Major oil producer Saudi Arabia announces net-zero by 2060

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One of the world’s largest oil NSE -0.99 % producers, Saudi Arabia, announced Saturday it aims to reach “net zero” greenhouse gas emissions by 2060, joining more than 100 countries in a global effort to try and curb man-made climate change.

The announcement, made by Crown Prince Mohammed bin Salman in brief scripted remarks at the start of the kingdom’s first-ever Saudi Green Initiative Forum, was timed to make a splash a little more than a week before the start of the global COP26 climate conference being held in Glasgow, Scotland.

Although the kingdom will aim to reduce its emissions, Prince Mohammed said the kingdom would do so through a so-called “Carbon Circular Economy” approach. That approach focuses on still unreliable carbon capture and storage technologies over efforts to actually reduce global reliance on fossil fuels. The announcement only pertains to Saudi Arabia’s efforts within its national borders, and does not impact its continued aggressive investment in oil and exporting its fossil fuels to Asia and other regions.

“The transition to net zero carbon emissions will be delivered in a manner that preserves the kingdom’s leading role in enhancing the security and stability of global energy markets, particularly considering the maturity and availability of technologies necessary to manage and reduce emissions,” a statement by the Saudi Green Initiative forum said.

The kingdom’s oil and gas exports form the backbone of its economy, despite efforts to diversify away from reliance on fossil fuels for revenue.

The global summit COP26 starting Oct. 31 will draw heads of state from across the world to try and tackle global warming and its challenges. It is being described as “the world’s last best chance ” to prevent global warming from reaching dangerous levels. The summit is expected to see a flurry of new commitments from governments and businesses to reduce their emissions of greenhouse gases.

Leaked documents first reported by the BBC emerged Thursday showing how Saudi Arabia and other countries, including Australia, Brazil and Japan, are apparently trying to water down an upcoming U.N. science panel report on global warming. The documents are purportedly evidence of the way in which some governments’ public support for climate action is undermined by their efforts behind closed doors.

Saudi Arabia has pushed back against the recommendation that fossil fuels be urgently phased out of the energy sector. Instead, the kingdom is touting, thus enabling nations to continue burning fossil fuels by sucking the resulting emissions out of the atmosphere, according to Greenpeace, which obtained the documents.

The kingdom repeatedly seeks to have the report’s authors delete references to the need to phase out fossil fuels, as well as the panel’s conclusion that there is a “need for urgent and accelerated mitigation actions at all scales”, according to the leaked documents.

Earlier this month, the United Arab Emirates – another major Gulf Arab energy producer – announced it too would join the “net zero” club of nations with a target to reach net-zero emissions by 2050.


Saudi Arabia launches national infrastructure fund with BlackRock

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Saudi Arabia, advised by the world’s largest fund manager BlackRock, has launched a national infrastructure fund to support up to 200 billion riyals ($53.32 billion) in projects over the next decade, state news agency SPA said on Monday.

The National Infrastructure Fund will invest in areas such as water, transportation, energy, and health, contributing to Saudi Arabia’s plans to transform the economy and make it less reliant on oil revenue.

The fund is one of the development funds of the National Development Fund (NDF), a body created in 2017 with the aim of supervising and linking together several economic development funds previously spread between various ministries and agencies.


Saudi Arabia licenses 44 companies to open regional headquarters in Riyadh

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Saudi Arabia said on Wednesday it had licensed 44 international companies to set up regional headquarters in the capital Riyadh under the kingdom’s push to become a regional commercial hub and vie for foreign capital and talent.

Among the 44 companies are multinationals in sectors including technology, food and beverages, consulting and construction including Unilever, Baker Hughes and Siemens, a press release said.

The world’s top oil exporter and largest Arab economy in February said it would give foreign firms until the end of 2023 to set up headquarters in the country or risk losing out on government contracts.

The move, part of efforts by Crown Prince Mohammed bin Salman to wean the economy off oil by creating new industries that also generate jobs for Saudis, has put the kingdom in competition with regional business hub the United Arab Emirates.

