US slams Huthi attack on Saudi refinery as bid to ‘disrupt global energy supplies’

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The United States on Friday condemned the drone strike on a Saudi oil refinery claimed by Yemen’s Huthi rebels, calling it an attempt to “disrupt global energy supplies.”

“We strongly condemn today’s drone attacks against Saudi Aramco facilities,” State Department deputy spokeswoman Jalina Porter told reporters of the dawn attack, the second major assault this month on Saudi energy installations.

“We condemn the Huthis’ attempts to disrupt global energy supplies by targeting Saudi infrastructure,” Porter added, saying the United States is “deeply concerned by the frequency of attacks on Saudi Arabia.”

“This behavior shows an utter lack of concern for the safety of the civilian population either working or living near the sites,” she said of the incident, which highlighted a dangerous escalation of Yemen’s six-year conflict between the Saudi-backed Yemeni government and the Iran-linked Huthis.


Global oil prices to climb above $70 per barrel by mid-2021

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Global oil prices will climb above $70 per barrel around mid-2021 as improved supply and demand fundamentals beginning May lead to substantial stock draws through to August, according to S&P Global Platts.

The research firm said while large oil consuming countries such as India may crank up the volume over their displeasure and many OPEC+ countries may be eager to ditch compliance to their production-cut deal or push to pump more, both consumers and producers may want to consider the benefits should oil prices stay in their arguable sweet spot.

“While the warning signs over a supply crunch in the coming years are well documented, they have been overshadowed by the pressing needs of consumer economies ravaged by Covid and producer countries crippled by low oil prices,” the firm said in a statement.

It added these very low oil prices along with the energy transition push have accelerated supply concerns. Also, as OPEC+ starts to raise output to meet growing oil demand, the amount of spare capacity in the system begins to dwindle.

The firm expects the amount of crude that can be sustainably produced at short notice halving by September to less than 4 million barrels per day with most of that left in the hands of Saudi Arabia.


A $12.5 billion deal shows Saudi oil still eclipses all else

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Saudi Arabia is celebrating one of the biggest foreign-investment windfalls in its history after netting more than $12 billion by selling off a stake in the oil pipelines that traverse the desert kingdom.

But the country may also be facing an uncomfortable reality as a result. As carefully cultivated relationships with firms such as BlackRock Inc. and SoftBank Group Corp. have yet to draw in the desired investment, it’s turning to the jewels of its energy industry to attract new money.

Last week’s sale of the stake to EIG Global Energy Partners LLC shows how reliant Saudi Arabia is on its traditional mainstay and the challenges Crown Prince Mohammed bin Salman faces in diversifying the country away from oil and gas to achieve his Vision 2030 goal. The likes of BlackRock and SoftBank haven’t invested back into the country as much as the government might have hoped, while foreigners favor revenue-rich energy assets over tourism and entertainment.

“Entertainment and tourism might have had a better year of foreign direct investment in 2020 if Covid had not happened,” Karen Young, resident scholar at the American Enterprise Institute in Washington, said via e-mail. “But all the same, the core investors who see value in Saudi will be interested in the largest and most profitable sector, and that is still very much oil and energy.”

Though EIG, the Washington-based private equity firm led by Chief Executive Blair Thomas, is a prominent investor in North America and Europe, it barely resonates in Saudi circles. It hasn’t made a single equity purchase in the Middle East until now, let alone the kingdom itself, and its management team has never showed at Saudi Arabia’s marquee “Davos in the Desert” conference, an event attended routinely by investment leaders from The Blackstone Group Inc.’s Stephen Schwarzman to Ray Dalio of BridgeWater Associates LP and the Carlyle Group’s David Rubenstein.

Saudi Arabia attracted $5.5 billion in net FDI flows in 2020, equivalent to about 1% of its economic output, according to data compiled by Bloomberg, which means the EIG deal brings more than twice last year’s total. The government’s goal is 5.7% by 2030, hence the temptation to offer up prized energy assets such as parts of Saudi Aramco, the state-owned energy giant.

