promising to respond officially for weeks, and the eventual decree largely established what officials had already said publicly.
The G7 price cap allows non-EU countries to continue importing seaborne Russian crude oil, but it will prohibit shipping, insurance and re-insurance companies from handling cargoes of Russian crude around the globe, unless it is being sold for less than the price cap.
EU countries have separately implemented an embargo that prohibits them from purchasing seaborne Russian oil.
Russian Urals oil traded above $56 per barrel on Tuesday, below the price cap level.
Brent crude oil moved a little higher on the news and was up 1.4 percent at $85.1 by 1743 GMT.


NEOM wraps up tour by showcasing investment opportunities in Hong Kong

Updated 21 April 2024
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NEOM wraps up tour by showcasing investment opportunities in Hong Kong

RIYADH: Saudi megacity NEOM on Sunday wrapped up a tour courting Chinese investors with an event at its last destination, Hong Kong.

The event was organized in partnership with the Belt and Road Office under the Commerce and Economic Development Bureau of the government of the Hong Kong Special Administrative Region.

The roadshow for NEOM traveled from Beijing to Shanghai to Hong Kong, where potential investors flocked to a chic museum to peruse eye-popping renderings in various stages of development.

A series of presentations by the NEOM leadership team led the event agenda, showcasing the progress and milestones of NEOM to date, as well as the partnership and investment opportunities available to the audience, according to an official press release.

A private showcase “Discover NEOM: A New Future by Design,” was one of the many highlights of the event, providing guests with an immersive experience that explored The Line, the 170-km-long city that will be the future of urban living; Oxagon, which is redefining the traditional industrial model; Trojena, the mountain resort of NEOM, and finally, Sindalah, a luxury island destination in the Red Sea that will be open to the public later this year.

NEOM CEO Nadhmi Al-Nasr said: “We would like to thank the finance and business sector for their support and contribution to the success of our tours ‘Discover NEOM.’ We enjoyed showcasing NEOM’s tangible on-the-ground progress and discussing the range of investment opportunities available to Hong Kong companies. We are looking forward to continuing to engage with our Hong Kong partners to meet our shared goals for a better future.”

NEOM’s Executive Director Tarek Qaddumi walked journalists through the exhibition at the M+ museum on Friday, talking up NEOM’s goal of balancing “nature conservation, human livability and economic prosperity.”

“NEOM is a very vast vision … It is an initiative that is probably the most exciting and the most forward-looking in the 21st century,” he said.

Hong Kong’s Secretary for Commerce and Economic Development Algernon Yau said: “As an open economy and one of the world’s top financial, investment, and innovation hubs, Hong Kong stands ready to support Saudi Arabia in achieving its vision while bringing growth opportunities for Hong Kong. Saudi Arabia is a key player in the development of the Belt and Road Initiative.

“With our internationally-benchmarked professional services and talent pool, Hong Kong can provide support for projects, such as NEOM, along the Belt and Road countries.”

Discover NEOM Hong Kong is the latest stop for the global roadshow and follows events in key markets including Beijing, Shanghai, Seoul, Tokyo, Singapore, New York City, Boston, Washington, D.C., Miami, Los Angeles, San Francisco, Paris, Berlin and London.

The megacity is progressing alongside other major development projects launched as part of Vision 2030.


Saudi airports record 18% surge in flights, passenger numbers during Ramadan, Eid holidays

Updated 21 April 2024
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Saudi airports record 18% surge in flights, passenger numbers during Ramadan, Eid holidays

RIYADH: Saudi Arabia’s airports recorded an 18 percent surge in the number of flights and passengers during the month of Ramadan and Eid Al-Fitr holidays compared to the corresponding period last year.   

According to a statement released by the General Authority of Civil Aviation, the Kingdom’s airports registered more than 12.5 million passengers during this timeframe.   

Furthermore, the report indicated that airports in the Gulf nation handled more than 86,000 flights during the corresponding period.  

It also revealed that during the same period, Saudi airports handled 100 cargo flights.

In terms of passengers per airport, King Abdulaziz International Airport was in the lead as it carried around 5.38 million travelers during the period mentioned above.