The new headquarter establishments would add 67 billion riyals ($18 billion) to the economy and provide around 30,000 job opportunities by 2030, the President of the Royal Commission for Riyadh City, Fahd al-Rasheed, said in a statement.

Rasheed told Reuters he expects the 44 firms to move to Riyadh within a year, adding that some had already done so. He said the target was for 480 companies by 2030.

The kingdom earlier this year said that 24 companies had signed agreements to establish main regional offices – including PepsiCo, Schlumberger, Deloitte, PwC and Bechtel – rather than oversee operations remotely from the UAE’s Dubai emirate.

European law firm DWF Group said on Wednesday that Riyadh would become its regional headquarters for business services.

Rasheed has said the move is not aimed at dismantling corporate operations elsewhere.

“We are simply saying – you need to have your regional headquarter here because this is not simply a contract economy that you come in and come out. We want to see you with us for the long term,” he told Reuters on Monday.

Rasheed defined regional headquarters as housing all major decision-making functions, but it was unclear how all firms themselves are defining Saudi headquarters.

Some people in the business community say companies are unlikely to shut operations in the UAE and may simply shift some operations to Saudi.

Danish wind turbine maker Vestas, not among the list of 44 firms, told Reuters in a statement that it was moving its Middle East sales h ..

Saudi Arabia has launched economic and social reforms aimed at making the kingdom an easier place to live and work in and has cut the red tape that long deterred companies.

source:Saudi Arabia has launched economic and social reforms aimed at making the kingdom an easier place to live and work in and has cut the red tape that long deterred companies.


Saudi Arabia could go carbon-neutral before 2060, says Prince Abdulaziz bin Salman

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Saudi Arabia could go carbon neutral before its 2060 target if technology evolves quickly enough, its energy minister said on Wednesday, days before the COP26 climate summit.

Prince Abdulaziz bin Salman said new processes enabling the “circular carbon economy” — a concept where waste carbon is captured and repurposed — were key to the world’s top oil exporter achieving net zero.

The desert kingdom, also one of the world’s biggest polluters, is heavily promoting the virtues of the circular carbon economy (CCE) at the Future Investment Initiative conference in Riyadh, an elite business gathering dubbed “Davos in the desert”.

“CCE first and foremost depends on the evolution of technology,” the minister told the conference, describing 2060 as a “dynamic baseline”.

“Actually, if technology evolves even faster, we may not have to wait until 2060. It could bring it earlier.”

On Saturday, Saudi Arabia pledged to go carbon neutral by 2060. Two days later it announced a billion-dollar contribution to initiatives to fund the circular carbon economy and provide “clean” fuel for the world’s poor.

The United Nations says more than 130 countries have set or are considering a target of reducing greenhouse gas emissions to net zero by mid-century, an objective it says is “imperative” to safeguard a liveable climate.

World leaders will gather in Glasgow from Sunday for the UN’s COP26, a historic summit billed as humanity’s “last best chance” to get devastating climate change under control.

“The most daunting challenge that we are all faced with is climate change,” the energy minister said, before adding that he did not expect any drop in demand for oil.

“I still argue it would not happen,” he said.

Oil production remains the fundamental plank of Saudi energy policy. This month, state-owned giant Saudi Aramco said it planned to raise production by a million barrels a day by 2027.


Saudi Arabia, 20 years after 9/11: ‘A country in the making’

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The Saudi Arabia of today is far different from the Saudi Arabia of Sept. 11, 2001.

All but four of the 19 hijackers on 9/11 were Saudi citizens, and the Saudi kingdom was the birthplace of Osama bin Laden, the head of al-Qaida and mastermind of the attack 20 years ago. In the two decades since then, Saudi Arabia has confronted al-Qaida on its own soil, revamped its textbooks, worked to curb terror financing andpartnered with the United States to counter terrorism.

It wasn’t until the last five years, though, that the kingdom began backing away from the religious ideology upon which it was founded and which it espoused within and outside its borders — Wahhabism, a strict interpretation of Islam that helped spawn generations of mujahedeen.

