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Oil prices slip as demand concerns outweigh efforts to curb supply

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Oil prices slip as demand concerns outweigh efforts to curb supply

Oil prices slipped on Tuesday, offsetting narrow gains in the previous session, as sluggish demand forecasts countered expectations that major producers would prop up oil prices by limiting crude oil output.

International benchmark Brent crude futures LCOc1 were down 18 cents or 0.3%, from the previous settlement, to $58.39 a barrel by 0310 GMT.

U.S. West Texas Intermediate (WTI) CLc1 futures were at $54.81 per barrel, down by 12 cents, or 0.2%, from the last close.

“Although the outlook remains bleak, oil prices have remained anchored this week after a rapid response from Saudi Arabia, who is serious about stepping in to defend the oil price,” Stephen Innes, managing partner at VM Markets Pte Ltd said in a note.

Saudi Arabia, the de-facto leader of the Organisation of the Petroleum Exporting Countries (OPEC), said late last week it plans to keep its crude oil exports below 7 million barrels per day in August and September to help drain global oil inventories.

Analysts expect the country to support prices ahead of its plans to float Saudi Aramco, in what could be the world’s largest initial public offering (IPO).

Saudi Aramco was ready for its IPO, but the timing for the deal will be decided by its sole shareholder, the Saudi government, a senior executive said on Monday.

Kuwait on Monday also reiterated its commitment to OPEC+ supply curbs after Oil Minister Khaled al-Fadhel said Kuwait had cut its own output by more than required by the accord.

OPEC and its allies, known as OPEC+, have agreed to cut 1.2 million barrels per day (bpd) since Jan. 1.

But booming U.S. shale oil production continues to chip away at efforts to limit the global supply overhang, weighing on prices.

U.S. oil output from seven major shale formations is expected to rise by 85,000 barrels per day (bpd) in September, to a record 8.77 million bpd, the U.S. Energy Information Administration forecast in a report.

Gloomy forecasts for the global economy and oil demand growth have also dragged on oil prices as the trade dispute between the United States and China escalates.

“The swift reaction from Saudi Arabia will likely stabilize oil prices, but the oil price probably won’t move much above $60 per barrel until there is evidence of progress in U.S.-China trade negotiations,” said Innes.

China’s central bank lowered its official yuan midpoint for the ninth straight day to a fresh 11-year low on Tuesday to reflect broad weakness in the local unit.

A lower yuan raises the cost of dollar-denominated oil imports in China, the world’s biggest crude oil importer, reports Reuters.

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Energy

Energy theft: KEDCO collaborates with Ministry of Justic

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Energy theft: KEDCO collaborates with Ministry of Justic

The Kano Electricity Distribution Company (KEDCO), has in collaboration with Federal Ministry of Justice, established a Special Investigation and Prosecution Task Force on Electricity Offenders (SIPTEO) to bring to book all offenders of various kinds.

This, according to the Managing Director of the Company, Mr Jamilu Isiyaku Gwamna, follows sabotage of the power sector reforms and operations of the company in Kano, Katsina and Jigawa states.

He said: “In view of these the management herewith uses this medium to inform the general public particularly those who are still in the business of vandalism, energy theft and meter by-pass and other unlawful acts to desist from such as there now exists a proper legal framework that will ensure that their next illegal act may become their last, as the laws of the Federal Republic of Nigeria will catch up with them.”

The Managing Director said all members of the taskforce have concluded a special training in line with global best practices to handle issues relating to power sector sabotage of any kind.

The members of the taskforce comprise KEDCO staff, security personnel and lawyers from the Federal Ministry of Justice.

“It is a well-balanced taskforce that will run all electricity offenders out of business and put them in their proper place according to the dictate of the laws,” he warned.

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Matters arising over new PSC Act

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Matters arising over new PSC Act

The Deep Offshore and Inland Basin Production Sharing Contract (PSC) Amendment Bill assented to by President Muhammadu Buhari has caused an upheaval in Nigeria’s oil industry. Adeola Yusuf reports

 

The Nigeria’s proverbial oil and gas tree was, last week, shaken to its root by two events that happened.