King Khalid International Airport came next with 3.23 million passengers, then Prince Mohammad bin Abdulaziz International Airport with 1.04 million travelers.

Meanwhile, the rest of the Kingdom’s airports combined carried as many as 2.85 million passengers in total.

In February, Saudi Arabia’s aviation sector continues to expand as GACA reiterates its commitment to boost air connectivity to over 250 destinations.    

During the authority’s participation in a session at the third symposium organized by the Riyadh Economic Forum, Mohammed Al-Khuraisi, the executive vice president of strategy and business intelligence at the authority, reviewed the main objectives of the National Aviation Strategy, the Saudi Press Agency reported at the time.  

This aligns with the Kingdom’s efforts to achieve the goals of Saudi Vision 2030, which aims for the Saudi aviation sector to become the top rated in the Middle East region. 

As part of his speech at the time, Al-Khuraisi highlighted additional goals of the strategy, including developing the infrastructure and operational procedures of airports, increasing the local market share of low-cost airlines, and enhancing the competitiveness of national carriers.     


Closing Bell: Saudi main index edges up to close at 12,518

Updated 21 April 2024
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Closing Bell: Saudi main index edges up to close at 12,518

RIYADH: Saudi Arabia’s Tadawul All Share Index began the week by gaining 15.87 points, or 0.13 percent, to close at 12,518.22.

The total trading turnover of the benchmark index on Sunday was SR6.39 billion ($1.70 billion) as 147 of the stocks advanced, while 76 retreated.  

The Kingdom’s parallel market, Nomu, also gained 232.50 points, or 0.87 percent, to close at 26,940.18. This comes as 35 of the stocks advanced while as many as 27 retreated.

Meanwhile, the MSCI Tadawul Index slipped 4 points, or 0.25 percent, to close at 1,571.11. 

The best-performing stock on the main index was Ash-Sharqiyah Development Co. The company’s share price surged 9.95 percent to SR21.44. 

Other top performers included Batic Investments and Logistics Co. as well as Saudi Ground Services Co.

The worst performer was Fawaz Abdulaziz Alhokair Co., whose share price dropped by 5.16 percent to SR11.40.

On the announcements front, Saudi AZM for Communication and Information Technology Co. announced its board’s resolution on approving the firm’s transfer from the parallel market to the main market and the appointment of Al Rajhi Capital as a financial adviser for the move.

According to a Tadawul statement, the transfer is subject to regulatory approval and depends on the fulfillment of all market requirements. Any material developments regarding the event will be announced as they occur, it added.

Saudi Automotive Services Co. announced the starting of a SR400 million project to gradually develop its locations over the next three years in accordance with regulations required for fuel stations and service centers issued by the Permanent Executive Committee for Service Centers and Fuel Stations. 

According to a bourse filing, the company is also planning to develop and improve services at its existing locations and add new benefits such as electric vehicle chargers, self-services, and AD LED screens.

The project is expected to contribute positively to sales growth and enhance customer experience and SASCO’s competitive position.

Furthermore, the undertaking will be financed through the company’s resources and the credit facilities signed with local banks.


Saudi food security drive receives boost with new Tadco partnership   

Updated 21 April 2024
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Saudi food security drive receives boost with new Tadco partnership   

RIYADH: Saudi Arabia’s food security drive is set to receive a boost as Tabuk Agricultural Development Co., also known as Tadco, signs an agreement to construct high-tech greenhouses.  

In a statement released on the Saudi Stock Exchange, Tadawul, the company outlined the signing of a memorandum of understanding with the Saudi Greenhouses Management and Agri Marketing Co. The aim is to establish a cooperative partnership for constructing and managing greenhouses tailored to the Kingdom’s climatic conditions. 

High-tech greenhouses use technology to control conditions like temperature, humidity, light, and irrigation, optimizing plant growth and crop yield while conserving resources like water and energy. They may also integrate sustainable practices, such as renewable energy and efficient water management, to reduce their environmental impact. 

Under the terms of the agreement, the entities will also collaborate to develop the marketing system, conduct research on high-value varieties, and cultivate them in Saudi Arabia. Additionally, the release stated their aim to “maximize the benefit of products through manufacturing industries.” 

