CHONGQING, China/SINGAPORE: China plans to launch a natural gas exchange in Chongqing in early 2018, aiming to create an Asian price benchmark as the nation’s use of the fuel surges amid its shift away from coal.
China is the world’s third-biggest consumer of natural gas behind the United States and Russia. An exchange in its fast-growing market would be a strong contender for an Asian gas marker off which other supplies in the region could be priced.
The Chongqing Oil and Gas Exchange — supported by state energy majors, and private and local government-backed gas distributors — would provide a trading platform for domestic output, pipeline imports from Central Asia and Myanmar, and imports of liquefied natural gas (LNG).
Chongqing is China’s second attempt to develop a traded gas market, having set up a similar exchange in 2015 in Shanghai.
An Asian gas price benchmark to stand next to those of the United States and Europe is seen as a key missing piece in establishing a truly global market for natural gas.
“The exchange is a product of the government’s reform push — to hand the pricing power to the market,” Exchange Chairman Zhang Bowen told Reuters.
“The long-term goal is to build the exchange into a benchmark for Asia and to win China its deserved pricing power,” said Zhang, who was previously president of PetroChina Kunlun Energy.
The exchange, led by a board of nine directors including a former PetroChina executive and an ex-senior state planning official, expects to launch electronically-based spot trading of pipeline gas and LNG imports in the first half of next year.
Registered in Chongqing municipality in July with 1 billion yuan ($150 million) in capital, the exchange has a team of 30, including former market developers at state-owned energy giants CNOOC and Sinopec.
“A China gas hub certainly looks attractive from a supply/demand and infrastructure perspective,” said Jeff Brown, president of consultancy Facts Global Energy (FGE).
Chongqing exchange is appraising around 200 potential members, mostly from the consuming hub of eastern China, and will be open to foreign participation in the longer run, said exchange executives.
Still, there are several challenges to overcome, for Chongqing or any other exchanges hoping to establish an active gas trading platform.
“The biggest would be that the government is still heavily involved in ‘guiding’ prices. Access to pipelines and import terminals can also be difficult,” said Brown.
China’s National Development and Reform Commission (NDRC) currently sets wholesale or city-gate gas prices by linking them to alternative fuels such as liquefied petroleum gas (LPG) and fuel oil.
Investors fear China could be as heavy-handed with gas as it has been with coal. Authorities have repeatedly intervened whenever coal prices have risen sharply, contributing to the virtual death of coal futures in Asia.
China is also struggling to build the infrastructure needed to freely distribute gas supplies. An inadequate pipeline grid and insufficient storage helped to trigger a supply crunch this winter after millions of households were switched from using coal to gas for heating.
“Pipelines need to be more connected and greater access allowed for third parties to the grid and terminals. More investments are needed to boost gas storage,” Song Dacai, chairman of the Chongqing exchange’s supervision committee and formerly a pricing official with the NDRC.
The exchange, though, is confident rising demand and slowly expanding gas infrastructure will help it succeed.
Chongqing, with its population of more than 30 million and proximity to Sichuan province’s large gas basin, already has a relatively well-developed gas grid, and distributors there are keen to participate on the exchange.
“As an investor, we are keen to become a market maker, provided that suppliers are ready to post meaningful volumes for us to trade,” said Luo Jing, deputy head of gas development at China Gas Holdings, a piped gas distributor.
State majors are expected to nominate available volumes on the exchange annually or bi-annually, said Zhang, the exchange chairman.
Others that are trying to develop regional gas exchanges as the basis for an Asian benchmark include Shanghai Petroleum and Gas Exchange and the Japan Korea Marker (JKM) by S&P Global Platts.
The Shanghai exchange, launched in 2015, has so far failed to attract much trading interest. China’s financial hub, though, is seen as a potential oil and gas trading center and likely home of China’s long delayed crude oil derivatives contract.
In many way, the JKM, an LNG price assessment, is seen as the strongest contender to become a regional gas benchmark.
“JKM seems to be gaining steam as an Asian gas price ... Since LNG is the most commoditized gas in Asia, it seems best placed to emerge as the Asia price marker,” FGE’s Brown said.
China’s Chongqing gas exchange aims to be Asia price benchmark
China’s Chongqing gas exchange aims to be Asia price benchmark
Fortune Global Forum to be held in Riyadh in 2025
RIYADH: The elite of the world's business leaders will converge on Riyadh next year as the Fortune Global Forum makes its inaugural appearance at the Saudi capital.
The event, organized by Fortune magazine, is attended by presidents, chairmen and CEOs, as well as prestigious economists.
Fahd bin Abdulmohsan Al-Rasheed, chairman of the Saudi Convention and Exhibitions General Authority, said for the past 30 years the forum had brought together “the titans of industry around the world to the forefront of economic development.”
Speaking at this year’s forum, which concluded in New York on Tuesday, he added: “And that forefront today is the Kingdom of Saudi Arabia.”
He urged delegates to visit the Kingdom’s business epicenter to see what it had to offer.
