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Pakistan to receive first cargo of cheap Russian oil in first half of June — oil minister

Employees at a fuel station attend to their customers in Islamabad, Pakistan, on February 16, 2022. (AFP/File)
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Updated 24 May 2023

Pakistan to receive first cargo of cheap Russian oil in first half of June — oil minister

  • A cargo containing 100,000 tons of oil will reach Oman by May 28 before the commodity is transported to Pakistan
  • Dr. Musadik Malik says the import of cheap Russian oil will create ‘different in the market,’ provide relief to people
Updated 24 May 2023
Arab News Pakistan

ISLAMABAD: State Minister for Petroleum Dr. Musadik Malik on Wednesday said Pakistan would receive the first consignment of Russian oil within the first half of June, hoping the import of oil at cheaper rates would make a “difference in the market.”

The country placed its first order for Russian crude oil on April 20 after the two sides signed several memoranda of understanding in the preceding weeks. Malik said Pakistan would assess how much oil to import in the future after receiving the first shipment.

“The first cargo containing 100,000 tons of oil from Russia will reach Oman on May 27 or 28, and from there, it will be transported to Pakistan via small ships,” he said in a news conference on Wednesday.

“The Russian oil will reach Pakistan by the end of the first week or at the beginning of the second in June,” he continued, adding the import of cheap oil would make a “difference in the market.”

Pakistan’s energy procurements from the international market constitute the most significant portion of its import bill, putting immense pressure on its forex reserves which have plummeted to critically low levels over the last several months.

According to official figures, the amount stood at about $23 billion during the last fiscal year.

Asked if the government’s plan to provide cheaper oil to the public would lead to potential objections from the International Monetary Fund (IMF) which is yet to release a $1.1 billion tranche under a stalled bailout facility, Malik said he was “confident” the global money lender would not raise any issues.

Islamabad has faced procurement problems related to liquefied natural gas (LNG) from the global market due to erratic spot prices that largely remained out of its reach since the Russian invasion of Ukraine.

Local media reports maintain Pakistan’s oil supplies have remained tenuous due to issues pertaining to clearance of import payments.

Historically, Pakistan has not enjoyed strong commercial relations with Moscow, unlike neighboring India, and has remained a traditional US ally. More recently, however, the South Asian state has started giving greater importance to economic diplomacy to augment its options in the international arena.

Topics: Dr. Musadik Malik

Pakistan’s digital footprint gains momentum with rising e-banking, PoS transactions — central bank

Updated 29 May 2023

Pakistan’s digital footprint gains momentum with rising e-banking, PoS transactions — central bank

  • During Q3 FY23, e-banking transactions increased by 4.3% in volume, 11.2% in value
  • Around 81% of all debit card holders in Pakistan are male while only 19.2% are female
Updated 29 May 2023
KHURSHID AHMED   

KARACHI: The volume and value of digital transactions in Pakistan continue to grow, with the South Asian country witnessing an expanding digital footprint as it pushes for the digitalization of its payment systems, the central bank said on Monday.

Increasing collaboration between banks and fintech companies has provided efficient, accessible and user-friendly digital payments platform for customers, allowing a greater number of customers to use digital channels to make payments, the State Bank of Pakistan said in its third quarterly review of Payment Systems for Fiscal Year 2022-23, which covers the January-March 2023 period.

Pakistan’s central bank expects migration to electronic means will boost Pakistan’s GDP by 7%, create four million jobs, and result in new deposits of $263 billion and represent a potential market of $36 billion by 2025.

“Adoption and acceptance of digital instruments has been increasing steadily,” the central bank report, released on Monday, said.  

During the third quarter of fiscal year 2023, overall e-banking transactions increased by 4.3% in terms of volume and 11.2% in terms of value. Internet and mobile phone banking transactions also grew in volume by 9.9% from 200.7 million to 220.5 million and in value by 19.1% from Rs9,167.6 billion to Rs10,922.3 billion, the State Bank of Pakistan reported.  

