BAGHDAD: Iraq is opening more of its untapped oil and gas resources to foreign developers, hoping to boost revenues after its costly war with the Daesh group, but analysts say the rushed bidding process — now timed to precede national elections — could draw a lukewarm response.
Last month, Oil Minister Jabar Ali Al-Luaibi unexpectedly moved the date to receive bids from late June to April, meaning the bidding would be held before May 12 national elections. Some believe Al-Luaibi, who is campaigning for a seat in parliament, moved up the date for political reasons.
Al-Luaibi hopes to represent the oil-rich southern province of Basra as a member of the Victory Alliance, which is led by Prime Minister Haider Al-Abadi, who is running for re-election.
“Personal and partisan interests are taking priority over national interests,” said Ruba Husari, managing director of the consulting firm Iraq Insight. “The objective of the exercise is aimed doubtlessly at portraying the ministry — and the minister — as aggressive in developing the nation’s resources ahead of the (elections).”
The Associated Press placed multiple calls to Al-Luaibi’s spokesman, who did not pick up. An aide to the spokesman said Al-Luaibi’s office was too busy with the election campaign to comment on the allegations.
In one of his campaign videos, Al-Luaibi tries to reassure a group of weary Iraqis who are worried about their future.
“Past years have wreaked havoc on everything,” a man in traditional Arab clothing says in the video, referring to the devastation caused by war. “Iraq’s wealth is your responsibility,” says a woman dressed in a conservative abaya — a loose black cloak that covers the body from shoulders to feet.
“I’m confident that with your determination I can protect the wealth of the generations,” Al-Luaibi says at the end of the video.
Thursday’s auction will be the fifth since Iraq opened its vast oil and gas reserves to international energy companies in 2009 for the first time in decades.
In previous bidding rounds, officials spent months hosting conferences, road shows and discussions with companies before issuing final contracts. Last month, the minister changed the date to April 15, but when companies asked for more time it was extended to Wednesday, and then to TSwitch to plain text editorhursday.
Ian Thom, principal analyst at energy consultancy Wood Mackenzie, said the tighter deadline could work against Iraq.
“Companies may be more cautious if they have not fully evaluated the bid terms,” he said. “This may result in bids being less competitive as companies seek a greater margin of safety.”
Fourteen companies are qualified to bid for exploration and development rights for 11 underdeveloped blocks.
Seven are located near the border with Iran, and three others are located near the Kuwaiti border, while the 11th is in the Arabian Gulf, in Iraqi territorial waters.
Encouraged by an improved security situation, Iraq in 2009 began to attract international oil companies to develop its vast untapped oil and gas reserves. Top among major oil companies are the US’s Exxon Mobil, Royal Dutch Shell, the UK’s BP, China’s CNPC and Russia’s Lukoil.
Since then, Iraq has awarded a handful of oil deals to develop major fields that hold more than half of its 153.1 billion barrels of proven oil reserves. Deals to tap natural gas resources were also awarded. As a result, Iraq’s daily production and exports have jumped to levels not seen since the late 1970s and early 1980s.
The country is now producing around 4.36 million barrels a day from Baghdad-controlled oil fields, up from nearly 2.4 million a day in 2009, and its daily exports averaged 3.450 million barrels a day last month, making it OPEC’s second-largest producer behind Saudi Arabia. Oil revenues make up nearly 95 percent of the country’s budget.
An economic crisis set in over the course of 2014, when the Daesh group swept across much of northern and western Iraq and oil prices plummeted. Iraqi forces concluded major military operations against the extremists last year, but large parts of the country were reduced to rubble.
In February, Iraq secured $30 billion from international donors to help rebuild devastated areas, far from the $88.2 billion Baghdad estimates it needs.
Earlier this month, the Iraqi Cabinet approved a five-year development plan with a target of 6.5 million barrels a day by 2022.
Iraq’s 2018 budget of nearly $88 billion comes with a deficit of more than $10 billion. It is based on a projected oil price of $46 per barrel and a daily export capacity of 3.8 million barrels.