For countless numbers of people in the United States, Saudi Arabia will forever be associated with 9/11, the collapse of the World Trade Towers and the deaths of nearly 3,000 people.

To this day, victims’ families are trying to hold the Saudi government accountable in New York and have pushed President Joe Biden to declassify certain documents related to the attacks, despite Saudi government insistence that any allegation of complicity is “categorically false.” Victims of a 2019 shootin at a Florida military base and their families are also suing Saudi Arabia for monetary damages, claiming the kingdom knew the Saudi Air Force officer had been radicalized and could have prevented the killings.

Saudi Arabia’s close partnership with the United States, including the presence of American troops in the kingdom after the first Gulf War, made its leadership a target of extremist groups.

“It is important to realize that the terrorists who struck the U.S. on September 11 have also targeted Saudi Arabia’s people, leadership, military personnel and even our holiest religious sites in Mecca and Medina on multiple occasions,” Fahad Nazer, the Saudi Embassy spokesperson in Washington, told The Associated Press. He said Saudi-U.S. counterterrorism work has saved thousands of lives.


Saudi economy grows 1.8% in Q2 but non-oil sector loses steam


Saudi Arabia’s economy posted a 1.8% annual growth in the second quarter, according to official gross domestic product (GDP) estimates, but the non-oil sector of the world’s largest oil exporter lost steam.

The figures, published on Monday by the General Authority for Statistics, revised upwards earlier estimates of a 1.5% overall growth in the second quarter, but they also revised non-oil growth to 8.4% from an earlier 10.1%.

On a quarter-on-quarter basis, the Saudi economy grew 0.6% compared to the first three months of the year, with the oil sector fuelling the growth.

Saudi Arabia was hit hard last year by the twin shock of the COVID-19 pandemic and record-low oil prices. The economy has rebounded this year, however, amid easing coronavirus-related restrictions, a vaccine roll-out and higher crude prices.

The GDP segment comprising wholesale and retail trade, restaurants and hotels, grew 16.9% in Q2 compared to the same quarter last year, although declining slightly when compared to the first three months of this year.

The pent-up demand that boosted the rebound was expected to lose some steam, economists have said.

“Preliminary GDP data for 2Q2021 released in August points to some moderation in the pace of sequential non-oil GDP growth. This normalisation is to be expected as the boost to activity from the initial reopening of the economy, trapped spending and pent-up demand wanes,” Monica Malik, chief economist at Abu Dhabi Commercial Bank, said in a note last week.

A domestic investment programme led by the Public Investment Fund, Saudi Arabia’s main sovereign investor, is expected to be the main driver of economic growth going forward, she said.

London-based Capital Economics has said the recovery in the non-oil sector has lost momentum in recent months, as opposed to the oil sector, which strengthened due to increased output.

“With OPEC+ agreeing … to raise oil output further, this will mechanically support stronger GDP growth and more than offset the easing of activity in the non-oil sector,” it said in a note last week.


Saudi imports from UAE drop 33% in July after new trade rules

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The value of Saudi Arabia’s imports from the United Arab Emirates (UAE) in July fell by 33% month on month, official data showed on Wednesday, after the kingdom imposed new rules in July on imports from other Gulf countries.

Imports from neighbouring UAE fell to 3.1 billion riyals ($827 million) in July from 4.6 billion riyals in June, according to data from the General Authority for Statistics. On an annual basis, UAE imports declined by about 6%.

In July, Saudi Arabia amended its rules on imports from other Gulf Cooperation Council (GCC) countries to exclude goods made in free zones or using Israeli input from preferential tariff concessions, a move seen as a challenge the UAE’s status as the region’s trade and business hub.

Despite being close allies, Saudi Arabia and the UAE are competing to attract investors and businesses.

In Dubai on Wednesday, electronic signs celebrated UAE-Saudi friendship ahead of the Saudi national day on Thursday, but the two countries’ national interests have increasingly diverged, including in their relations with Israel and Turkey.