“This is the latest milestone in an ongoing shift,” said Jim Krane, a fellow at Rice University’s Baker Institute for Public Policy in Houston. “Mohammed bin Salman and his advisers keep finding novel ways to coax cash out of Aramco without disrupting its operational capability. Right now it’s cash that the kingdom needs and Aramco controls the spigot.”

EIG beat out rivals including Apollo Global Management Inc. and Brookfield Asset Management Inc. to buy the stake. It’s now putting together a consortium of other investors to join the deal.

While several global investors have forged closer ties with Saudi Arabia in recent years, most of them see it more as a source of capital than an investment destination. The kingdom’s flagship Public Investment Fund, or PIF, is the largest investor in Softbank’s $100 billion technology vehicle, with an allocation of $45 billion. The PIF has also pledged as much as $20 billion to help Blackstone Group LP build the world’s largest infrastructure fund.

The reasons are manifold, ranging from the inconsistency of the Saudi legal system to an economic slump as the country adjusts to lower oil prices. The 2017 arrest and incarceration of scores of Saudi businessmen at Riyadh’s Ritz Carlton hotel and the murder of dissident writer Jamal Khashoggi the following year have hardly helped.

FDI into Saudi Arabia peaked between 2008 and 2012, averaging more than $26 billion. During those years, it was mostly driven by large refinery and petrochemical projects developed with foreign partners at a time when oil averaged over $90 a barrel. The subsequent slide in oil has seen average FDI into Saudi drop to about $6 billion a year.

“Despite the measures to liberalize and open the economy for investment into new industries, FDI has not come in the way originally planned,” said Monica Malik, chief economist at Abu Dhabi Commercial Bank.

FDI may be set to pick up further this year. The kingdom signed agreements with developers including Electricite de France SA and Marubeni Corpo. to build solar power plants last week, and later this year it is likely to complete the sale of the world’s largest desalination plant. In 2020, FDI rose 20%, in part driven by deals with Alphabet Inc. and Alibaba Group Holding Ltd. to develop cloud-computing hubs that Saudi Arabia said were worth a combined $1.5 billion.

In selling assets of its main state-owned energy explorer, Saudi Arabia is following a model successfully implemented by neighboring Abu Dhabi. Instead of pursuing an initial public offering of its state-owned energy firm Adnoc, the emirate has raised more than $20 billion in recent years by bringing international investors into some of its key assets. EIG studied some of the Adnoc assets that were on offer but couldn’t reach an agreement. Hence, it didn’t want to lose out on the Aramco transaction, a person familiar with the matter said.

Saudi Aramco is encouraged by the valuation and the interest generated for the pipelines deal, meaning the oil giant may pursue more disposals in the coming years, people familiar with the matter said. It has already entrusted boutique investment bank Moelis & Co with formulating a strategy for selling stakes in some subsidiaries, people familiar with the matter said in December.

“It’s a great deal for Aramco, but also a new kind of investment strategy, in that it is “giving up” much more in terms of investor access to information, control over operations than an IPO does,” said Young of the American Enterprise Institute. “It is a real partnership, a long-term effort with outsiders, which is an entirely new level of trust outside of the firm and the government.”

Founded in 1982, EIG has committed more than $34 billion to the energy sector, according to its website. Its portfolio includes holdings in Spanish solar developer Abengoa SA, Houston-based Cheniere Energy Inc., natural-gas producer Chesapeake Energy Corp. and storage and pipeline operator Kinder Morgan Inc.


Aramco pipeline investors to refinance loan with bonds next year

EIG Global Energy Partners will lead a yet-unnamed consortium to issue billions of dollars in bonds across two or three transactions to replace bank debt backing an investment in Saudi Aramco’s oil pipeline assets, two sources said.

The Washington, D.C.-based firm’s consortium will issue bonds to replace $10.5 billion in so-called staple financing that was arranged by Aramco for potential suitors to take the 49 per cent stake, the sources said.

The $12.4 billion deal, announced last Friday, gives the EIG-led group a stake in Aramco Oil Pipelines, which has the rights to 25 years of tariff payments for oil transported through Aramco’s oil pipeline network that traverses the world’s largest crude exporter.