First, which happened to Nigeria from far away London, the United Kingdom (UK), was President Muhammadu Buhari’s signing the bill, an Act, which amends the Deep Offshore (and Inland Basin Production Sharing Contract).

This was promptly followed, some hours after, by the news of plans by French super major, Total, to exit from Oil Mining Lease (OML) 118.

While the industry players and watchers are yet to establish an official link between the two events, Total immediately appointed Investment bank, Rothschild, to manage the $750 million asset sale in Nigeria.

Opinions have been pouring on the new PSCs law in no small measure; all trying to justify or repudiate the move, altering the entire firmament of the industry.

NEITI’s opinion

The recent PSC Amendment Bill, which was assented to by President Buhari would usher in significant improvement in oil revenue for Nigeria, the Nigeria Extractive Industries Transparency Initiative (NEITI) said.

The agency commended the Presidency and the National Assembly for the speedy manner, the amendment process was handled. The bill was signed by President Buhari in London just a few days after it was passed by the lawmakers.

Executive Secretary of NEITI, Waziri Adio, said in Abuja that the amendment of the law was long overdue.

“We commend the 9th National Assembly and the Presidency for breaking the jinx with the prompt action taken to amend the law in record time,” Mr. Adio said.

The development, he said, was quite consistent with NEITI’s agitation for urgent amendment of the law to forestall further revenue losses to the federation.

He recalled that in March 2019, NEITI had published a policy brief titled “the 1993 PSCs: the steep cost of inaction,” which revealed that Nigeria lost between $16 billion and $28.61 billion in ten years for failure to review the terms of the agreement in 2008 as required by the law governing the PSCs.

The official said there were two notable triggers for the review of the Act in 2004 when crude oil price crossed the $20 per barrel mark, and in January 2008 after 15 years of the 1993 PSCs.

Section 16 (1) of the Deep Offshore and Inland Basin Production Sharing Contracts Act Cap. D3. LFN 2004 spelled out the conditions under which the PSCs should be reviewed.

The provisions of the Act stipulates that the law shall be subject to review to ensure that if the price of crude oil at any time exceeds $20 per barrel, the share of the revenue to the government of the federation shall be adjusted under the PSC.

The essence of the adjustment of the sharing formula was to ensure that the Production Sharing Contracts shall be economically beneficial to the government.

More revenue

The official expressed confidence that with the amendment of the law, revenue generation for the federation in the PSC arrangement in the oil and gas industry will witness significant improvement.

The Deep Offshore and Inland Basin Production Sharing Contracts Act was enacted on March 23, 1999, with its commencement backdated to January 1, 1993.

Bickering before review

Of late, the Federal Government, through the Office of the Attorney General of the Federation and Minister of Justice, Abubakar Malami, had been making a case for the recovery of over $62 billion from the international oil companies.

These are arrears of revenues that should have accrued to Nigeria over the years that oil sold above $20 a barrel.

Malami had accused the IOCs of frustrating efforts in the past for the government to negotiate the review of the PSC.

The morning after

Mass sack last Thursday loomed in Nigeria’s oil industry as more international oil companies mulled pull out from Nigeria’s oil bloc stakes.

The move, which came a few days after President Buhari assented to the bill, New Telegraph gathered, is to worsen the over 3500 job loss suffered by the Nigeria’s oil industry between 2016 and 2019.

French super major, Total, which pioneered the fresh exit plan from Oil Mining Lease (OML) 118, this newspaper gathered on Thursday, has appointed Investment bank, Rothschild, to manage the $750 million Nigeria’s asset sale.

Total is not the only international oil company that has stakes in the OML 118. The stake owners include Royal Dutch Shell 0- the operator, Exxon Mobil and Eni. While Royal Dutch Shell owns 55 per cent stake in the OLM 118, Exxon Mobil has 20 per cent, Eni and Total both own 12 per cent in the oil block.

There has been exchange of correspondences between the IOCs offices in Nigeria and their headquarters situated in their mother countries over this move, this newspaper can report authoritatively.

“While a lot of these correspondences centred on implications of the new law guiding Production Sharing Contracts (PSCs) to our bottomlines, our officers here in Nigeria have been tasked to take resolutions on the new bill as an emergency,” a top management staff of one of the oil majors told this newspaper.

