BEIJING: China’s biggest energy firm PetroChina is reviewing its multi-billion-dollar push to produce liquefied natural gas (LNG) to fuel trucks and ships in place of diesel, shutting two loss-making gas liquefaction plants, sources said.
PetroChina unit Kunlun Energy Co. Ltd. closed the two major plants in the past month, wrongfooted by rising costs for gas and China’s slower growth rate that has cooled demand, two sources with direct knowledge of the situation said.
Seen just a year ago as a fast-growing profit engine, the firm is now reviewing investment in the niche business that chills gas into liquid form, sourcing the gas from small producing fields or from pipelines tapping large inland basins, they said.
LNG is increasingly being seen as a potential transport fuel, and can nearly treble a vehicle’s driving range over rival compressed natural gas (CNG). Royal Dutch Shell last year agreed to run LNG fueling lanes at up to 100 major truck stops along US interstate highways.
LNG is cleaner and nearly a third cheaper than diesel, China’s main transport fuel. Oil firms had an ambitious goal back in 2011 to replace 10 percent of automotive diesel consumption with gas by 2015, industry officials have said.
Led by the private sector, China has built dozens of small-scale onshore gas liquefaction facilities since 2001 to tap marginal gas fields located off the national pipeline grid, filling a supply gap as demand for lower-carbon producing LNG surged.
Kunlun, a relative latecomer, emerged as a leader of the business, having spent billions of dollars on a dozen LNG plants, mainly in the country’s west and north, and building over 600 gas refueling stations. The company separately operates two multi-billion-dollar LNG import terminals on China’s east coast.
It also helped put nearly 80,000 LNG vehicles on the road by the end of 2013 by working with auto makers and truck fleet owners, said a Kunlun executive, who declined to be named as he was not authorized to talk to the media.
But since the second half of 2013, Kunlun has seen utilization rates at some of its plants fall below 50 percent, he said, amid a broad economic slowdown and as Beijing rolled out a gas price reform that pushed up prices of feed gas.
An anti-corruption probe of top PetroChina executives, including Kunlun’s former chairman Li Hualin — a protege of China’s ex-security chief Zhou Yongkang who is now officially under investigation — added to uncertainty about the company’s business strategy, said the Kunlun executive.
A PetroChina spokesman did not respond to Reuters questions.
Kunlun Energy’s investor relation chief was not available for comment.
PLANT SHUTDOWNS
In July, barely a month after the start of trial production, Kunlun shut down a 1.2 million ton per year (tpy) liquefaction plant at Huanggang in the central province of Hubei, the sources said.
The plant, the largest of its kind in China, had aimed to supply LNG to vessels along the Yangtze, China’s longest river.
A second plant at Ansai in northern Shaanxi province was closed a month ago. Neither plant has a clear date for a restart, the sources said.
Kunlun is now test-running a new 600,000-tpy facility in Tai’an, in the eastern province of Shandong, following some early technical glitches.
“For the (Tai’an) plant, the day it starts running is the day it begins incurring a loss,” said an official at PetroChina parent China National Petroleum Corp. (CNPC), who was involved in building all the three projects, which had a combined cost of about $1.3 billion.
Beijing introduced a new pricing scheme in July 2013 aimed at converging its domestic natural gas prices with the cost of imported gas by end-2015, to encourage domestic production and more imports by ship and pipeline.
Wholesale gas prices were raised by 15 percent last July, and the government earlier this week announced a fresh hike of about 18 percent to take effect from September.
The changes have pushed up the price of the gas feedstock for LNG, but the slower economy has meant producers have been unable to pass on the increased costs to consumers.
“It’s a combination effect of price reform and the slowing economy. The sales prices for LNG couldn’t catch up with those of feed gas,” said Diao Zhouwei, Beijing-based gas market analyst at research firm IHS Energy.
Kunlun’s plants that started after mid-2013 are paying the so-called “incremental” gas prices that are linked to the cost of imported fuels, although some smaller LNG facilities are still paying lower “existing volume” prices, due to agreements with local governments, the sources said.
A slowdown in construction, coal mining and transportation sectors is also taking away the incentive for trucks to switch to gas as it involves an upfront additional cost that normally takes some eight months to pay back.
The CNPC official said PetroChina has temporarily put a ban on expanding its onshore LNG business while it studies the economics of its existing plants.