Saudi Arabia launches company to transform Asir into global tourism hub
RIYADH: Saudi Arabia’s Asir region has launched a new tourism venture through a partnership with the aim of creating a holding company to transform the area into a global tourist destination.
The collaboration between Aseer Investment Co., a subsidiary of the Public Investment Fund, and Rikaz Real Estate, aligns with the goal of transforming Asir into a world-class tourist destination that combines authentic heritage with sustainable development, according to the Saudi Press Agency.
The holding company seeks to contribute to enhancing a tourism environment that enriches guests’ experiences with unique offerings, connecting visitors to local culture and community traditions, SPA reported.
It is also committed to promoting sustainable tourism by protecting the environment, developing local communities, and collaborating with artisans and local businesses to preserve the authenticity of Asir’s heritage.
In October, the Kingdom’s Abha city secured a new investment partnership to boost tourism by developing culturally rich dining and retail experiences.
PIF firm Aseer Investment Co. signed the deal with Nimr Real Estate and the National Co. for Tourism, or Syahya, to propel the project, the Saudi Press Agency reported.
This aligns with the objectives of developing Abha, which will offer a range of benefits, including retail stores that reflect the cultural heritage of the Asir region.
The partnership also seeks to be a model for multiple collaborations with private sector investors and create more regional job opportunities.
Investments in the region are expected to create between 14,000 and 18,000 job prospects and contribute to up to 6 percent of the non-oil gross domestic product within 10 years, as outlined by AIC Chief Executive Osama Al-Othman in February.
Saudi Arabia emerged as a leader in tourism growth among G20 nations, experiencing a 73 percent increase in international visitors in the first seven months of 2024 compared to 2019.
According to the UN World Tourism Barometer report in September, the Kingdom welcomed 17.5 million international tourists during this timeframe, showcasing its growing allure as a global travel destination.
This surge is part of the nation’s Vision 2030 initiative, which aims to diversify the economy and reduce dependence on oil revenues.
“Saudi Arabia cements its global leadership and takes the first spot among G20 countries in international tourist arrivals growth, with a 73 percent increase in the first seven months of 2024 compared to the same period in 2019,” stated the Saudi Tourism Ministry on X.
Under the National Tourism Strategy, the Kingdom aims to attract 150 million visitors by 2030 and increase the sector’s contribution to the nation’s gross domestic product from 6 percent to 10 percent.
These goals reflect the country’s commitment to strengthening its tourism sector and enhancing its global appeal.
IMF, Saudi Arabia announce new annual conference tackling global economic challenges
RIYADH: The International Monetary Fund and Saudi Arabia will jointly organize a high-level annual conference in AlUla to discuss global economic challenges, it has been announced.
The AlUla Conference for Emerging Market Economies will bring together a select group of finance ministers, central bank governors, and policymakers, along with leaders from the public and private sectors, representatives from international institutions, and members of academia.
According to a joint statement by Kristalina Georgieva, managing director of IMF and the Minister of Finance Mohammed Al-Jadaan, the first edition of this series will be held from Feb. 16-17, 2025.
“The world is confronting deeper and more frequent shocks, including from conflicts, geoeconomic fragmentation, pandemics, climate change, food insecurity, and the digital divide,” according to the statement.
They continued: “If not addressed adequately, these shocks put at risk emerging market economies’ hard-won improvements in living standards. Such setbacks would affect large segments of the world population and put at risk global growth and macro-financial stability.”
The gathering will offer a platform to exchange views on domestic, regional, and global economic developments and discuss policies and reforms to spur inclusive prosperity and build resilience supported by international cooperation.
Recent economic issues affecting the global landscape include rising inflation rates, driven by supply chain disruptions and increased demand for goods post-pandemic.
Supply chain delays continue to impact the availability of essential products, causing bottlenecks in manufacturing and increasing costs.
Additionally, geopolitical conflicts, such as the war in Gaza, have disrupted energy supplies and food exports, leading to global food insecurity and fuel price volatility.
Concerns over the using the Red Sea shipping lane increased dramatically at the end of 2023, when Houthi militants stepped up attacks on vessels in the wake of the escalation of the Israel-Hamas conflict.
The effects of these challenges pose significant risks to economic stability, especially for emerging markets that are more vulnerable to such global shocks.
The AlUla conference is the latest example of the growing relationship between Saudi Arabia and the IMF, with the organization in April establishing its first office in the Middle East and North Africa region in Riyadh.
The facility was launched during the Joint Regional Conference on Industrial Policy for Diversification, jointly organized by the IMF and the Ministry of Finance, on April 24.
The new office aims to strengthen capacity building, regional surveillance, and outreach to foster stability, growth, and integration, thereby promoting partnerships in the Middle East and beyond, according to the Saudi Press Agency.
The work hub will promote closer collaboration between the IMF and regional institutions, governments, and other stakeholders, according to the SPA report.
The IMF also expressed its gratitude to the Kingdom for its financial contribution aimed at supporting capacity development in member countries, including fragile states.