Saudi Arabia’s new trade rules excluded from the GCC tariff agreement goods made by companies with a workforce made up of less than 25% of local people – a problem for a country like the UAE where the population is mostly made up of foreigners.

It also said all goods made in free zones in the region would not be considered locally made – a blow to the UAE where free zones are a major driver of the economy.

The monthly drop in UAE import value was by far the sharpest decline this year, the statistics authority data showed.

The UAE slipped to third-main import country in July after China and the United States, while it was second in June.

“The July data might have been particularly volatile with regards to creating the required paperwork … The upcoming months might provide a clearer indication of the new Saudi regulations on UAE exports,” said Monica Malik, chief economist at Abu Dhabi Commercial Bank.

The value of Saudi Arabia’s overall exports jumped 79.6% compared with July 2020 when international trade was hit by the COVID-19 pandemic.

The increase was mainly because of higher oil exports, which increased 112.1% year on year, the authority said.


Saudis triumph in oil market with comeback from the coronavirus crisis

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When the OPEC+ alliance of oil producers gathers next week, group leader Saudi Arabia can savor a moment of triumph.

Eighteen months after slashing crude production during the pandemic, Riyadh is set to pump at almost pre-Covid levels of 9.8 million barrels a day this month as a recovering global economy clamours for energy supplies.

Furthermore, by bringing those shipments back slowly enough to avert a new surplus, Saudi Energy Minister Prince Abdulaziz bin Salman has revived crude prices to $80 a barrel. That’s swelled the kingdom’s petroleum revenues to a three-year high, putting them on track for an even bigger payout in 2022.

“OPEC+ has had a very good year,” said Ben Luckock, co-head of oil trading at commodities merchant Trafigura Group. “They have delivered: they have managed to thread the needle.”

That’s a far cry from the tumult of last March, when the plunge in fuel demand briefly pitched Organization of Petroleum Exporting Countries and its partners into a vicious fight over customers. Those bitter memories seem very distant as the 23-nation network — jointly led by the Saudis and Russia — prepares to meet on monday.

If there’s a threat to the delicate balance OPEC+ has achieved, it’s that the market could overheat and prices rise too high.

The alliance has signaled it will stick with its schedule of modest production increases by approving another 400,000 barrel-a-day increment for November. But the market has shifted since that road map was agreed in July.

The shortage of natural gas, which has sent prices to the equivalent of $190 a barrel, is spurring a switch to oil products for heating and manufacturing, boosting overall demand. U.S. oil production is still recovering from Hurricane Ida, which has knocked out a total of almost 35 million barrels after slamming the Gulf of Mexico a month ago — equivalent to almost two full months of OPEC+ supply increases.

Anxiety among key consuming nations is palpable, especially if they end up experiencing a cold winter. China has instructed top energy firms to secure supplies at any cost. U.S. President Joe Biden’s administration says it has reminded OPEC of the need to support the recovery, and National Security Adviser Jake Sullivan met with Saudi Crown Prince Mohammed bin Salman this week.

“OPEC will come under increasingly intense pressure from Washington to open the production release valve and cap the upside” in prices, said Helima Croft, chief commodities strategist at RBC Capital Markets. “An increase beyond the 400,000 barrels a day is a live option for Monday.”

That’s a view shared by the world’s largest independent trader, Vitol Group. Not only is demand being boosted by the shortage of natural gas, the supply outlook is tightening as prospects diminish for a swift deal to revive Iranian exports, said Chris Bake, the company’s head of origination.

Tehran and Washington have been involved in negotiations to reactivate a nuclear accord — and lift U.S. sanctions on Iranian oil shipments — but the talks have so far made little headway. As a result, roughly 1.4 million barrels a day of Iranian crude that traders thought might be entering the market in late 2021 remains absent.

Bigger Boost?
Some OPEC+ delegates say privately that the increase approved at Monday’s meeting could be bigger than the scheduled 400,000 barrels a day. Scenarios for larger hikes have been considered, said one official.