Stating that there would be need for re-adjustment in revenues forecast and projections made on investments in Nigeria before the bill, he maintained that there would be “realignment in spending and possible right-sizing to reflect the new reality.”

Job loss fear

There has been mass sack of over 3,500 workers in Nigeria’s oil industry between 2016 and 2019, data compiled by this newspaper showed.

While the country’s economic recession was allegedly responsible for the sack of about 3,000 in 2016, the United States (U.S.) super oil major, Chevron, allegedly sacked 500 staff working on various projects of the company in Nigeria in 2019.

The two major unions in the oil and gas sector, Nigeria Union of Petroleum and Natural Gas (NUPENG) and Petroleum and Natural Gas Senior Staff Association of Nigeria (PENGASSAN), then, threatened to go on strike saying over 3,000 of their members were affected during the 2016 mass sack.

Total group is already looking for buyers for one of its major oil blocks in Nigeria. The oil company wants to sell off its 12.5 per cent stake and has already contracted an investment bank to manage the sale process of the deepwater oilfield.

Total’s 12.5 per cent stake in the deepwater oilfield, Oil Mining Lease 118, is estimated to worth $750 million. Part of the oil block includes Bonga field which began production in 2005.

According to report, the Bonga field has produced around 225,000 barrels of oil and 150 million standard cubic feet of gas per day at its peak. And with the $10 billion development of the Bonga Southwest field, production output is expected to grow.

OML 118 stakes

The decision to sell its stake in the OML 118, which is located some 120 kilometres (75 miles) off Niger Delta, is coming amidst Total’s expansion in Africa. The company was also reportedly planning to sell $5 billion of assets around the world by 2020; the sale of its stake in OML 118 is part of the assets’ sale.

The company appointed Investment bank, Rothschild to manage the sale process on its behalf.

Shell Nigeria Exploration and Production Company (SNEPCo), it would be recalled, invited interested bidders for the development of the Bonga South West Aparo (BSWA) oil field in February 2019.

It was reported that the project’s initial phaseincludes a new Floating, Production, Storage and Offloading (FPSO) vessel, more than 20 deep-water wells and related subsea infrastructure. The field lies across Oil Mining Leases 118, 132 and 140, about 15km southwest of the existing Bonga Main FPSO.

But Shell disclosed days after that the directive by the Nigerian government to foreign oil companies to pay $20 billion in taxes owed would delay the final investment decision (FID) on its Bonga Southwest deepwater oilfield.

OML 119 as a complement

What the government might lose in OML 118, it appears that it might gain from OML 119.

The Nigerian National Petroleum Corporation (NNPC) has publicly opened bids from the 14 companies for the financing and redevelopment of the oil bloc – OML 119.

The latest is that ten of the 14 firms jostling for the redevelopment financing deals for the oil  bloc are jittery over fate of their bids as four bids have already suffered “technical” disqualification.

The ill-fated bids submitted by four companies during an open bid round penultimate Friday, New Telegraph gathered exclusively yesterday, could not fly after a preliminary screening showed that the firms could not meet up with the financial requirement for the funding deals.

Group Managing Director of the Nigerian National Petroleum Corporation (NNPC), Mallam Mele Kyari, it would be recalled, publicly opened bids from the 14 companies for the financing and redevelopment of Oil Mining Lease (OML) 119.

OML 119 is a twin offshore block made up of Okono and Okpoho Fields located approximately 50 kilometers offshore south-eastern Niger Delta.

“As we speak, four of the 14 bids can not fly because even from the preliminary screening they have been technically knocked out for their inability to meet up with the financial requirement for the financing deal,” a source close to the deal said.

Noting that this development might have sent jitters down the spines of 10 other bidders, the source maintained that the NNPC “conducted an open bid because of its resolve to ensure that only those who are genuinely qualified are allowed to secure the deals.”

OML 119 is operated by the Upstream subsidiary of the corporation, the Nigerian Petroleum Development Company Limited (NPDC).

Speaking at the public opening of bids for the Funding and Technical Services Entity (FTSE) which held penulrimate Friday in Abuja, the GMD, according to a statement, said that OML 119 was one of the corporation’s critical projects.

