Saudi Aramco faces key test of demand in global debt markets | Financial Times:
Saudi Arabia’s state-owned energy company is preparing to issue a debut bond — a key test of investors’ willingness to do business with the kingdom five months after the murder of journalist, Jamal Khashoggi.
Plans to offer shares in Saudi Aramco, billed as the biggest initial public offering in history, were put on ice last year because of concerns over valuation and litigation risks. Now the kingdom is turning to the global debt markets to issue a $10bn bond in what could be the first in a series of deals for the world’s biggest oil producer. Teams of bankers across Wall Street have begun to drum up interest for a transaction likely to be launched in the second quarter.
The deal could be well received, despite the damage done to Saudi Arabia’s international standing by the Khashoggi affair. The oil price is rising, the bond’s coupon offers a small premium to government bonds and Saudi Aramco is an energy sector giant with daily oil production about three times that of ExxonMobil.
Friday, 1 March 2019
Canada’s Oil Capital Takes a Page From the OPEC Playbook - Bloomberg
Canada’s Oil Capital Takes a Page From the OPEC Playbook - Bloomberg:
When prices for Canada’s heavy crude collapsed late last year, Alberta did something quite out of character. The traditionally conservative, free-market-loving province took a page out of OPEC’s handbook and ordered its largest oil producers to throttle back output by about 325,000 barrels a day, the equivalent of almost 9 percent of daily production.
The move was an unprecedented intervention meant to rescue Canada’s oil producers—and the province’s tax revenue—from a lack of pipeline capacity that caused a glut of crude to back up in storage tanks. It worked: The price of Western Canadian Select, the benchmark for crude extracted from Alberta’s oil sands, has more than tripled since closing at $13.46 a barrel in mid-November, its lowest level in at least a decade. But the unintended consequences have critics fuming and even some of the policy’s supporters wringing their hands.
When prices for Canada’s heavy crude collapsed late last year, Alberta did something quite out of character. The traditionally conservative, free-market-loving province took a page out of OPEC’s handbook and ordered its largest oil producers to throttle back output by about 325,000 barrels a day, the equivalent of almost 9 percent of daily production.
The move was an unprecedented intervention meant to rescue Canada’s oil producers—and the province’s tax revenue—from a lack of pipeline capacity that caused a glut of crude to back up in storage tanks. It worked: The price of Western Canadian Select, the benchmark for crude extracted from Alberta’s oil sands, has more than tripled since closing at $13.46 a barrel in mid-November, its lowest level in at least a decade. But the unintended consequences have critics fuming and even some of the policy’s supporters wringing their hands.
Timing the key for Gulf's equity markets | ZAWYA MENA Edition
Timing the key for Gulf's equity markets | ZAWYA MENA Edition:
GCC markets have gotten off to a strong start in 2019 led by the market in Saudi Arabia, which is up approximately 8 percent year-to-date (YTD). The recent rally on the Tadawul Index has been led mainly by foreign investors, who bought close to 4.4bn riyals ($1.17 billion) through QFIs and Swaps during the first month of the year in anticipation of inflows that will come from FTSE and MSCI inclusion in March and June respectively.
The positive sentiment on KSA can also be attributed to other factors, such as recent news on government mega-projects like NEOM, the kingdom’s under-development $500bn futuristic mega-city, and the National Industrial Development and Logistics Program (NIDLP), which aims to drive $450bn in new investments. A 21 percent YTD gain in the Brent crude price has also supported the momentum, resulting in a further upswing in market sentiment.
Leading the rally is the Saudi banking sector, which continued its strong performance up 31 percent in 2018, versus an index average of 8.3 percent, and up 12 percent YTD vs. an index average of 8 percent. While the market is not cheap, we are of the belief that one cannot forego the opportunity, given its weight on the benchmark S&P Index.
GCC markets have gotten off to a strong start in 2019 led by the market in Saudi Arabia, which is up approximately 8 percent year-to-date (YTD). The recent rally on the Tadawul Index has been led mainly by foreign investors, who bought close to 4.4bn riyals ($1.17 billion) through QFIs and Swaps during the first month of the year in anticipation of inflows that will come from FTSE and MSCI inclusion in March and June respectively.
The positive sentiment on KSA can also be attributed to other factors, such as recent news on government mega-projects like NEOM, the kingdom’s under-development $500bn futuristic mega-city, and the National Industrial Development and Logistics Program (NIDLP), which aims to drive $450bn in new investments. A 21 percent YTD gain in the Brent crude price has also supported the momentum, resulting in a further upswing in market sentiment.
Leading the rally is the Saudi banking sector, which continued its strong performance up 31 percent in 2018, versus an index average of 8.3 percent, and up 12 percent YTD vs. an index average of 8 percent. While the market is not cheap, we are of the belief that one cannot forego the opportunity, given its weight on the benchmark S&P Index.