At the end of March 2023, there were 9.3 million internet banking, 15.3 million mobile phone banking and 48.4 million branchless banking app users. In addition to this, holders of e-wallets reached 1.6 million.

Customers using Raast, Pakistan’s first instant payment system, for online Person-to-Person (P2P) funds transfers increased to 29.2 million users from 25.8 million. P2P value and volume of transactions processed through Raast during the third quarter grew by 92.3% and 55.6% respectively, with 41.2 million transactions amounting to Rs872.8 billion respectively.

With increasing number of digital platforms and online shopping avenues, transactions through Point-of-Sale (PoS) have also witnessed growth, with volume of transactions increasing by 6.8% and value by 10.1%.  

However, ATMs transactions remained similar to the previous quarter in terms of volume but increased 6% in value, according to the SBP report.  

The average ticket size of transactions through PoS was Rs5,463 per transaction while for ATM based transactions, it was Rs15,429 per transaction, according to the report.  

The value of e-commerce transactions processed by banks increased by 7.1% to reach Rs36.6 billion by the end of the third quarter of FY23.
 
There were 112,302 PoS machines installed across the country by the end of Q3 FY23, increasing from 96,975 PoS machines in the same quarter last year.

The volume of paper-based transactions declined from 95.5 million in Q2 FY23 to 94.3 million in Q3 FY23. However, its value increased by 3% to Rs1,646.6 billion during the quarter.

“As of quarter-end Mar-23, total payment cards issued in Pakistan stood at 48.4 million of which, 46.0 million are issued by Banks/ Micro Finance Banks (MFBs) while the remaining 2.4 million are issued by EMIs,” the report said.

Payment cards in Pakistan can be categorized into four categories, debit, credit, pre-paid and social welfare cards. Out of total cards in circulation, there are 37.1 million debit cards capturing 76.7% share of total cards followed by 9.2 million social welfare cards that make up 19.1%, 1.9 million credit cards, which is 4%, and 0.2% prepaid cards.  

However, the gap between male and female debt and credit card holders remains large in Pakistan.  

“Around 81% of all debit card holders are male, 19.2% female,” the report said.  

Topics: Pakistan economy digital banking

Pakistan says to share budget details with IMF to unlock funds 

Updated 29 May 2023
REUTERS 

Pakistan says to share budget details with IMF to unlock funds 

  • The IMF funding is crucial for the $350 billion South Asian economy, which faces acute balance of payments crisis 
  • Finance Minister Ishaq Dar says he will like the IMF to clear its 9th review before the budget, due in early June
Updated 29 May 2023
REUTERS 

ISLAMABAD: Pakistan will share its upcoming budget details with the International Monetary Fund (IMF) in order to unlock stalled funds, Finance Minister Ishaq Dar said on Sunday. 

Hopes for a resumption of an IMF deal are diminishing, analysts say, with a bailout programme agreed in 2019 due to expire on June 30 at the end of the 2022-23 fiscal year. 

Dar said he would like the IMF to clear its 9th review before the budget, which is due to be presented in early June, as all the conditions for that had already been met. 

The IMF funding is crucial for the $350 billion South Asian country, which faces an acute balance of payments crisis. This has raised concerns of a sovereign default, something which the minister dismissed. 

The central bank's foreign reserves have fallen as low as to cover barely a month of controlled imports. Pakistan's economy has slowed, with an estimated 0.29% GDP growth for 2022-2023. 

"They have asked for some more things again, we are ready to give that too, they say that give us budget details, we will give it to them," Dar said in an interview with local Geo TV. 

He said it would not work for Pakistan if the IMF combined the 9th and 10th review of the bailout, adding, "We will not do it, (we) see this is (as) unfair." The IMF's $1.1 billion funding to Pakistan, which is part of the $6.5 billion Extended Fund Facility agreed in 2019, has been held up since November. 

Islamabad hosted the IMF mission in February to negotiate a series of fiscal policy measures to clear the 9th review. 