The Saudis themselves don’t want to see prices spiral toward $100 a barrel, as excessive fuel costs would curtail demand and stimulate a revival in U.S. shale output, according to people familiar with the kingdom’s thinking.

A spike in crude prices — just weeks before world leaders gather in Glasgow, Scotland, for a fresh round of climate talks intended to shift the world away from fossil fuels — could boost support for the transition to renewable energy.

But the kingdom is not yet convinced that crude’s jump above $80 in London earlier this week reflects a genuine supply shortage, the people said.

OPEC+ is likely to wait and see whether the natural gas deficit bolsters oil demand “materially” before speeding up the return of output, said Amrita Sen, chief oil analyst and co-founder of consultant Energy Aspects Ltd. Such steps may be taken “in the future, but not yet.”


Saudi Aramco’s once again a $2trn company as oil soars

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A Saudi court on Sunday issued a final order on the restructuring of the Algosaibi family’s conglomerate AHAB, putting a formal end to one of Saudi Arabia’s largest and longest debt disputes.

AHAB filed for a financial restructuring in 2019 under the framework of Saudi Arabia’s bankruptcy law, introduced the previous year to make the kingdom more investor-friendly.

The Dammam commercial court on Sunday issued the final ratification order for the AHAB restructuring, which is now unappealable, Simon Charlton, chief restructuring officer at AHAB, told Reuters.

“The company will now take steps to begin lifting the restrictions over assets and begin liquidating assets to be able to make distributions to its approved creditors,” he said.

AHAB’s creditors include local, regional and international banks. About a third of the firm’s debt has been traded for years by banks’ trading desks and hedge funds.

Under the settlement, AHAB’s creditors are expected to receive about 26 cents on the dollar for debt claims totalling 27.5 billion riyals (about $7.3 billion), Charlton said.

The settlement assets include over 800 million riyals in cash, a portfolio of publicly traded shares worth about 3.7 billion riyals, and real estate assets in Saudi Arabia.

The company will retain its core operating assets and plans to rebuild those businesses and the restructured group, possibly by raising external financing, Charlton said, adding that funding plans were at an early stage.

Creditors have been pursuing AHAB and Saad Group, a Saudi conglomerate owned by tycoon Maan al-Sanea, since they defaulted on about $22 billion in combined debt in 2009.

The Algosaibis and Sanea – who married into the Algosaibi family – have been locked in a bitter dispute over who was to blame for the 2009 collapse of the companies.

“AHAB will continue to pursue its claims in the Saad estate and against Al Sanea, who it continues to hold responsible,” Charlton said.

AHAB was one of the first companies to apply for a restructuring under the new Saudi bankruptcy law.

Before the law, modern bankruptcy legislation did not exist in Saudi Arabia, meaning the main options for defaults were liquidation or cash injections.


Kuwaiti logistics giant Agility applies for licence to run digital bank

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Kuwait-based logistics giant Agility confirmed on Tuesday that it applied for a licence to establish a digital bank.

The move is part of the company’s “ongoing focus on digital initiatives”, according to vice chairman and chief executive Tarek Al Essa in a statement to the Dubai Financial Market.

However he said the application is in its early stages, adding: “Agility has requested a licence to establish a digital bank but there is nothing material at the moment.”

The statement came in response to a report by Kuwait’s Al Rai newspaper on Agility’s plans which said the application includes an emphasis on technical aspects, cyber security, operational risks and measures to combat money laundering and terrorism financing.

The trend towards digital banking is gathering pace in the Gulf region.

In the UAE, Al Maryah Community Bank has become the first digital bank to serve UAE customers after launching its app while Emaar founder and chairman Mohamed Alabbar has previously announced that he will head Zand, the first digital bank in the world to provide both retail and corporate banking.

A survey from Boston Consulting Group (BCG) in October last year revealed that 87 percent of respondents in the UAE would be willing to open an account with a branchless digital-only bank.

Last year, Abu Dhabi investment firm ADQ revealed plans to set up a digital bank with an initial capital of AED2 billion after obtaining the legacy licence of First Gulf Bank.