Closing Bell: Saudi Arabia’s TASI ends in the red, trading volume hits $2.95bn
RIYADH: The Tadawul All Share Index concluded the last session of the week at 11,791.18 points, down by 139.27 points or 1.17 percent.
The MSCI Tadawul 30 Index also saw a decline, dropping 19.18 points to close at 1,481.36, reflecting a 1.28 percent loss. In contrast, the parallel market Nomu finished Thursday’s trading at 29,467.71 points, up 262.18 points or 0.90 percent.
TASI reported a trading volume of SR11.10 billion ($2.95 billion), with 51 stocks advancing and 182 declining. The top performer of the day was Saudi Cable Co., which saw its share price surge by 5.10 percent to SR92.70.
Other strong performers included Shatirah House Restaurant Co., which gained 3.75 percent to reach SR21, and Arabian Mills for Food Products Co., which rose by 3.08 percent to SR53.60. Naseej International Trading Co. and Saudi Real Estate Co. also posted notable gains.
The worst performer was Saudi Real Estate Co., which dropped 4.94 percent to close at SR10. Alkhaleej Training and Education Co. and Red Sea International Co. also suffered significant losses, with their share prices falling by 4.90 percent to SR29.10 and 4.84 percent to SR68.80, respectively. Astra Industrial Group and Al-Omran Industrial Trading Co. were also among the day’s largest decliners.
On the parallel market, Nomu, Alqemam for Computer Systems Co. was the top gainer, rising by 9.57 percent to SR103. Other gainers included Dar Almarkabah for Renting Cars Co., which climbed 9.10 percent to SR42.55, and Horizon Educational Co., which rose by 7.58 percent to SR79.50. Mulkia Investment Co. and Knowledge Tower Trading Co. also saw significant increases.
On the losing side of Nomu, WSM for Information Technology Co. recorded the largest drop, with its share price falling by 6.18 percent to SR44. Osool and Bakheet Investment Co. and Natural Gas Distribution Co. also experienced notable declines, with their shares dropping by 5.37 percent to SR37.85 and 5 percent to SR57, respectively.
Leaders stress urgent need for climate finance at COP29 ministerial dialogue
RIYADH: Global climate finance continues to fall short of expectations, as leaders gathered at the COP29 Ministerial Dialogue on Climate Finance to address ongoing challenges and map out next steps.
The meeting, held in Baku, Azerbaijan, underscored the urgent need for increased and more effective funding mechanisms. COP29 President Mukhtar Babayev emphasized that climate finance plays a central role in the broader negotiations.
“The urgency of the situation is evident,” Babayev remarked, pointing to the severe impacts of climate change observed over the past year. “Recently, we witnessed catastrophic flooding in Spain, and in the Pacific region, island communities are faced with the possibility of being wiped out entirely. We must act now; failure to do so will have grave human and economic costs.”
The president stressed the importance of fulfilling the $100 billion-per-year commitment made in Copenhagen and reiterated in Paris, urging leaders to reflect on lessons learned and consider the quality and allocation of financial resources.
Developing countries once again voiced the need for tangible action, with Fiji’s Deputy Prime Minister Biman Prasad highlighting the importance of aligning climate finance with the goals of the Paris Agreement.
“This is a ‘put your money where your mouth is’ moment,” Prasad said. “The 1.5°C temperature goal and the Paris Agreement itself will not be deliverable from both an economic and scientific perspective if we do not invest right. The New Collective Quantified Goal is critical for aligning our priorities and addressing major inconsistencies,” he added.
The EU reaffirmed its commitment to climate finance, noting that the $100 billion goal was first collectively met in 2022, with contributions reaching $115.9 billion.
“The EU and its member states contributed €28.5 billion, or around $30 billion, in climate finance from public sources,” a representative said. “Almost half of the public funding came in the form of grants, with a significant portion provided on concessional terms. We need to make further efforts to facilitate the mobilization of private funding, as it remains a key source of climate finance,” the representative added.
Simon Stiell, executive secretary of the UN Framework Convention on Climate Change, emphasized the critical juncture at which the global community now finds itself.
“The huge opportunities we have and the terrible risks we face are real,” Stiell said. “It’s time to take action to bridge gaps, solve problems, and come together to ensure climate finance and climate action benefit everyone.”
Sweden also announced a significant new contribution, with Ministerial representatives unveiling an $8 billion Swedish krona ($723.6 million) pledge to the second replenishment of the Green Climate Fund.
“This makes Sweden the largest per capita donor to the GCF among the larger donors,” the Swedish representative noted.
As discussions progressed, leaders acknowledged the widening gap between current financial commitments and the funds required to meet the 1.5°C target. There were calls for more robust mobilization of both public and private finance.
The COP29 president concluded: “Delivering the climate fairness that developing countries need is one of the main metrics of shared success. We can learn from past efforts to inform the road ahead, but significant determination and leadership from all parties are required to bridge these critical gaps.”
