Business

OPEC secretary general ponders energy security, transition

Published

9 months ago

09/03/2023

HOUSTON, March 7 (Xinhua)– Haitham Al Ghais, Secretary General of the Organization of the Petroleum Exporting Countries (OPEC), said on Tuesday the energy industry needs considerable investment to meet rising global demand and ensure market stability as energy security concerns return to the fore.

Meanwhile, he said the oil and gas industry, which will retain its share as a critical component of the energy mix, must transform and decarbonize operations.

As COP28 comes up in Dubai later this year, “We at OPEC stand fully behind the UAE to bring on board everybody,” he said during the annual CERAWeek global energy forum in Houston.

SECURITY OF SUPPLY

“The key thing that we focus on is always trying to make sure that there is stability, there’s adequate supply to the market,” said the secretary general, warning of the “underinvestment” in hydrocarbons.

“We’ve seen a significant shortfall in investments in the oil sector,” he said.

It can take a long time to come into actual energy production since the typical span is a “few years at best” and up to seven years before new projects come online, he explained.

As the global economy doubles in size, energy demand will increase by 23 percent, but “there is no imaginable way renewables can alone do this (meet the demand),” he told the audience.

He said the energy industry needs 12.1 trillion U.S. dollars in capital investment. “Unless this happens, I’m afraid, honestly, that we could be facing issues in the future with regard to energy security and, accordingly, affordability,” he added.

“We are investing already, and we urge and call others to invest. It’s a global responsibility that OPEC cannot shoulder on its own,” he went on.

SECURITY OF DEMAND

Al Ghais said it is not a concern that Russia redirects its crude oil exports while Middle East exports are increasingly going to Europe, citing his 30 years of experience in the industry.

“It’s quite normal to see this,” he said, “We’ve always seen redirection of flows, whether it’s related to geopolitical events or demand centers being created and others disappearing. So this is typical where we have a redirection in flows from the east to the west or the west to the east.”

According to the forecast from OPEC, oil demand will increase by 2.3 million barrels a year, with the majority of the rise in demand coming from China and India, the secretary general said.

However, the global energy market is big enough despite improving demand, said Al Ghais.

“What concerns us more is actually the slowdown we see in Europe and the U.S. in terms of the financial situation and the inflation,” he said, noting a divided market is emerging on the demand side.

“There is phenomenal demand growth in Asia,” he said, and Russia’s oil production has been “resilient and managed to find new homes.”

He added that without the existence of OPEC and its allies, a group known as OPEC+, there would be more instability and volatility.

“With security of supply, there is also a requirement for security of demand, and the tools fit in together like hand and glove,” said the OPEC chief.

ENERGY TRANSITIONS

OPEC sees energy transitions as “absolutely an opportunity,” Al Ghais said.

“I don’t think it’s a threat. Again, it was something that we are already embracing. We believe this is an opportunity for us to meet our Paris Agreement goals,” he said.

“I think it’s important to look at the whole issue of energy transition, which I prefer to call energy transitions, by the way, not transition, with a sense of reality,” he said, “There is no one size fits all solution.”

Al Ghais said the energy transitions should “focus on different countries’ capabilities, circumstances, their potentials, their financial capabilities, and so forth.”

“When we talk about transition here in the U.S. or in Europe, it means nothing to other people around different parts of the world. What we take here for granted, like switching on the light, (a) switch is not available in other places in the world,” he went ahead, noting there are a million Africans alone who have no access to electricity.

The five-day CERAWeek will conclude on Friday and is focused on the dual challenges of meeting the world’s growing energy demand while reducing emissions.

More than 7,000 participants, including policymakers, industry leaders, company executives, investors and researchers from over 80 countries and regions, joined the forum, according to organizer S&P Global.

Source(s): Xinhua

Business

More USD supplied in 2023 than last four years, says MMA

Published

3 days ago

02/12/2023

Maldives Monetary Authority (MMA) says it supplied more US dollars this year than the last four years, in its efforts to combat the dollar black market.

The central bank said it continues to supply US dollars to banks and state-owned enterprises.

In 2019, the MMA sold total USD 626.6 million under its foreign exchange intervention policy.

And in 2022, the central bank upped the amount to USD 993.7 million.

MMA said it increased its interventions by 3 percent this year.

MMA said it supplied US dollars to the State Trading Organization (STO) import staples, pharmaceuticals and fuel again this year, in order to mediate the impact on the foreign exchange rate due to the rise in global fuel rates.

The central bank said it also supplied US dollars to other state-owned enterprises to finance debt repayments.

MMA said that as part of additional efforts to address US dollar constraints faced by banks, it also issues US dollars to Maldivians who travel overseas at the rate of USD 500 per traveler via the Bank of Maldives (BML), and provides US dollars to hajj and umrah groups, and to people who travel overseas for medical treatment and education under set policies.

The dollar rate is currently upwards of MVR 18 in the black market – higher than the fixed bank rate of MVR 15.42. The BML has the daily limit for US dollar withdrawals fixed at USD 1,600.