Pakistan had to complete a series of prior actions demanded by the IMF, which included reversing subsidies, a hike in energy and fuel prices, jacking up its key policy rate, a market-based exchange rate, arranging for external financing and raising over 170 billion rupees ($613 million) in new taxation. 

The fiscal adjustments have already fuelled Pakistan's highest ever inflation, which hit 36.5% year-on-year in April. 

Topics: Pakistan budget

Russia eyes opportunities at trade show in Riyadh

Updated 28 May 2023
Reina Takla

Russia eyes opportunities at trade show in Riyadh

  • Exhibition to showcase industrial technologies to help boost KSA’s development
Updated 28 May 2023
Reina Takla

RIYADH: Saudi Arabia and Russia’s bilateral economic ties are set to get a new boost as the Kingdom is hosting the Made in Russia +Innoprom business mission in Riyadh on May 29 and 30. 

In an interview with Arab News, Anton Atrashkin, program director of the Innoprom International Trade Show, said that more than 100 Russian companies would be a part of the event to be held in Riyadh. 

The delegation will be led by Russia’s Deputy Minister of Industry and Trade Alexei Gruzdev. 

Innoprom is the largest Russian industrial exhibition that has been held for the last 14 years in Yekaterinburg. 

The event aims to showcase advanced technologies developed in Russia that are ready to be used in the industrial sector. 

“All of us are very excited to see the reaction and attitude of the Saudi business community toward what we have to offer. We are really making our very first steps in the blessed land of the KSA. For many Russian delegates, it will be their first trip to the country. I would say that our business mission is opening a new page of bilateral economic relations,” said Atrashkin. 

Russian Helicopters, Transmashholding, Rostselmash Agricultural machines, Power Machines, and Kaspersky are some of the key companies participating in the industry event. 

Atrashkin also said that Russian agricultural products are getting popular in the Saudi market, and the event seeks to introduce Russian industrial technologies in the Kingdom. 

Gruzdev said the Russian-Saudi ties are based on a strong foundation, which will contribute to the development goals of both countries. 

Our business mission to Riyadh aims to strengthen economic ties between Russia and Saudi Arabia.

Alexei Gruzdev, Russia’s deputy minister of industry and trade

“Our business mission to Riyadh aims to strengthen economic ties between Russia and Saudi Arabia, discover new business opportunities, exchange ideas, and establish long-term partnerships,” said the deputy trade minister. 

He added: “We are particularly grateful to the Riyadh Chamber of Commerce for hosting us as well as to our Saudi partners from the Ministry of Industry and Mineral Resources and Ministry of Investment.” 

Atrashkin said that the infrastructure development currently underway in Saudi Arabia, including the giga-project NEOM, presents an opportunity for Russian companies to showcase their potential to become part of the success story of the Kingdom. 

“The whole world sees this project (NEOM) as the highest point of mankind’s ambitions. Many companies from Europe, the US, and Asia want to get a stake in this No. 1 project of the 21st century. Russian companies definitely have many competitive technologies in unmanned systems, construction, engineering, and software products,” added Atrashkin. 

He said that some business leaders visiting Saudi Arabia as part of this event are “prepared to discuss deep localization, being aware of the opportunities (available in) 36 industrial cities managed by the Saudi Authority for Industrial Cities and Technology Zones.” 

The Saudi Authority for Industrial Cities and Technology Zones, also known as MODON, has been undertaking the development and supervision of industrial lands and integrated infrastructure in Saudi Arabia, and it oversees 36 existing and under-development industrial cities across the Kingdom, in addition to private industrial facilities. 

According to Atrashkin, some areas where Saudi businesses can use Russian technologies include IT, engineering technologies for construction industries, unmanned systems for industrial and agricultural projects, and cybersecurity, to name a few. 

During the interview, Atrashkin also lauded the reformatory measures introduced by the Saudi government, which now allows foreign investors to operate in the Kingdom. He further noted that Russian-Arab relations have always been cordial and deep. 

I would say that our business mission is opening a new page of bilateral economic relations.