Iraq’s move to rush oil bidding could deter some major companies
Iraq’s move to rush oil bidding could deter some major companies
- Last month, Oil Minister Jabar Ali Al-Luaibi unexpectedly moved the date to receive bids from late June to April
- Fourteen companies are qualified to bid for exploration and development rights for 11 underdeveloped blocks
Saudi Arabia’s private debt market targets over $1.77bn by Q3 2024: report
RIYADH: Saudi Arabia’s private debt market is experiencing significant growth, with eight active funds targeting to raise over $1.77 billion in capital by the third quarter of 2024, according to a new report.
This growth is driven by a sharp rise in investor confidence, with 97 percent of Middle East-based institutional investors now viewing the Kingdom as the most promising market for private debt in the coming year, up from 82 percent in 2023, based on Preqin survey data.
The report, titled “Territory Guide: The Rise of Private Debt Funds in Saudi Arabia 2024,” was published in collaboration with Saudi Venture Capital Co. It highlights the increasing interest from both regional and global investors, fueled by the positive outcomes of the Kingdom's Vision 2030 reforms.
The findings align with the fact that Saudi Arabia accounts for up to 27.5 percent of private debt fund transactions in the Middle East and North Africa region between 2016 and the third quarter of 2024.
In 2022, private debt funds focused on Saudi Arabia raised a record $335 million in total capital, a sharp rise from the $32 million raised by a single fund in 2003.
“This first-of-its-kind report highlights the emergence of private debt funds as a key asset class in Saudi Arabia, driven by the Kingdom’s Vision 2030 and its ambition to diversify the economy,” said Nabeel Koshak, CEO and board member at SVC.
“At SVC, we continue our commitment to support the development of such reports that provide policymakers, investors, and founders with insights and data to inform strategic decisions and policies to nurture the private capital ecosystem further,” Koshak added.
David Dawkins, lead author of the report at Preqin, commented: “Global investment firms are not alone in closely watching the growth and evolution of Saudi Arabia’s nascent private debt industry.”
Dawkins also noted: “For other developing economies in the Middle East and beyond, Saudi Arabia’s success in this area will strengthen the impetus for improving transparency to secure the capital needed for sustainable growth in a net-zero world.”
The study further revealed that among all private debt funds with investments tied to Saudi Arabia that concluded between 2016 and the third quarter of 2024, mezzanine funds accounted for 50 percent of total exposure, with direct lending and venture debt funds closely following at 30 percent and 20 percent, respectively.
Support for startups and small to medium-sized enterprises in the Kingdom is also reflected in the high proportion of venture debt, which represents 75 percent of all funds in the market with Saudi Arabia exposure.
The report also highlighted that private debt marked its second consecutive year as the asset class with the highest proportion of Middle Eastern investors intending to increase their investments in the coming year. Nearly 58 percent of investors expressed this sentiment, up from 50 percent in 2023.
The percentage of investors considering private debt the most promising asset class in the region rose by 12 percentage points, from 31 percent in 2023.
Private debt is expected to further bolster Saudi Arabia’s growing entrepreneurial community as the nation advances toward its Vision 2030 goals. Since 2018, new regulatory frameworks have been implemented, ushering in an era of increased transparency and equity within the private debt sector, closely aligned with the Kingdom’s broader investment vision.
Closing Bell: Saudi main index rises to close at 11,864
RIYADH: Saudi Arabia’s Tadawul All Share Index rose on Sunday, gaining 24.38 points, or 0.21 percent, to close at 11,864.90.
The benchmark index recorded a trading turnover of SR4.22 billion ($1.12 billion), with 124 stocks advancing and 99 declining.
The Kingdom’s parallel market Nomu also posted gains, climbing 345.06 points, or 1.13 percent, to close at 30,885.34, as 49 stocks advanced and 32 declined.
The MSCI Tadawul Index increased by 4.74 points, or 0.32 percent, to close at 1,491.56.
The best-performing stock of the day was Arabian Contracting Services Co., whose share price surged 9.97 percent to SR167.60.
Other notable gainers included Saudi Reinsurance Co., rising 4.97 percent to SR45.45, and Saudi Public Transport Co., which climbed 3.98 percent to SR23.00.