The staple financing backing the deal had a five-year maturity and one-year extension option, the sources said.

EIG will replace the full amount with long-tenor bonds across two or three bond deals, they said.

The first bond issuance will likely be in the first quarter of next year and the entire refinancing will be done within two years, the sources said.

The equity portion of the $12.4 billion deal was $1.9 billion and the rest was the staple financing, one of the sources said.

EIG is in talks to sell part of the equity portion to investors including Abu Dhabi state fund Mubadala, Chinese investors, pension funds in Saudi Arabia and the UAE, as well as a small piece to U.S. pension funds, the source added.

Mubadala has said it is looking at the deal.

EIG is a Washington, D.C.-based investment firm that has invested more than $34 billion in energy and energy infrastructure projects around the world.

EIG has not commented beyond its statement last week that said the transaction is expected to close soon, subject to customary closing conditions, including any required merger control and related regulatory approvals.

Aramco declined to comment.

HSBC was EIG’s financial adviser and Latham & Watkins was legal adviser, the statement said.

EIG has invested in a gas pipeline project with LNG producer Cheniere Energy, in oil and gas producer Aethon Energy and last year took a majority stake in Limetree Bay Ventures, an oil refinery and terminal in the Caribbean.

The Aramco pipeline deal closely mirrors infrastructure deals signed over the last two years by Abu Dhabi National Oil Co (ADNOC), which raised billions of dollars through sale-and- leaseback deals of its oil and gas pipeline assets.

A consortium that took a stake in ADNOC’s gas pipelines similarly refinanced bank debt with bonds across two transactions in October and February.


Kuwait’s Kipic picks Honeywell as automation contractor for Prize

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Kuwait Integrated Petroleum Industries Company (Kipic), the company behind Kuwait’s $27bn (KWD8.2bn) Al Zour refinery has picked Honeywell Process Solutions (HPS) as the main automation contractor for its new Petrochemicals and Refinery Integration Al Zour Project (Prize).

As part of the contract, HPS will deliver front-end engineering design (Feed) and advanced process control technology for the complex, which will help Kipic reach its production targets faster.

In a statement, Honeywell said that Prize has been developed ad part of the Al Zour refinery complex and once developed will be the first integrated refining and petrochemicals complex in Kuwait. Upon being operational, the facility will increase Kuwait’s domestic petrochemicals, aromatics, and gasoline manufacturing capabilities.

Speaking on the contract win, president for Honeywell in Kuwait, Rachad Abdallah said: “At the integrated refining and petrochemicals complex at Al-Zour, we are leveraging our experience and technologies to help develop one of the most ambitious initiatives in the region.”

Meanwhile, acting chief executive officer at Kipic, Hatem Al Awadhi said: “With Honeywell’s support, we are building a strategic project that will only transform Kuwait’s domestic oil and gas market, and also provide a significant accelerator for the country’s long-term economic development by improving gasoline and benzene supply to the local and international markets.”

In July 2019, Honeywell UOP was awarded a contract by Kipic, as part of which the company would reconfigure the refinery and petrochemicals sections of Al Zour Refinery.


Fluor, Daewoo, Hyundai JV start up boilers at KIPIC’s Al Zour Refinery

The joint venture of New York Stock Exchange-listed global engineering, procurement, fabrication, construction and maintenance firm Flour with Daewoo Engineering & Construction (E&C), and Hyundai Heavy Industries (FDH JV) has successfully started up two boilers that began generating steam in the new Al-Zour Refinery.

The refinery is a part of the Kuwait Integrated Petrochemicals Industrial Company’s (KIPIC) Package 2 and 3 project in the country.

In a stock market filing Fluor said that it is leading the JV that is working to deliver two engineering, procurement, fabrication, and construction packages for key process support units, utilities, and infrastructure for the highly complex, mega-sized Al-Zour Refinery project.

Upon completion, the grassroots complex is expected to be one of the largest refineries in the world, with the capacity to process 615,000 barrels of oil per day (bpod).

Commenting on the achievement, president of Fluor’s global energy and chemicals business, Mark Fields, said: “This significant milestone marks the completion of several critical utility systems to start up and advance the refinery into commercial operations with our ongoing support.