PetroChina reviews LNG investment strategy
PetroChina reviews LNG investment strategy
Saudi Arabia’s property market set for growth with billions in new projects
- The largest PIF projects in the Kingdom are in the Asir region
- At least 50 percent of the country’s tourism is expected be centered in Riyadh
RIYADH: The Saudi real estate landscape is poised for substantial growth, as industry leaders, policymakers, and investors gathered at the Real Estate Future Forum in Riyadh to unveil major developments in property investment and tourism.
Highlighting the Kingdom’s ambitious Vision 2030 objectives, Asir Gov. Prince Turki bin Talal revealed the Public Investment Fund is spearheading nine major projects in the region, with four already launched and five in progress. “The largest PIF projects in the Kingdom are in the Asir region,” the governor said, emphasizing the region’s pivotal role in Saudi Arabia’s evolving property market.
The governor highlighted the region’s growing hospitality sector, with between 6,000 and 8,000 approved hotel rooms currently available.
He also announced that Abha’s World Cup bid had been officially recognized as the best in the Kingdom by the Ministry of Sports.
Meanwhile, Al-Ahsa Gov. Prince Saud bin Talal unveiled plans to expand the region’s hospitality offerings. “Our pipeline includes over seven or eight hotels and more than 25 rural lodges, including three five-star hotels: Hilton, Radisson Blu, and Hilton Garden Inn,” he said. Saudi Tourism Minister Ahmed Al-Khateeb noted the rapid expansion of the Kingdom’s hospitality industry, with hotel room capacity expected to grow from 475,000 to 675,000 by 2030. Al-Khateeb also discussed the impact of major infrastructure projects, such as the King Salman International Airport expansion and the launch of Riyadh Air, which are central to the Kingdom’s hyper-tourism strategy.
He forecast that at least 50 percent of the country’s tourism will be centered in Riyadh, but emphasized efforts to keep the capital’s share from exceeding 80-90 percent. In the financial sector, Mohammed El-Kuwaiz, chairman of the Capital Market Authority, discussed the increasing role of real estate in the Kingdom’s investment market.
“Around 20 percent of the 55 initial public offerings currently under review involve real estate companies,” he revealed.
El-Kuwaiz emphasized the importance of financial stability and transparency for companies looking to list, advising them to treat investors as partners.
In a significant move, he also announced that listed companies owning properties in Makkah and Madinah can now welcome foreign investors immediately.
SAMA permits full public launch of STC Bank in digitalization push
RIYADH: The Saudi Central Bank, also known as SAMA, has authorized STC Bank to launch its full operations in Saudi Arabia.
As the first licensed digital bank in the Kingdom, STC Bank’s approval marks a significant step in SAMA’s ongoing strategy to accelerate digital transformation and enhance competitiveness in the banking sector.
At the same time, the move ensures the safeguarding of financial stability, according to a press statement from the central bank.
This milestone underscores the growing dynamism and potential of Saudi Arabia’s digital economy, while also highlighting SAMA’s efforts to create a regulatory framework that fosters innovation within the financial sector.
“SAMA is committed to strengthening the resilience of the banking sector, boosting its appeal, and increasing its role in achieving Saudi Vision 2030 and the Kingdom’s broader national objectives. This includes empowering entrepreneurs and financial institutions to deliver innovative financial services to the Saudi market,” the central bank said.
The approval follows a significant step taken in April 2024, when SAMA formally approved the transition of STC Pay — the mobile financial services arm of Saudi Telecom Co. — to STC Bank. Following a nine-month beta launch, STC Bank is now poised to begin its full banking operations.
Additionally, in December 2024, SAMA also gave the green light to D360 Bank, another digital financial institution, allowing it to begin its operations in the Kingdom.
Al-Habtoor Group halts investment plans in Lebanon amid growing instability
DUBAI: UAE-based business conglomerate Al-Habtoor Group has abandoned its plans to reenter the Lebanese market, citing ongoing “unrest and instability” caused by armed militias.
In a statement issued on Tuesday, Khalaf Al-Habtoor, chairman of the group, explained that recent developments had deeply shaken his optimism.
“My team and I had been diligently preparing to launch new projects and expand existing investments in Lebanon, encouraged by promising signs such as the election of Gen. Joseph Aoun as president and the nomination of Nawaf Salam as prime minister. Both individuals embody integrity, credibility, and respect, instilling renewed hope among the Lebanese people — and investors like myself — for the country’s future,” the statement read.