Al-Baha Investment and Development Co. led the decliners, falling 6.06 percent to SR0.31. Aldrees Petroleum and Transport Services Co. dropped 4.33 percent to SR123.60, and Batic Investments and Logistics Co. declined 3.23 percent to SR3.59.
Leejam Sports Co. announced the opening of four new fitness centers. These include a men’s center and the first ladies’ center in Al-Rass city, Qassim Province, as well as the first men’s and ladies’ centers in Al-Qunfidah city, Makkah Province.
Branded under “Fitness Time” and “Fitness Time - Ladies,” the centers will feature state-of-the-art facilities, high-spec sports equipment, and modern designs.
The financial impact of these openings is expected to reflect in the fourth quarter of 2024. Despite the announcement, Leejam Sports Co. closed the session at SR180, down 0.34 percent.
Obeikan Glass Co. reported a net profit of SR29.89 million for the nine months ending Sept. 30, a 58.3 percent drop from the same period in 2023. The decline was attributed to lower average selling prices due to global market conditions and increased administrative expenses related to a new investment in a subsidiary, Saudi Aluminum Casting Foundry.
The stock ended at SR49.60, down 1.59 percent.
United Mining Industries Co. announced the issuance of two exploration licenses for gypsum and anhydrite ore from the Ministry of Industry and Mineral Resources. The company plans to conduct studies to determine the availability of raw materials, with financial impacts to be announced upon completion.
Its stock closed at SR39.60, up 0.26 percent.
Morgan Stanley receives approval to establish regional HQ in Saudi Arabia
RIYADH: US-based investment bank Morgan Stanley has been granted approval to establish its regional headquarters in Saudi Arabia, as the Kingdom continues to attract international investment.
This move aligns with Saudi Arabia’s regional headquarters program, which offers businesses various incentives, including a 30-year exemption from corporate income tax and withholding tax on headquarters activities, as well as access to discounts and support services.
Saudi Investment Minister Khalid Al-Falih confirmed the progress of this initiative in October, stating that the Kingdom has successfully attracted 540 international companies to set up regional headquarters in Riyadh—exceeding its 2030 target of 500.
“Establishing a regional HQ in Riyadh reflects the growth and development of Saudi Arabia and is a natural progression of our long history in the region,” said Abdulaziz Alajaji, Morgan Stanley’s CEO for Saudi Arabia and co-head of the bank’s Middle East and North Africa operations, according to Bloomberg.
Morgan Stanley first entered the Saudi market in 2007, launching an equity trading business in Riyadh, followed by the establishment of a Saudi equity fund in 2009.
This approval follows a similar move by Citigroup earlier this month, with the bank also receiving approval to establish its regional headquarters in Saudi Arabia.
Fahad Aldeweesh, CEO of Citi Saudi Arabia, emphasized that this development would support the firm’s future growth in the Kingdom.
Goldman Sachs, another major Wall Street bank, also received approval in May to set up its regional headquarters in Saudi Arabia.
Prominent international firms that have already established regional headquarters in Saudi Arabia include BlackRock, Northern Trust, Bechtel, PepsiCo, IHG Hotels and Resorts, PwC, and Deloitte.
In addition, a recent report from Knight Frank noted that Saudi Arabia's regional headquarters program has led to increased demand for office space in Riyadh, with the city’s office stock expected to grow by 1 million sq. meters by 2026.
In August, Kuwait’s Markaz Financial Center echoed this sentiment, predicting a significant uptick in the Kingdom’s real estate market during the second half of the year, driven by the regional headquarters program.
QatarEnergy strengthens global footprint with offshore expansion in Namibia
RIYADH: QatarEnergy has expanded its portfolio through a new agreement with TotalEnergies to increase its ownership stakes in two offshore blocks in Namibia’s Orange Basin.
According to a press release, the state-owned energy firm will acquire an additional 5.25 percent interest in block 2913B and an additional 4.7 percent interest in block 2912 under the new deal, subject to customary approvals.
Once finalized, QatarEnergy’s share in these licenses will rise to 35.25 percent in block 2913B and 33.025 percent in block 2912.
Saad Sherida Al-Kaabi, Qatar’s minister of state for energy affairs and CEO of QatarEnergy, said: “We are pleased to expand QatarEnergy’s footprint in Namibia’s upstream sector. This agreement marks another important step in working collaboratively with our partners toward the development of the Venus discovery located on block 2913B.”