Anton Atrashkin, Program director, Innoprom International Trade Show

“When I witness the negotiations between the Russian and Arabic businessmen, I always note very warm attitudes toward each other. A genuine deep respect for your partner is a common feature of our business culture. It works well and helps to avoid many mistakes,” said Atrashkin. 

He further said: “I would also mention great support from the Saudi government to make the economy open — not only to the Russians but to all the partners of the KSA. The ambition of the Saudi government is to have the best infrastructure in the world. This means millions of opportunities for the manufacturers.” 

A recent press statement from Innoprom said that Saudi Arabia is currently witnessing a real industrial revolution, offering tremendous opportunities for foreign investors. 

“Many experts call the Kingdom of Saudi Arabia one of the most promising partners. Today, a real industrial revolution is taking place in Saudi Arabia; dozens of industrial cities are springing up with special regimes for foreign investors. The Russian industrial technology developers are looking for ways to get contracts worth multimillion dollars from the Kingdom,” it said in a press statement.

Topics: Made in Russia +Innoprom business mission Innoprom International Trade Show Trade show Russia

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ADNOC Drilling on fleet expansion spree as it eyes over $3bn revenue in 2023

Updated 27 May 2023
SYED AMEEN KADER

ADNOC Drilling on fleet expansion spree as it eyes over $3bn revenue in 2023

  • The company grew the fleet by 16 rigs in 2022, bringing the total to 115, CEO tells Arab News
Updated 27 May 2023
SYED AMEEN KADER

RIYADH: On the back of a strong first-quarter performance, ADNOC Drilling plans to go big on its expansion strategy as it eyes 20 percent year-on-year growth in revenue this year. 

As a sole drilling partner to Abu Dhabi National Oil Co., ADNOC Drilling launched a bold fleet expansion program to enable the energy giant achieve its production targets. 

In an interview with Arab News, the CEO of the Middle East’s largest national drilling company, Abdulrahman Abdulla Al-Seiari, said they grew the fleet by 16 rigs in 2022, bringing the total to 115. 

“We will add a further 27 rigs by 2024, bringing our fleet to 142 rigs, and with these additional rigs will come additional revenue,” he told Arab News. 

Sharing the financial projections for the rest of the year, Al-Seiari said they expect to make a total revenue of between $3 and $3.2 billion in 2023. 

“We guided the market to expect EBITDA in the range of $1.35 to $1.5 billion with a margin of 45 percent to 47 percent. We will see record net income between $850 million and $1 billion,” he said. 

This comes after the drilling firm recorded a 19 percent year-on-year growth in revenue to $716 million in the first quarter.   

Its net income increased by 25 percent year-on-year to $219 million, which Al-Seiari said “clearly demonstrates the success of our strategy to expand both our drilling fleet and our service offering.” 

He attributed this rise in revenue to ADNOC’s accelerated production capacity growth which he said, “directly translates into an acceleration of drilling activity.” 

SPEEDREAD

• ADNOC Drilling said its OFS capabilities offer comprehensive drilling and completion services that span the entire drilling value chain.

• The business division has helped the firm create considerable savings in well time and cost while delivering better well economics, ensuring cost-effective services.

• The drilling firm looks to play a key role in helping ADNOC achieve its target of reducing carbon intensity by 25 percent by 2030.

“To enable this growth, we are growing our drilling fleet to deliver the wells required. When these rigs go onto our long-term contracts, they provide long-term cashflow and earnings visibility to shareholders while providing protection from market volatility,” he explained.   

ADNOC Drilling’s oilfield services business has also significantly grown in recent years and in the first quarter of 2022, the company achieved record OFS revenue of $123 million. 

Continuing that rapid expansion, the CEO said the segment grew by a massive 43 percent in the first quarter of 2023 to $126 million. The company attributed the growth to increased activity volume across the entire portfolio. 

ADNOC Drilling said its OFS capabilities offer comprehensive drilling and completion services that span the entire drilling value chain. 