Last week, Tadco secured a partnership agreement with Topian, a subsidiary of the Saudi giga-project NEOM, to innovate fruit and vegetable production. 

The MoU, which aimed to leverage advanced agricultural technologies and practices to enhance domestic food cultivation, was signed between the two bodies to set up a hydroponic greenhouse facility at the company’s site in Tabuk, located in northwestern Saudi Arabia.   

Hydroponics is the method of cultivating plants without soil and utilizing minimal water resources. This type of production, designed for space efficiency, can grow fruits, vegetables, and flowers in half the time of traditional agriculture while using 90 percent less water.  

This will further support the Kingdom’s efforts toward sustainable food production practices.   

Under the terms of the MoU, Topian will contribute its expertise, handling key responsibilities such as the design, installation, and operation of the hydroponic greenhouse facility.    

Meanwhile, the deal will see Tadco taking on a pivotal role in facilitating the project’s success by providing essential support and resources.  

This includes identifying and allocating suitable agricultural land for the greenhouse, establishing distribution channels for product off-take, and providing infrastructure and labor assistance to ensure seamless project execution.  

Both partnerships underscore Saudi Vision 2030’s aim to enhance food security through increased domestic production and sustainable agricultural practices.   

This further highlights the nation’s dedication to green initiatives. For instance, in January 2021, Al-Jouf Agricultural Development Co. launched the largest greenhouse complex in the Kingdom, covering 12 hectares and utilizing cutting-edge hydroponic technology. 


Saudi firm WAJA Co. forms joint venture to produce EVs in Egypt 

Updated 21 April 2024
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Saudi firm WAJA Co. forms joint venture to produce EVs in Egypt 

RIYADH: Saudi multi-sector firm WAJA Co., is set to establish a joint firm in Egypt to produce and manufacture electric vehicles, after signing a framework cooperation agreement.

The deal, inked with the Egypt-based military organization Arab Organization for Industrialization, meets the needs of the local market and exports abroad, according to the company’s statement to Tadawul.

In October 2023, Egypt was ranked 28th in a global e-mobility index, which reveals the country’s readiness to transition to EVs, Egypt Today newspaper reported, citing US consulting firm Arthur D. Little.

According to a report by the investment management firm Goldman Sachs, EVs could constitute nearly half, or 50 percent, of global car sales by 2035. This projection holds true despite the challenges faced by the sector, including competing market dynamics. 

Additionally, analysts predict that within five years following that date, a similar proportion of car sales will consist of more advanced autonomous or partially autonomous vehicles. 

Saudi Arabia has set a goal to transition 30 percent of all vehicles in Riyadh to electric by 2030. This target is part of a larger strategy to reduce emissions in the capital city by 50 percent, aligning with the country’s objective of achieving carbon neutrality by 2060. 

In January of this year, research firm Mordor Intelligence predicted that the Middle East and Africa automotive EV market size will be estimated at $3.33 billion in 2024 and will reach $9.42 billion by 2029. This sector is projected to grow at a compound annual growth rate of 23.2 percent during the forecast period from 2024 to 2029. 

Governments in the region are increasingly emphasizing the promotion of eco-friendly vehicles and raising awareness about energy storage solutions within the renewable sector. These efforts are anticipated to stimulate growth in the market for EVs and related technologies in the foreseeable future. 

Faisal Sultan, vice president and managing director of Lucid Middle East, told Arab News in an earlier inteview that while the industry is still in its early stages of development, significant expansion is anticipated in the future, driven by a growing appetite among customers in the region for the best eco-conscious automobiles. 

“We are already on a path for electric vehicles to become a part of our daily lives, and Lucid is eliminating the most common barriers of ownership, including price, performance, and driving range,” Sultan said. 

EVs are appealing for their futuristic design, but one concern that potential buyers may consider is the need for more infrastructure to support these vehicles. 

In 2024, research firm Canalys predicts that the global EV market will grow by 27.1 percent, reaching 17.5 million units. 

As forecasts indicate exponential growth of the EV market, eco-conscious modes of transportation are no longer merely ambitions. The sector is rapidly evolving into a cornerstone of our lives, driving the nation toward a tomorrow that prioritizes sustainability and environmental responsibility.