“Timely delivery of the new Al-Zour Refinery is critical to the Kuwait economy.”

Fields continued: “Our team worked closely with KIPIC to continue with about 15,000 workers on site to maintain progress throughout the COVID-19 pandemic.”

He added that the accomplishment was made possible through the FDH JV team’s “well-conceived health and safety strategy that was implemented with rigorous discipline”.

According to Fluor, several enabling facilities were completed and handed over, leading up to the achievement. This included the delivery of the central control room building and other associated buildings, fire water systems, communication system, and other refinery infrastructure.

COOEC Fluor Heavy Industries Co — Fluor’s joint venture fabrication yard in Zhuhai, China —delivered 188 modules with a combined weight of 65,000 metric tonnes to support the project’s large-scale, onshore modular execution strategy.

Speaking about the milestone, deputy CEO of KIPIC, Khaled Al-Awadhi, said: “Working together with the Fluor-led joint venture to achieve this important milestone for the ZOR Program is a true success – not only for KIPIC, but for the State of Kuwait – and will help bring energy self-sufficiency and further prosperity for all of us.”

In terms of health and safety achievement, the FDH JV has marked more than 154 million work hours on site. At peak, it employed more than 20,000 craft workers backed by joint venture team members spread across three continents.



Small scale manufacturing plants in Kuwait produce petrochemicals, fertilizers, ammonia etc. The growth of the manufacturing sector in Kuwait has not been ideal, as it was hard hit firstly, by the Iraqi invasion and then, the recession. The contribution of the manufacturing sector towards the GDP of Kuwait has ranged between 5-6% for the past few years, though it is projected to reach USD XX billion by 2021 at a CAGR of XX%. Greater exposure to trade, competition in the sector and diversification are factors affecting the growth of this market.

Diversification Driving Manufacturing Sector Growth

Numerous initiatives are being taken by the government to promote the manufacturing sector, like the passing of the Kuwait Development Plan. It was approved for almost USD 120 billion and is expected to simulate Kuwait’s economy and help in developing the infrastructure. The government recently announced that it is increasing the budget for the manufacturing sector by nearly USD 1.7 billion per year.

New free trade zones are being built in Kuwait. This will increase the need for building products giving an automatic push to the construction material manufacturing industries. Availability of low-cost labor acts as an add-on to the success of the manufacturing sector.


Land prices in Kuwait are elevated for industrial areas due to very high demand and low availability of resources. The news of more than 20 Kuwaiti factories deciding to relocate to Saudi Arabia because of the features and facilities it offers was also a major setback. Expensive electricity and energy, industrial production costs, unskilled labor, small market size and unavailability of resources are some of the major challenges faced by the manufacturing sector in Kuwait.


There are numerous opportunities in the construction material manufacturing industries in Kuwait. Apart from that foreign investors are being given a number of incentives which include a 10-year tax holiday and after that, a flat 15% tax for investing in Kuwait. Petrochemical is the biggest industry after oil and gas and offers great opportunities.

Key Deliverables in the Study

PESTLE Analysis (Overview): Macro market factors pertinent to this region.
Market Definition: Main as well as associated/ancillary components constituting the market.
Key Findings of the Study: Top headlines about market trends & numbers.
Market Dynamics:
Drivers: Key factors driving the growth of the market.
Restraints: Most relevant threats and restraints which hinder the growth of the market.
Opportunities: Sectors of high return or quick turnaround on investment.
Market Concentration: Porter’s Five Forces Analysis quantified by a comprehensive list of parameters.
Chain Analysis
Market Share Analysis: Top players in the market (by value and volume).
Company Profiles: Pertinent details about leading, high growth, and innovation-motivated stakeholders with contact, operations, product/service offerings, financials, and strategies & insights.


Jordanian shares slip, bucking gains in Mideast peers

Stocks in Jordan snapped a three-day advance, bucking gains in most Middle East markets, after several arrests were made following what may have been an attempt to destabilize the current government.