The business division has helped the firm create considerable savings in well time and cost while delivering better well economics, ensuring cost-effective services. 

Talking about the growth prospect of the drilling industry, Al-Seiari said: “It is in very good shape in the UAE.” 

While ADNOC’s production capacity growth will deliver big gains for ADNOC Drilling in the short term, he said it plans to unlock Abu Dhabi’s “unconventional” oil and gas reserves and deliver gas self-sufficiency for the UAE that will “cement long-term earnings potential.” 

“We are the key enabler of gas self-sufficiency and will drill the thousands of wells needed to access the trillions of standard cubic feet of recoverable unconventional gas resources.”

Strong order book 

Since its initial public offering in October 2021, the company has secured more than $12 billion in contract backlog. In April 2023, it won another contract for integrated drilling services worth $412 million — the first of a number of anticipated significant awards in 2023.   

Talking about their future plans, Al-Seiari said they are “hugely ambitious” and are constantly evaluating opportunities for growth. 

“The pipeline of opportunities in Abu Dhabi is vast and remains our number one priority; however, the expansion of operations beyond our borders is a component of our mid-to-long-term strategy.” 

Decarbonization plan 

The drilling firm, which claims to have the world’s longest well with a total length of 50,000 feet, looks to play a key role in helping ADNOC achieve its target of reducing carbon intensity by 25 percent by 2030. 

“We are 100 percent committed to the delivery of maximum energy with minimum emissions,” said the CEO.    Explaining the company’s decarbonization plan, Al-Seiari said it rests on three broad streams of complementary activity which include continually driving greater efficiencies, minimizing the emissions of the drilling fleet, and addressing emissions associated with the global supply chain.   

“We are adding batteries to our fleet so providing hybrid power. These hybrid-powered drilling rigs can reduce emissions by up to 15 percent. Additionally, we are connecting our rigs to the grid where infrastructure allows,” he said. 

ADNOC Drilling is also supporting local manufacturing and procuring equipment and services from within the UAE — a move that helps the firm decarbonize its supply chain.

Topics: ADNOC Drilling ADNOC

Related

Developing aviation infrastructure key to achieving Vision 2030 goals: report

Updated 28 May 2023
Nirmal Narayanan

Developing aviation infrastructure key to achieving Vision 2030 goals: report

  • Kingdom has the potential to become a gateway connecting Asia Pacific to Europe and America, says expert
Updated 28 May 2023
Nirmal Narayanan

RIYADH: The launch of the Kingdom’s strategic plans to become a global tourism and logistics hub has added a new impetus to its fast-evolving aviation industry, which can be bolstered by investing in innovative technologies, suggested a report issued by the King Abdullah Petroleum Studies and Research Center.

Speaking to Arab News, Abdulrahman Alwosheel, a research associate at the Riyadh-based center and co-author of the report, said due to its strategic geopolitical location, the Kingdom has all the potential to become a gateway connecting Asia Pacific to Europe and America, which will also help it achieve its tourism goals as envisaged in Vision 2030.

“There are several areas where Saudi Arabia can focus to enhance its aviation industry by improving infrastructure, increasing connectivity, investing in innovation and technology, developing a skilled workforce, and promoting tourism,” said Alwosheel. 

The researcher said following the decision to allow tourist visas the Kingdom has made incredible progress in the tourism sector. 

The KAPSARC report said advancement in the Kingdom’s aviation sector is key to achieving the goals outlines in Vision 2030. Saudi Arabia’s National Tourism Strategy aims to attract 100 million visitors by 2030 and increase the tourism sector’s contribution to the gross domestic product to more than 10 percent. 

On the other hand, Saudi Arabia’s National Logistics Strategy, launched by Crown Prince Mohammed bin Salman in 2021, aims to position the Kingdom as a global logistics hub connecting three continents and improve transportation services. The strategy also seeks to improve the capabilities of the Kingdom’s air cargo sector by doubling its capacity to more than 4.5 million tons by 2030. 