This project, the statement issued by Acting Group General Manager, Group Public affairs division, Samson Makoji, read, “aligns wholly with the Federal Government’s aspirations of boosting crude oil and gas production, growing reserves, and monetizing the nation’s enormous gas resources.”

The GMD who was represented by the Chief Operating Officer, Corporate Services, Engineer Faruk Sa’id, stated that the selection process for the potential FTSE was transparent and in strict compliance with extant laws and overriding national interest.

He added that it was also in tandem with the Economic Recovery and Growth Plan (ERGP) and the TAPE agenda of the NNPC.

In his remarks, the Group General Manager, Supply Chain Management, Mr. Abdulhamid Aliyu, assured the companies that the selection process would remain transparent and fair.

Last line

The signing of PSC act shows that government can achieve anything if it is so desired to achieve. However, the investors/ concessionaire/oil companies must be carried along in the review as they are critical stakeholders that need co-operation rather than confrontation on any issue of national development.

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Nigeria, others fret as OPEC’s oil projection suffers slide

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Nigeria, others fret as OPEC’s oil projection suffers slide

2023 forecast falls to 32.7m barrels a day

 

The Organisation of Petroleum Exporting Countries (OPEC) at the weekend fretted as its oil demand projection slide by about seven per cent over the next four years, slumping to an average of 32.7 million barrels a day in 2023.

OPEC slashed estimates for the amount of oil it will need to pump in coming years, projecting that its share of world markets will shrink until the middle of the next decade amid a flood of U.S. shale supplies.

The producer group expects that demand for its oil will slide by about seven per cent over the next four years, slumping to an average of 32.7 million barrels a day in 2023, according to its annual report.

That could compel the OPEC and its partners — who have already curbed output this year to prevent a glut — to reduce supplies even further, or at least compete more fiercely among themselves for a diminishing portion of global markets.

The organization cut forecasts for demand for its oil each year from 2019 through 2023 by an average of about 5 million barrels a day, or roughly 16 per cent, though the numbers have been affected by membership changes. Qatar left the group at the beginning of this year.

OPEC will remain under pressure from rising U.S. oil output. America has become the world’s top oil producer through developing hydraulic fracturing, commonly known as “fracking,” in states such as Texas and North Dakota.

“The main driver of medium-term non-OPEC supply growth remains overwhelmingly U.S. tight oil,” OPEC said in its latest World Oil Outlook, using another term for shale oil.

By 2025, U.S. shale-oil output will climb more than 40 per cent to reach 17 million barrels a day, or 3.1 million a day more than OPEC projected in last year’s report. American oil will account for a fifth of global daily output at that time.

But the U.S. deluge will also be supplemented by supplies from regions which had either seemed in decline or uneconomical in an era of constrained crude prices, such as offshore Norway and Brazil, as well as Canada, Guyana and Kazakhstan.

OPEC and its partners are due to meet next month in Vienna, and will consider whether to deepen their current output cutbacks to avert another glut in 2020, according to the organization’s Secretary-General, Mohammad Barkindo.

Russia, the most important of OPEC’s allies, has been more cautious in signaling what needs to be done.

Some members of OPEC+, including Russia, are still falling short on their pledged cutbacks. But the coalition has considerable incentive to double down on its efforts: oil prices, currently just above $60 a barrel in London, are too low for most OPEC nations to cover government spending, including Saudi Arabia, the group’s biggest member.

Riyadh may also need higher prices as it sells part of state-owned oil giant Saudi Aramco, in what may prove to be the world’s biggest-ever initial public offering.

Yet the findings of this latest report could make them consider whether the strategy is backfiring, by propping up investment in U.S. shale drilling and perpetuating an oil oversupply.

Many analysts have said the group should have heeded the warning of former Saudi oil minister Ali al-Naimi, who predicted that by making room for shale, OPEC would be trapped in an endless spiral of production cuts.

OPEC’s current share of the global market is about 35 per cent, a level it sees dwindling by 2025 to 32 per cent, according to the report.

At the same time, the report does offer OPEC some solace if it chooses to stay the course. U.S. shale output growth will slow from the middle of the next decade, and then begin to decline from 2029 onward. OPEC’s share of the global market will rebound to 40 per cent by 2040.