However, he said that the continued dominance of armed militias, particularly what he described as “Shiite militias”, and the “absence of rule of law” have made it impossible for investors to proceed with confidence.
Tensions escalated with Hezbollah supporters holding rallies in Beirut, including in Christian-majority neighborhoods, further raising sectarian divisions. The protests followed the return of Shiite residents to southern Lebanon after a ceasefire between Israel and Hezbollah was recently extended.
In his statement, Al-Habtoor lamented the lack of decisive action from Lebanese authorities, including the army and the Ministry of Defense, in addressing these disturbances, noting that the situation was only worsening.
Unless the new government takes a firm stance against those working to destabilize the country, hopes for a “new Lebanon” will remain unfulfilled, he said.
Al-Habtoor clarified that the decision to pull out was made after careful analysis and close monitoring of the situation. As a result, neither he, his family, nor any group managers would be traveling to Lebanon.
Earlier this month, and following the wave of optimism that followed the election of President Aoun and Prime Minister Nawaf Salam, Al-Habtoor told Arab News in an interview that his group intended to move forward with plans to reopen its five-story mall in Beirut and relaunch the Habtoorland amusement park in Jamhour, contingent on Lebanon’s government delivering the promised security and stability measures.
The group, a multibillion-dollar global conglomerate, has diverse interests spanning luxury hotels, shopping malls, and more. As of January last year, its investments in Lebanon were estimated at around $1 billion.
Experts predict suburban boom, smarter housing designs in Saudi Arabia
RIYADH: The rise of community living and the increased accessibility of suburbs, driven by advancements in transportation, are transforming real estate trends in Saudi Arabia, experts say.
At the Real Estate Future Forum in Riyadh on Jan. 28, Khaled Elsehamy, chief development officer for real estate at the National Housing Co., highlighted the significant shift in the Kingdom's real estate sector. According to Elsehamy, more people are now viewing suburban areas as attractive living options.
During a panel discussion, Elsehamy also noted a growing preference among Saudi residents for smaller housing units, moving away from the traditional multigenerational homes.
“Suburbs are becoming increasingly appealing,” Elsehamy said. “People now find areas outside the central cities more attractive due to their convenience, accessibility, and proximity to essential services. They can easily connect with the city whenever they wish.”
He continued: “The rising costs of utilities, furniture, and maintenance have led people to seek smaller, more efficient homes. There is a growing demand for durable, modular designs that offer long-term savings while meeting modern needs.”
Elsehamy’s remarks came just a day after NHC CEO Mohammad Al-Buty announced that lower interest rates in 2025 will help the company surpass its 2024 sales targets. This aligns with NHC’s broader ambition to become the leading real estate developer in the region and stay at the forefront of the industry.
Elsehamy also discussed the shifting mindset of Saudi homebuyers, noting a stark contrast to traditional purchasing habits. “In the past, people bought homes for their children and grandchildren. That’s no longer the case,” he explained.
“Today, people are looking for homes that fit different life stages. They think, ‘I’ll live in this house now, move to a bigger one later, and eventually downsize to a smaller place by the beach in 20 years.’”
The NHC official emphasized that community living is driving new trends in Saudi Arabia’s housing market. “Community living allows residents to interact more with those around them, and it often includes amenities like community centers where people can work, especially those with remote work options.”
Echoing these sentiments, Andrew Baum, emeritus professor at Oxford, also spoke during the panel, highlighting how modern homebuyers prioritize accessibility over location.
“Previously, location was everything in real estate,” said Baum. “But today, accessibility has become the key factor. The new metro in Riyadh is set to significantly impact property values, opening up newly accessible areas.”
Oussama Kabbani, group chief Development officer at ROSHN, emphasized that Saudi Arabia’s real estate sector has reached a global standard post-Vision 2030. Reflecting on ROSHN’s approach to enhancing community living standards, Kabbani explained that understanding customer needs is central to their success.
“It all comes down to data and actively listening to your customers,” he said. “We conduct numerous surveys online and engage directly with residents to understand what’s missing. We focus a lot on creating activities for children, with educational and cultural events to keep them engaged.”
He continued: “We also place a strong emphasis on sports. It's not complicated — you don’t need to spend a fortune to make people happy. The key is knowing what makes them happy and delivering it with quality.”
Kabbani also noted the growing sophistication of the community real estate sector. He predicted that investments in senior living spaces, alongside data centers and healthcare facilities, would soon become more prominent.