Oil falls 2 percent as demand worries overtake supply cuts | Reuters
Oil falls 2 percent as demand worries overtake supply cuts | Reuters:
Oil prices settled down about 2 percent on Friday, ending around 3 percent lower on the week as concerns over global demand growth after weak U.S. manufacturing data overshadowed OPEC-led supply cuts and sanctions on Venezuela and Iran.
After strengthening early in the session to over a three-month high, U.S. crude futures turned sharply lower on demand worries. The ISM manufacturing activity index in February sank to the lowest since November 2016, and was below expectations.
U.S. West Texas Intermediate crude (WTI) futures fell $1.42, or 2.5 percent, to settle at $55.80 per barrel, after hitting $57.88, its highest since mid-November.
Global benchmark Brent crude futures for May settled $1.24, or 1.9 percent, lower at $65.07 a barrel.
Oil prices settled down about 2 percent on Friday, ending around 3 percent lower on the week as concerns over global demand growth after weak U.S. manufacturing data overshadowed OPEC-led supply cuts and sanctions on Venezuela and Iran.
After strengthening early in the session to over a three-month high, U.S. crude futures turned sharply lower on demand worries. The ISM manufacturing activity index in February sank to the lowest since November 2016, and was below expectations.
U.S. West Texas Intermediate crude (WTI) futures fell $1.42, or 2.5 percent, to settle at $55.80 per barrel, after hitting $57.88, its highest since mid-November.
Global benchmark Brent crude futures for May settled $1.24, or 1.9 percent, lower at $65.07 a barrel.
#Qatar fund seeking Deutsche Bank stake of at least 5 percent - Spiegel | Reuters
Qatar fund seeking Deutsche Bank stake of at least 5 percent - Spiegel | Reuters:
The sovereign wealth fund of Qatar is seeking a stake of at least 5 percent in Deutsche Bank, a German magazine reported on Friday.
Der Spiegel, citing unidentified sources, said the Qatar Investment Authority (QIA) could buy the stake on the open market or from Chinese conglomerate HNA, which has a 6.3 percent holding in Germany’s biggest bank.
Discussions with Germany’s financial market watchdog Bafin are already underway, the report said.
The sovereign wealth fund of Qatar is seeking a stake of at least 5 percent in Deutsche Bank, a German magazine reported on Friday.
Der Spiegel, citing unidentified sources, said the Qatar Investment Authority (QIA) could buy the stake on the open market or from Chinese conglomerate HNA, which has a 6.3 percent holding in Germany’s biggest bank.
Discussions with Germany’s financial market watchdog Bafin are already underway, the report said.
In rebuff to Trump, OPEC oil output drops further in February | Reuters
In rebuff to Trump, OPEC oil output drops further in February | Reuters:
OPEC oil supply fell to a four-year low in February, a Reuters survey found, as top exporter Saudi Arabia and its Gulf allies over-delivered on the group’s supply pact while Venezuelan output registered a further involuntary decline.
The drop of 300,000 barrels per day (bpd) comes despite criticism from U.S. President Donald Trump, who on Monday tweeted a call for the group to ease its efforts to boost prices, saying they were “getting too high”.
On Jan. 1, the Organization of the Petroleum Exporting Countries and its allies began new production cuts to avert a glut that could soften prices. OPEC sources say the deal will go ahead despite Trump’s pressure.
OPEC oil supply fell to a four-year low in February, a Reuters survey found, as top exporter Saudi Arabia and its Gulf allies over-delivered on the group’s supply pact while Venezuelan output registered a further involuntary decline.
The drop of 300,000 barrels per day (bpd) comes despite criticism from U.S. President Donald Trump, who on Monday tweeted a call for the group to ease its efforts to boost prices, saying they were “getting too high”.
On Jan. 1, the Organization of the Petroleum Exporting Countries and its allies began new production cuts to avert a glut that could soften prices. OPEC sources say the deal will go ahead despite Trump’s pressure.
COLUMN-NOPEC bills provide useful leverage for the White House: Kemp | Reuters
COLUMN-NOPEC bills provide useful leverage for the White House: Kemp | Reuters:
For a proposed statute still at the first stage of the legislative process, with only a handful of sponsors in the U.S. Congress, the “No Oil Producing and Exporting Countries Act of 2019” (NOPEC) is generating a lot of comment.
The amount of attention being paid to the proposed legislation is out of all proportion to its probability of being enacted into law - unless oil prices spike higher at some point during the remainder of 2019 and 2020.
Similar NOPEC bills were introduced into the House of Representatives (HR 948) and the Senate (S 370) early last month, where they were referred to the respective judiciary committees for detailed consideration.
For a proposed statute still at the first stage of the legislative process, with only a handful of sponsors in the U.S. Congress, the “No Oil Producing and Exporting Countries Act of 2019” (NOPEC) is generating a lot of comment.