Although it sees challenges from rival supplies, OPEC’s outlook shows less concern about demand. The report projects that global crude consumption will continue to grow until at least 2040, rejecting the idea increasingly circulating among investors and oil companies that demand will “peak” as countries move away from fossil fuels to avert catastrophic climate change.

While OPEC did lower demand forecasts, it said the reduction reflects a weaker economic backdrop rather than a shift away from carbon. Global oil demand will increase at a “healthy” rate of 1 million barrels a day until 2024, when it will reach 104.8 million barrels a day, then expand at a slower pace, to hit an average of 110.6 million a day in 2040.

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AfDB converts $1.5bn energy fund to concessional facility

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AfDB converts $1.5bn energy fund to concessional facility

The African Development Bank (AfDB) has made a U-turn on the $1.5 billion Sustainable Energy Fund for Africa (SEFA) as it converted the fund to a concessional finance facility.

The board of governors, AfDB, a document of the bank sighted by New Telegraph showed, has approved the conversion of the Sustainable Energy Fund for Africa (SEFA), which it administers into a “special fund” to amplify its development impact by allowing it to access a wider range of financial instruments.

Currently, SEFA supports small and medium-scale renewable energy and energy-efficiency projects through early stage interventions that enhance project bankability and access to private sector investments.

“Under the new dispensation, the fund will focus its interventions on green mini-grids to accelerate energy access to underserved populations green base load to support clean generation capacity and energy efficiency to optimise energy systems and reduce energy intensity,” the AfDB document read.

“This support will be provided through technical assistance and concessional investments that will improve the bankability of projects across innovative technologies and challenging geographies and crowd-in more commercial investments into the sector,” the bank maintained.

The special fund will provide critical support to African countries to accelerate the transition towards greener and more sustainable power systems, the bank’s acting Vice-President, Power, Energy, Climate and Green Growth, Wale Shonibare, said.

He said the special fund’s ability to provide various financial instruments would unlock more private sector investments in new technologies and businesses.

First established in 2012, SEFA is anchored in a commitment of $121 million by the governments of Denmark, United States, United Kingdom, Italy, Norway and Spain.

To date, it has committed $76 million across 56 projects in 30 countries.

The fund’s investments are expected to leverage over $1.5 billion in investments in new capacity and connections across Africa.

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Energy

Iran says its discovered new oil field with over 50bn barrels

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Iran says its discovered new oil field with over 50bn barrels

Iran has discovered a new oil field in the country’s south with over 50 billion barrels of crude oil, its president said Sunday, a find that could boost the country’s proven reserves by a third as it struggles to sell energy abroad over U.S. sanctions.

The announcement by Hassan Rouhani comes as Iranfaces crushing American sanctions after the U.S. pulled out of its nuclear deal with world powers last year.

Rouhani made the announcement Sunday in a speech in the desert city of Yazd. He said the field was located in Iran’s southern Khuzestan province, home to its crucial oil industry, reports The Associated Press.

Some 53 billion barrels would be added to Iran’s proven reserves of some 150 billion, he said.

“I am telling the White House that in the days when you sanctioned the sale of Iranian oil, the country’s workers and engineers were able to discover 53 billion barrels of oil,” Rouhani said, according to the semi-official Fars news agency.

Oil reserves refer to crude that’s economically feasible to extract. Figures can vary wildly by country due to differing standards, though it remains a yardstick of comparison among oil-producing nations.

Iran currently has the world’s fourth-largest proven deposits of crude oil and the world’s second-largest deposits of natural gas. It shares a massive offshore field in the Persian Gulf with Qatar.

The new oil field could become Iran’s second-largest field after one containing 65 billion barrels in Ahvaz. The field is 2,400 square kilometers (925 square miles), with the deposit some 80 meters (260 feet) deep, according to the semi-official Tasnim news agency.

Since the U.S. withdrew from the 2015 nuclear deal, the other countries involved — Germany, France, Britain, Russia and China — have been struggling to save it. However, they’ve offered no means by which Iran can sell its oil abroad. Iran since has gone beyond the deal’s stockpile and enrichment limits, as well as started using advanced centrifuges barred by the deal. It just began injecting uranium gas into centrifuges at an underground facility as well.