“Our communities are designed with schools, community centers, playgrounds, and more,” Kabbani added. “When people choose to live in our communities, they’re not just buying a home — they’re buying a lifestyle. And we’re committed to ensuring that lifestyle is truly lived.”
During the session, Nasser Al-Kadi, chief investment officer at Awqaf Investment, praised the recent regulatory reforms in Saudi Arabia’s real estate sector, noting their positive impact on the market.
He emphasized the importance of embracing technological advancements to further modernize the sector. “The regulatory changes in Saudi Arabia have not only attracted external capital but also increased transparency within the industry,” Al-Kadi said.
He continued: “Technology isn’t just a tool for optimization — it’s a driver of growth and innovation. We haven’t yet seen the full potential of these technologies in the Kingdom’s real estate sector.”
Robert J. Di Franco, chief development officer at Roaya Co., also highlighted the growing influence of technology, stating that innovation is fundamentally reshaping every aspect of the real estate industry.
“Innovation and technology are shaping everything we do — from pre-acquisition phases to market analysis, accessing real-time transactional data, to how we manage construction projects and facility handovers. Technology is now integrated into every part of our process,” Di Franco said.
Foreign investments set to revive Makkah’s property market: Ladun CEO
RIYADH: Saudi construction firm Ladun Investment Co. expects a surge in Makkah’s real estate sector following a key ruling by the market regulator allowing foreign investment in Saudi-listed companies owning property in the holy cities.
In an interview with Arab News at the Real Estate Future Forum in Riyadh, Hassan Al-Hazmi, CEO of the Tadawul-listed firm, emphasized that the new regulations are poised to drive investor confidence in Makkah’s market, which has faced stagnation in recent years.
On the event’s opening day, the Kingdom’s Capital Market Authority announced that the Makkah and Madinah real estate markets will now be open to foreign investors. However, investments are limited to shares or convertible debt instruments of listed companies, with total non-Saudi ownership — individuals and legal entities — capped at 49 percent of a company’s shares.
The decision is expected to enhance the competitiveness of Saudi Arabia’s capital market and support the Vision 2030 economic diversification agenda.
“As Mohammed El-Kuwaiz, chairman of the CMA, mentioned yesterday (Jan. 27), the regulations have been studied for more than three years. He said they were supposed to be approved two years ago but were delayed to make them more holistic. There is now a big study regarding foreign investors having ownership in Makkah, Madinah, and the Kingdom as a whole,” said Al-Hazmi.
He said Ladun is focused on Makkah and anticipates growth. “We already manage and own assets in Makkah worth more than SR3.2 billion ($853.1 million).”
Al-Hazmi noted that Makkah’s real estate sector had faced stagnation since 2014, particularly due to the impact of COVID-19 on religious tourism and travel. However, he believes that the sector is on the brink of recovery.
“We already see signs of recovery — companies owning assets in Makkah are experiencing a rise in their share prices. This is very positive, and we anticipated this shift and planned accordingly,” he added.
Ladun is also focused on localizing its workforce and increasing Saudi employment opportunities, aligning with government initiatives.
“Just today, we signed an agreement with the Ministry of Municipal and Rural Affairs and Housing regarding human capital and how we are going to localize more Saudis. At the managerial level, including our C-suite, we have Saudis,” Al-Hazmi said.
He added: “In middle management, we have many young men and women who are part of our company, and they are truly giving us great empathy and trust in ourselves to move forward. This is one of the pillars of Vision 2030.”
In November, Ladun announced a new investment in Jabal Omar Development Co. in partnership with Musharaka Capital, acquiring a land plot worth SR600 million with an expected revenue of approximately SR2 billion. This investment is viewed as a major step in reinforcing Ladun’s presence in Makkah’s evolving real estate market.
Al-Hazmi also highlighted the broader impact of Vision 2030 on the Saudi real estate market, particularly in Makkah, which he sees as a prime beneficiary.
“Stability brings prosperity, and Saudi has enjoyed stability for 100 years now, that brings prosperity. We see it. We see it around the region,” he said.
Referring to comments made by Larry Fink, CEO of BlackRock, during the World Economic Forum in Davos, Al-Hazmi added: “Larry mentioned that if we take the US aside, we will find the most stable area in the world the GCC countries. Prosperity will be there.”
With a focus on sustainable expansion, strategic investments, and market recovery, Ladun Investment Co. remains optimistic about its role in shaping Makkah’s future real estate landscape.