The Amman Stock Exchange General Index fell as much as 0.6 percent Sunday, reversing an increase of 0.5 percent last week. Jordan Petroleum Refinery Co. and Jordan Phosphate Mines fell more than 1 percent, dragging the index down the most.

Over the weekend, Hasan Bin Zeid, a member of the Jordanian royal family, was held on security grounds along with several others, including a former minister. Saudi Arabia, the United Arab Emirates, Qatar, Egypt and other Arab states expressed support for King Abdullah II.

Elsewhere in the region, benchmarks rose in Saudi Arabia, Dubai, Abu Dhabi, Bahrain and Kuwait as weighed in prospects of higher oil production in the near term. Last week, OPEC+ showed growing confidence in the global economic recovery by agreeing to increase oil production gradually in the coming months.

Saudi Arabia and its allies showed they are more convinced now that fuel demand is on a firmer footing after a yearlong beating from the coronavirus.

Investors should see “a very solid first quarter for Saudi petrochemicals,” said Jaap Meijer, the head of equity research at Arqaam Capital, in an interview to Bloomberg Television.


Dubai-based Kitopi set to enter Bahrain, Qatar markets this quarter

Scion Industrial engineering Pvt. Ltd.

Kitopi, the Dubai-based cloud kitchen platform, is set to enter Bahrain and Qatar this quarter as part of its planned expansions into the wider GCC market.

The company is also gearing up to enter the Southeast Asian market between July and September.

The food tech start-up, which is reportedly planning another round of fundraising, however, has ruled out opening up for an initial public offering (IPO).

“We are looking to expand to Bahrain and Qatar in the next few weeks in Q2, and will be expanding in Southeast Asia in Q3,” a senior executive at the venture told Arabian Business.

“As for the fundraising plans, we’re not looking at an IPO at this point in time,” the director level executive said.

There have been talks among investment banking circles in Dubai about Kitopi being among some of the growth stage ventures in the UAE which are considering IPOs for their next round of fundraising.

Kitopi is currently present in the UAE, Saudi Arabia and Kuwait markets, operating more than 60 satellite kitchens with more than 1,200 partner restaurants.

Leading cloud kitchen and virtual restaurant operators in the UAE such as Kitopi and India-based Rebel Foods have been working on aggressive expansion plans in the GCC region on the back of exponential growth of online food delivery services in the region.

“Players such as Kitopi are expanding the food service category itself by capturing more ‘share of stomach’. These platforms have also enabled many restaurant chains and culinary start-ups to be closer to the customers and thus generate new demand and impulse purchases,” Sandeep Ganediwalla, managing partner of RedSeer Consulting, Dubai, a global consultancy firm specialising in online services, told Arabian Business.

“Although the lockdowns have fuelled the growth of this sector, our research indicates that there are other benefits such as variety, comfort and pricing that will continue to drive the sector post-pandemic,” Ganediwalla added.

Cloud kitchens have lately garnered attention from global investors and international food brands, as consumers have been forced to turn to online for food delivery due to the pandemic-induced lockdowns and movement restrictions.

On their part, food tech platforms have also been upping their game by planning global attention seeking moves as Rebel Foods’ plans to enter into a partnership deal with Expo 2020 Dubai, slated to commence in October, and Kitopi’s move to diversify into e-grocery business by launching ‘Shop Kitopi’ in Dubai last March.

“The business models of dark kitchens are still evolving, with players such as Kitopi offering multiple models from ‘end-to-end services’ to ‘no-frills kitchen operations’ and everything in between. However, competition in this space is increasing with many independent kitchen operators entering the space.

“If they are able to offer a distinctive value proposition and make the unit economics work, they would further boost the nascent dark kitchen ecosystem,” Ganediwalla said.

Kitopi raised $60 million last year – taking total investments in the venture to $120 million since it was founded in 2018.

As for the company’s decision not to consider an IPO for now, Ganediwalla said a growth-stage venture’s operations and business model would need to reach a certain level of maturity before they take the company public.

“An IPO is a big step in the journey of any company, as it would also mean controls and scrutiny increasing many-fold. [An IPO] could also become an interesting proposition as these start-ups mature and they get comfortable that public investors are valuing them fairly,” Ganediwalla said.