The collapse of the nuclear deal coincided with a tense summer of mysterious attacks on oil tankers and Saudi oil facilities that the U.S. blamed on Iran. Tehran denied the allegation, though it did seize oil tankers and shoot down a U.S. military surveillance drone.

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S’African fuel prices to drop in Nov

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The retail price of petrol in South Africa will decrease by 0.8% from November 6, while the price of wholesale diesel will fall by 1.1%, the energy department said on Tuesday.

The price of petrol will decrease by 13 cents to 16.08 rand ($1.09) per litre in the commercial hub of Gauteng province, while diesel will go down by 16 cents to 14.68 rand per litre.

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Oil trader Vitol pulls out of $1.5bn deal to buy Nigerian oil fields

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Oil trader Vitol pulls out of $1.5bn deal to buy Nigerian oil fields

Oil trader Vitol [VITOLV.UL] has quit a consortium that was set to buy a stake in two Nigerian oil fields from Brazil’s Petrobras (PETR4.SA), its former partner said on Friday.

Africa Oil (AOI.TO) said it would conclude the $1.5 billion purchase alone after Vitol and Delonex Energy pulled out of the deal to buy half of Petrobras Oil and Gas, known as Petrobras Africa, from the Brazilian company.

“We remain committed to completing this acquisition and look forward to working with Petrobras and all stakeholders to accomplish that goal,” Keith Hill, chief executive of Vancouver-based Africa Oil, said in a statement.

Africa Oil said the deal will go ahead under the previously agreed terms. It has agreed a $250 million loan facility with BTG Pactual and will fund the rest with available cash, reports Reuters.

BTG, Brazil’s largest independent investment bank, owns the other 50% stake in Petrobras Africa, whose core assets are stakes in offshore fields that produce Nigerian oil grades Agbami, Egina and Akpo.

Vitol did not issue a statement on the withdrawal.

A source close to Vitol said the deal was taking too long to close, including the wait for necessary clearances from Brazilian and Nigerian officials.

Two sources close to the deal also said Vitol soured on it in part because it would not have got physical oil cargoes from it. “At the end of the day, it was a non-core business for Vitol, so they walked away,” one source said.

The sale is part of a Petrobras effort to offload $21 billion in assets amid heavy debts and a corruption scandal.

The Petrobras Africa assets include an 8% interest in OML 127, which includes Agbami, and 16% interest in OML 130, which contains Akpo and Egina. A Chevron (CVX.N) affiliate operates OML 127, while Total (TOTF.PA) affiliates operate OML 130.

Akpo produces 130,000 barrels per day (bpd) of condensate, while Egina, which started last year, will produce roughly 200,000 bpd. Agbami, with 240,000 bpd of light, sweet crude, is the most prized part of the asset.

David Round, E&P analyst with BMO Capital Markets, said despite Vitol’s exit, it remains an attractive deal.

“Africa Oil’s decision to become sole acquirer (and ability to fund) illustrates the impressive level of cash generation from the assets, although we expect the market to remain cautious as completion is still pending after 12 months,” Round said.

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S’Arabia formally starts IPO of state-run oil firm

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S’Arabia formally starts IPO of state-run oil firm

Saudi Arabia formally started its long-anticipated initial public offering of its state-run oil giant Saudi Aramco on Sunday, which will see a sliver of the firm offered on a local stock exchange in hopes of raising billions of dollars for the kingdom.

An announcement from the kingdom’s Capital Market Authority serves as a starting gun for an IPO promised by Crown Prince Mohammed bin Salman since 2016.

Initial plans call for the firm’s shares to be traded on Riyadh’s Tadawul stock exchange, then to later put other shares on a foreign exchange, reports The Associated Press.

Prince Mohammed hopes for a very-optimistic $2 trillion valuation for Aramco, which produces 10 million barrels of crude oil a day and provides some 10% of global demand. That would raise the $100 billion he needs for his ambitious redevelopment plans for a Saudi Arabia hoping for new jobs, as unemployment stands at over 10%.