Alwosheel said further improvement in domestic transport could also play a crucial role in elevating the tourism sector in Saudi Arabia, which is already progressing steadily compared to its regional counterparts. 

 “Unlike the neighboring countries, such as Qatar, Bahrain, and the UAE, in which domestic transport needs are more limited, in Saudi Arabia, domestic transport can play a vital role in supporting growth by promoting and developing domestic tourism, including the development of aviation infrastructure and services,” he added. 

The researcher pointed out that strategic alliances and joint ventures involving air carriers, manufacturers, airports, and government agencies could enable the aviation industry to leverage individual assets and skills to achieve the Kingdom’s goals.

Sustainability and challenges

The report emphasized the importance of sustainability in the overall development process of the aviation sector in the Kingdom. The think tank said unexpected circumstances caused by the COVID-19 pandemic such as a drop in demand, disruption of the airline industry, and the resultant financial losses served as a wake-up call to promote sustainable pathways.

Alwosheel noted that the cost factor is one of the major challenges the aviation industry should address while propagating the use of sustainable aviation fuel. 

“SAF is more expensive than traditional fossil-based fuels, which can create a financial burden for airlines. However, with increasing demand and production, technological maturity, feedstock availability, and diversity, the cost of SAF is expected to decrease,” said Alwosheel. 

According to the International Air Transport Association, the production of sustainable aviation fuel is estimated to meet just 2 percent of the sector’s needs by 2025. 

SAF is produced in tiny quantities from feedstocks such as cooking oils and animal waste and costs two to five times more than traditional jet fuels.

Alwosheel added that SAF will become more cost competitive if governments, along with customers and suppliers of SAF and airports work together and devise ways to promote technological advancements in the fuel’s production. He also pointed out that integrating SAF production plants with existing oil and gas industries could help reduce capital costs. 

“SAF production must be aligned with the region’s conditions since the production of biofuels could be limited. However, integrating it with the existing industries (petrochemical) can help reduce capital costs in developing facilities dedicated to producing SAF by considering co-processing pathways,” the researcher said. 

He said another challenge for SAF uptake is the strict certification standards to ensure that it is sustainable and does not harm the environment. 

With continued investment in research and development, increasing facilities for production and availability, and developing a robust certification system, the aviation industry can successfully embrace SAF.

Abdulrahman Alwosheel, Research associate at King Abdullah Petroleum Studies and Research Center

“The development of a certification system that is universally recognized can be challenging. Consequently, with continued investment in research and development, increasing facilities for production and availability, and developing a robust certification system, the aviation industry can successfully embrace SAF,” said Alwosheel. 

The ‘Passenger Load Factor’

Passenger Load Factor is “the percentage of available seating capacity filled with passengers, regardless of the seating capacity designation made by the airline or the cabin layout.” 

According to the KAPSARC report, PLF is instrumental in assessing the profitability of airlines since it indicates that an airline has sold most of its available seats, which allows it to divide its costs among the total passengers carried. 

Andres Guzman, a fellow researcher at KAPSARC, said that Saudi Arabia’s PLF has significantly improved, highlighting the Kingdom’s growth in the aviation sector.

“In fact, the lower PLF dilutes the benefits that aircraft manufacturers have made in the last years in improving fuel efficiency by considering new technology engines when the performance of the aviation sector is expressed in terms of the number of passengers instead of (the number of ) seats available,” said Guzman. 

According to the researcher, making the aviation sector sustainable requires concerted efforts from all stakeholders including airline carriers, aircraft manufacturers, consumers, airports, and governments. 

Guzman said despite financial challenges, aircraft fleet renewal has considerably improved the performance of the aviation sector, as newer aircraft are more fuel efficient, and they offer improved safety and reduced maintenance costs. 

“As sustainability has become a global concern, governments and financiers could foster a smoother transition of fleet renewal programs by offering financial incentives in compliance with legislation on emissions reduction,” he said.

Topics: Saudi aviation King Abdullah Petroleum Studies and Research Center Vision 2030 saudi tourism

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