TotalEnergies, the operator of both blocks, will retain 45.25 percent in block 2913B and 42.475 percent in block 2912. Other partners include Impact Oil & Gas, which holds 9.5 percent in both blocks and the National Petroleum Corp. of Namibia, which owns 10 percent in block 2913B and 15 percent in block 2912.
Located about 300 km off the coast of the African country, in water depths ranging from 2,600 to 3,800 meters, these blocks host the promising Venus discovery. The Venus field has attracted considerable attention as a significant find that could impact Namibia’s energy future.
This offshore acquisition complements QatarEnergy’s recent ventures into renewable energy. In October, the company announced a 50 percent stake in TotalEnergies’ 1.25-gigawatt solar project in Iraq.
The initiative, part of Iraq’s $27 billion Gas Growth Integrated Project, aims to enhance Iraq’s energy self-sufficiency by addressing its reliance on electricity imports and reducing environmental impacts.
The solar project, set to deploy 2 million bifacial solar panels, will generate up to 1.25 GW of renewable energy at peak capacity, supplying electricity to approximately 350,000 homes in Iraq’s Basra region.
QatarEnergy will share equal ownership of the project with TotalEnergies, which retains the remaining 50 percent.
The firm’s dual focus on traditional and renewable energy highlights its strategic approach to meeting global demands while addressing sustainability concerns.
Its involvement in Namibia’s offshore blocks and Iraq’s shift toward renewable energy highlights a well-rounded portfolio that includes fossil fuels and clean energy investments.
GCC lending growth hits 3.1% in Q3, Saudi Arabia leads: report
RIYADH: Listed banks in the Gulf Cooperation Council achieved their highest lending growth in 13 quarters, with loans rising 3.1 percent to $2.12 trillion in the third quarter.
According to a report by Kamco Invest, Saudi Arabia led the surge with a 3.7 percent quarter-on-quarter increase in gross loans, marking its fastest growth in nine quarters.
Qatar followed with a 1.9 percent rise, while Bahrain recorded a 1.2 percent increase.
This growth aligns with the International Monetary Fund’s projection of 3.5 percent nominal gross domestic product growth for GCC nations in 2024, driven by the strong performance of non-oil sectors in the UAE, Qatar, Bahrain, and Saudi Arabia.
The region’s commitment to diversification and long-term infrastructure development continues to drive its financial sector.
Despite record lending levels, aggregate net income for GCC-listed banks increased marginally by 0.4 percent to $14.9 billion.
While total revenues grew 4.1 percent, supported by a 2.8 percent rise in net interest income and a 6.9 percent increase in non-interest income, higher expenses and impairments weighed on profitability.
Loan impairments rose to a three-quarter high of $2.5 billion, with increases in the UAE, Saudi Arabia, Oman, and Bahrain partially offset by declines in Qatar and Kuwait.
Customer deposits across GCC-listed banks reached a nine-quarter high, rising 3.2 percent to $2.5 trillion.
Saudi Arabia led with a 4.6 percent increase, while the UAE maintained its position as the largest deposit market at $828 billion.
Deposits in Oman and Qatar also saw solid growth, contributing to the region’s overall resilience.
The aggregate loan-to-deposit ratio remained stable at 81.4 percent, with Saudi Arabia reporting the highest ratio of 92.8 percent and the UAE the lowest at 69.3 percent, reflecting its strong liquidity position.
The GCC banking sector’s resilience is further demonstrated by its consistent focus on operational efficiency. The cost-to-income ratio declined slightly to 39.9 percent, highlighting the sector’s ability to manage expenses effectively despite rising costs.
As the region continues to diversify its economy, the banking sector remains a critical enabler of growth, funding large-scale projects and fostering financial innovation.
While rising funding costs and potential interest rate cuts may pose challenges, the sector’s robust fundamentals and strategic focus on non-oil growth position it for sustainable expansion.
The commitment to balancing economic diversification with financial innovation is expected to drive the sector’s continued success, reinforcing its pivotal role in the GCC’s broader economic landscape.