However, economic worries, the trade war between China and the U.S. and increased crude oil production by the U.S. has depressed energy prices. A September 14 attack on the heart of Aramco already spooked some investors, with one ratings company already downgrading the oil giant.

The announcement by the Capital Market Authority offered no timeline for the IPO.

“The Capital Market Authority board has issued its resolution approving the Saudi Arabian Oil Co. application for the registration and offering of part of its shares,” the authority said in its statement. “The company’s prospectus will be published prior to the start of the subscription period.”

The Saudi-owned satellite channel Al-Arabiya reported last week, citing anonymous sources, that pricing for the stock will begin November 17. A final price for the stock will be set December 4, with shares then beginning to be traded on the Tadawul on December 11, the channel reported. The channel is believed to have close links to the kingdom’s Al Saud royal family.

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Report: Saudi Crown Prince approves kick-off of Aramco IPO on Sunday

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Report: Saudi Crown Prince approves kick-off of Aramco IPO on Sunday

Saudi Arabia’s Crown Prince Mohammed bin Salman on Friday agreed that the initial public offering of state oil giant Aramco will be announced on Sunday, five sources familiar with the matter told Reuters.

The world’s top oil company will announce its intention to float (ITF) on November 3, the sources said.

“The crown prince finally gave the green light,” one source said.

Aramco declined to comment.

Saudi Aramco officials and advisers have held last-minute meetings with investors over the past few days in an attempt to achieve as close to a $2 trillion valuation as possible ahead of an expected listing launch on Sunday, according to sources.

The final meeting by the Saudi government on Friday evening was to decide whether to go ahead with the listing.

To achieve $2 trillion, in the largest IPO in history, Riyadh needs the initial listing of a 1%-2% stake on the Saudi stock market to raise at least $20 billion-$40 billion.

The listing is the centerpiece of the crown prince’s plan to shake up the Saudi economy and diversify away from oil. But there have been various delays since it was first announced in 2016.

Prince Mohammed wants to eventually list a total of 5% of the company. An international sale is expected to follow the domestic IPO.

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Oil falls on weak Chinese industrial data

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Oil falls on weak Chinese industrial data

Oil prices fell on Monday after strong gains last week as data released in China reinforced signs that its economy is slowing, although progress in China-U.S. trade talks has supported prices.

Brent crude was down 32 cents or 0.5 per cent at 61.70 dollars a barrel by 0933 GMT, having gained more than 4 per cent last week — its best weekly gain since September 20.

West Texas Intermediate crude was down 33 cents or 0.6 per cent at 56.33 dollars a barrel after rising more than 5 per cent last week — the biggest weekly increase since September 20, reports Reuters.

Profits at Chinese industrial companies fell for the second straight month in September as producer prices continued their slide, highlighting the impact of a slowing economy and protracted U.S. trade war on corporate balance sheets.

Still, traders were optimistic after the U.S. Trade Representative’s office and China’s Commerce Ministry said on Friday that the two countries were “close to finalizing” some parts of a trade agreement.

“Looking further ahead, if trade talks continue to progress and we see full agreement to phase one of the deal, this should help to improve sentiment further,” ING analyst Warren Patterson said.

U.S. energy companies reduced the number of oil rigs operating this week, leading to a record 11-month decline as producers follow through on plans to cut spending on new drilling.

Russia’s energy ministry said that OPEC and its oil-exporting allies, known as OPEC+, would factor in the slowdown of U.S. oil output growth when they meet to discuss their output agreement in December.

However, Russian Deputy Energy Minister Pavel Sorokin said it was premature to talk about deeper production cuts.

OPEC+ has since January implemented a deal to cut output by 1.2 million bpd to support the market. The pact runs to March 2020 and the producers meet to review policy on December 5-6.

“We are of the view that an extension of current cuts is path of least resistance for the producer group, while deeper cuts will be far more difficult to agree on,” Harry Tchilinguirian, global oil strategist at BNP Paribas in London said.

Elsewhere, a suggestion by U.S. President Donald Trump that Exxon Mobil or another U.S. oil company could operate Syrian oil fields drew rebukes from legal and energy experts.

Money managers cut their net long U.S. crude futures and options positions in the week to October 22, the U.S. Commodity Futures Trading Commission said on Friday.

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