The amount of attention being paid to the proposed legislation is out of all proportion to its probability of being enacted into law - unless oil prices spike higher at some point during the remainder of 2019 and 2020.
Similar NOPEC bills were introduced into the House of Representatives (HR 948) and the Senate (S 370) early last month, where they were referred to the respective judiciary committees for detailed consideration.
U.S. Shale Can Add a Saudi Arabia and Pay Investors, Rystad Says - Bloomberg
U.S. Shale Can Add a Saudi Arabia and Pay Investors, Rystad Says - Bloomberg:
U.S. shale-oil companies are on track to add production equivalent to Saudi Arabia’s output by 2030, without needing the external financing the industry’s boom has relied on so far, according Rystad Energy AS.
“They are going to be very profitable, they are going to be able to return surprisingly good cash amounts to investors and still grow one Saudi Arabia,” said Per Magnus Nysveen, senior partner at the Oslo-based consultant.
Although the shale revolution has helped American oil production more than double since the start of the decade, its dependence on debt and equity to grow production volumes while offering limited returns to investors has raised doubts about its sustainability.
U.S. shale-oil companies are on track to add production equivalent to Saudi Arabia’s output by 2030, without needing the external financing the industry’s boom has relied on so far, according Rystad Energy AS.
“They are going to be very profitable, they are going to be able to return surprisingly good cash amounts to investors and still grow one Saudi Arabia,” said Per Magnus Nysveen, senior partner at the Oslo-based consultant.
Although the shale revolution has helped American oil production more than double since the start of the decade, its dependence on debt and equity to grow production volumes while offering limited returns to investors has raised doubts about its sustainability.
Oil rises on OPEC's cuts, but soaring US exports and economic slowdown weigh | ZAWYA MENA Edition
Oil rises on OPEC's cuts, but soaring US exports and economic slowdown weigh | ZAWYA MENA Edition:
Oil prices rose on Friday as markets tightened amid output cuts by producer club OPEC, but surging U.S. supply and a global economic slowdown prevented crude from climbing further.
U.S. West Texas Intermediate (WTI) crude oil futures were at $57.41 per barrel at 0350 GMT, up 19 cents, or 0.3 percent, from their last settlement.
International Brent crude futures were at $66.59 per barrel, up 28 cents, or 0.4 percent.
Oil prices rose on Friday as markets tightened amid output cuts by producer club OPEC, but surging U.S. supply and a global economic slowdown prevented crude from climbing further.
U.S. West Texas Intermediate (WTI) crude oil futures were at $57.41 per barrel at 0350 GMT, up 19 cents, or 0.3 percent, from their last settlement.
International Brent crude futures were at $66.59 per barrel, up 28 cents, or 0.4 percent.
Can #Qatar's low-carbon city show a greener Middle East future? | Reuters
Can Qatar's low-carbon city show a greener Middle East future? | Reuters:
During Doha’s sweltering summers, when temperatures can hit 45 degrees Celsius and steamy humidity makes the air feel even hotter, museum manager Fahad Al-Turky tends to drive a lot and stay mainly indoors.
But staying cool is getting easier in Msheireb Downtown Doha - an under-construction district of the capital where he works.
Developers of the 76-acre regeneration zone, which aims to become “one of the largest sustainable cities in the world”, are outfitting it with green features, from rainwater harvesting to shady overhangs that make walking outside cooler.
During Doha’s sweltering summers, when temperatures can hit 45 degrees Celsius and steamy humidity makes the air feel even hotter, museum manager Fahad Al-Turky tends to drive a lot and stay mainly indoors.
But staying cool is getting easier in Msheireb Downtown Doha - an under-construction district of the capital where he works.
Developers of the 76-acre regeneration zone, which aims to become “one of the largest sustainable cities in the world”, are outfitting it with green features, from rainwater harvesting to shady overhangs that make walking outside cooler.
EU blocked on dirty money blacklist that angered Saudis, US | Financial Times
EU blocked on dirty money blacklist that angered Saudis, US | Financial Times:
Brussels has suffered a humiliating defeat in its plans to place Saudi Arabia and four US territories on a money laundering blacklist after virtually unanimous opposition from EU member states.
EU diplomats said 27 of 28 countries, led by the UK, France, Germany, and the Netherlands, blocked publication of the list, which has also prompted fury in Washington and Riyadh.
The strength of opposition means the European Commission will have to rethink its draft list of 23 non-EU territories deemed to be failing in fighting money laundering.
Brussels has suffered a humiliating defeat in its plans to place Saudi Arabia and four US territories on a money laundering blacklist after virtually unanimous opposition from EU member states.
EU diplomats said 27 of 28 countries, led by the UK, France, Germany, and the Netherlands, blocked publication of the list, which has also prompted fury in Washington and Riyadh.
The strength of opposition means the European Commission will have to rethink its draft list of 23 non-EU territories deemed to be failing in fighting money laundering.
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