Source(s): sun.mv

Business

Crude prices fail to rally after OPEC+ decision to cut oil supplies

Published

3 days ago

02/12/2023

VALLETTA, Dec. 1 (Xinhua) — Thursday’s decision by the Organization of the Petroleum Exporting Countries (OPEC) and its allies, a group known as OPEC+, to further cut down oil production next year has left the market disappointed, according to analysts.

OPEC+ announced further production cuts for next year to bolster oil prices that have recently tumbled amid a weakening economic backdrop. Several OPEC+ countries are to additionally cut a total of 2.2 million barrels per day (bpd) for the first quarter (Q1) of 2024, which aims to support the stability and balance of oil markets.

The reductions will be taken from the quotas adopted at the last OPEC+ ministerial meeting in June. It will add to the voluntary output cuts announced by OPEC+ countries in April and will last until the end of 2024, OPEC said in a statement.

Saudi Arabia, the de facto leader of OPEC, will extend its voluntary production cut of 1 million bpd, which has been in effect since July, to the end of Q1 2024. Russia, a leading OPEC ally, will cut its oil exports by 500,000 bpd, up from the current 300,000 bpd, until next March.

Other OPEC+ countries, including Iraq, the United Arab Emirates, Kuwait, Kazakhstan, Algeria and Oman, have pledged smaller cuts for Q1 2024, the OPEC said.

Warren Patterson, ING’s head of commodities strategy, noted that instead of seeing further cuts distributed among the whole group, it was left up to individual members to decide whether they would make deeper voluntary supply cuts.

“Our balance sheet shows that the additional voluntary cuts ensure that the marginal surplus that had been forecast for 1Q24 will be erased, and in fact, we now see a small deficit,” Patterson wrote on the ING website.

“This suggests that there is some upside to our current 1Q24 ICE Brent forecast of US$82/bbl and full-year 2024 forecast of US$88/bbl,” he said, “However, this will largely depend on how OPEC+ goes about unwinding these cuts and obviously on how demand plays out next year.”

“While OPEC seemed to build up expectations leading to a sharp rally, at the end of the day the market was skeptical that OPEC could keep its promises,” Phil Flynn, an analyst at the Price Futures Group, said.

Oil prices have slid since October amid concerns about oversupply in a weakening global economic outlook. The international benchmark Brent crude has stayed in the range of low- to mid-80 U.S. dollars a barrel in recent weeks, from this year’s peak of over 90 dollars a barrel in September.

Before Thursday’s OPEC+ ministerial meeting, analysts had expected the oil-producer group to make bigger production cuts next year to support the oil prices.

Crude prices failed to rally after the meeting, with Brent crude edging down 0.32 percent to settle at 82.83 dollars a barrel on Thursday.

Asset & Wealth Management Investment Strategy Group (ISG) at Goldman Sachs believes that the price of a barrel of oil is likely to trade between 70 and 100 dollars for most of 2024. The forecast reflects slowing oil demand growth arising from tighter financial conditions and still elevated U.S. recession odds over the coming year.

Source(s): Xinhua

Business

OPEC+ further cuts oil output amid falling prices

Published

3 days ago

01/12/2023

VIENNA, Nov. 30 (Xinhua) — The Organization of the Petroleum Exporting Countries (OPEC) and its allies, a group known as OPEC+, on Thursday announced further production cuts for next year to bolster oil prices that have recently tumbled amid a weakening economic backdrop.

Following a virtual meeting of OPEC+ oil ministers, OPEC said in a statement on Thursday night that its Secretariat “noted the announcement” of several OPEC+ countries to additionally cut a total of 2.2 million barrels per day (bpd) for the first quarter (Q1) of 2024, which aims to support “the stability and balance of oil markets.”

In breakdown, Saudi Arabia, the de facto leader of OPEC, will extend its voluntary production cut of 1 million bpd, which has been in effect since July, to the end of Q1 2024. Russia, a leading OPEC ally, will cut its oil exports by 500,000 bpd, up from the current 300,000 bpd, until next March.

Other OPEC+ countries, including Iraq, the United Arab Emirates, Kuwait, Kazakhstan, Algeria and Oman, have pledged smaller cuts for Q1 2024, the OPEC said.

However, the statement noted that the new output cuts will be “returned gradually subject to market conditions” to “support market stability” after March next year.

Before Thursday’s OPEC+ ministerial meeting, analysts had expected the oil-producer group to make bigger production cuts next year to support the oil prices.

Crude prices failed to rally after the meeting, with Brent crude edging down 0.32 percent to settle at 82.83 dollars a barrel on Thursday.

Thursday’s meeting also saw Brazil, one of the world’s top 10 crude producers, ready to join OPEC+ next year. Brazil’s Minister of Mines and Energy Alexandre Silveira de Oliveira attended the online meeting.

OPEC+ countries are set to convene their next ministerial meeting on June 1, 2024.

Source(s): Xinhua