INTERVIEW: KAPSARC’s Adam Sieminski on a ‘voyage of discovery’ in Saudi energy industry

President of the King Abdullah Petroleum Studies and Research Center (KAPSARC), Adam Sieminski. (Illustration: Luis Grañena)
Updated 28 April 2019
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INTERVIEW: KAPSARC’s Adam Sieminski on a ‘voyage of discovery’ in Saudi energy industry

  • It has been a dramatic year even by the high-octane standards of the global energy industry
  • President of KAPSARC tells Arab News how he has navigated through it

One year on from his appointment as president of the King Abdullah Petroleum Studies and Research Center (KAPSARC), Adam Sieminski has a clear verdict: “It’s been great. Riyadh is actually kind of a fun place,” he said.

When not at the organization’s Zaha Hadid-designed campus in the Saudi capital, Sieminski, a career energy specialist across the financial, academic and public policy aspects of the industry, likes to take in Saudi Arabia’s historical and cultural archaeology.

“The hospitality that my wife Laurie and I have been shown in the Kingdom is unequaled anywhere in the world that we have traveled,” he said, regretting that his responsibilities at KAPSARC have not allowed him to spend more time exploring the country.

It has been a dramatic year even by the high-octane standards of the global energy industry. The resurgence of US oil and dramatic policy shifts by the US administration, the emergence of the OPEC+ alliance, the continuing “dash for gas” and the apparently unstoppable growth of electric and renewable energy — events such as these have kept energy experts busy analyzing, evaluating and forecasting.

It is KAPSARC’s job to make sense of all that and put forward appropriate policy recommendations to the Kingdom’s decision-makers, presenting them with a “range of options” for a policy call. The think tank was founded by the Council of Ministers as a non-profit global institution dedicated to independent research into all aspects of energy, and is an ideas laboratory for Saudi policymakers, and beyond.

The idea that, at least in the next 10 years or so, demand for oil is going to peak is really unlikely.

Adam Sieminski

Think tanks are relatively new in the Arabian Gulf, where policy has traditionally been decided by the intuition of a “strong man” monarch or president, but Sieminski believes that is changing in Saudi Arabia.

“It is a monarchy … but as part of Vision 2030 I think there is a recognition that they have to broaden out the base associated with thinking about these issues,” he said. All of KAPSARC’s deliberations are published on its website.

“We are becoming more like other think tanks around the world: Performing public-policy research analysis, and engaging with other organizations that generate policy-oriented research and advice on domestic and international issues. For example, KAPSARC will be helping with research associated with the G20 Summit to be hosted by the Kingdom in November 2020,” Sieminski said, insisting that his institute is not a policymaker itself, and “definitely not a lobby.”

It is becoming more highly rated among energy professionals and academics, now firmly placed in the top third of think tanks in the Middle East.

The center gained significant kudos from a 2018 peer-reviewed study on the role of OPEC in stabilizing global oil prices through use of its spare production capacity, which it found helped to prevent a $200 per barrel spike in the aftermath of the global financial crisis.

So Sieminski is the man to go to for answers to the big-picture energy issues of the day. Perhaps the biggest issue in energy of the past 15 years — ever since the publication of “Twilight in the Desert” by Matthew Simmons in 2005 — has been the idea of “peak oil,” the suggestion that the world’s supply of oil faces exhaustion and that new energy sources, such as renewable and nuclear, will make it redundant anyway.

“Peak supply as an economic theory was flawed from the beginning. The whole concept was based on the idea that price and developments in technology did not matter, the only thing that mattered was how much oil was in the ground. What we’ve learned is that prices and technology really do matter. High prices encouraged the development of shale and that has changed the landscape,” said Sieminski.

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BIO

BORN

•Williamsport, Pennsylvania, US, 1950

EDUCATION

•Undergraduate degree in civil engineering

•Master’s in public administration, Cornell University, New York

•Chartered financial analyst

CAREER

•Senior energy analyst, NatWest Securities

•Chief energy economist, Deutsche Bank

•Senior director for energy and environment, US National Security Council

•Administrator, US Energy Information Agency

•Senior adviser, Center for Strategic and International Studies

•Professor, James R. Schlesinger chair for energy and geopolitics, CSIS

•President, KAPSARC

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“Now what everybody is thinking about is peak demand, that we’re going to run out of demand for oil because electric vehicles or renewables — biofuels, solar, electricity or wind — come in an eliminate the need for hydrocarbons. I think the reality is that with population growth and economic growth, particularly in places like Asia, the Middle East, Latin America and Africa, there are a lot of people who do not have sufficient affordable energy, and hydrocarbons are a pretty decent way of providing that. So the idea that, at least in the next 10 years or so, demand for oil is going to peak is really unlikely.”

Another big theme among energy experts is the move by major producers toward petrochemicals as the “next big thing” in the global industry.

Sieminski refers to a piece of analysis by the International Energy Agency that shows demand for oil going up by 10 million barrels a day over the next decade, and one of the big components of that rise in demand is petrochemicals. “Is petrochems the next big thing? It’s always been a big thing,” he said.

Sieminski believes there may be a move toward hydrocarbon-free energy sources, but there will always be a demand for the oil, gas and other forms, perhaps in conjunction with renewable sources to produce hybrid power-generation systems. He remains skeptical of some of the more esoteric projects, such as solar-powered flights.

“There was a solar plane that went around the world, but it had a payload of one person,” Sieminski said, while agreeing that there was a need to remove carbon dioxide from the atmosphere.

The energy implications of climate change is one of the big themes Sieminski has promoted at KAPSARC. “It’s important to find ways to provide consumers with clean, yet still affordable and reliable energy,” he said.

Saudi Arabia and other Gulf energy producers are also moving toward gas as a more efficient and environmentally friendly power source. “Around 70 percent of gas in the Kingdom is associated with oil; it comes up when you produce the oil. It used to be flared, but there is very little now,” he said.

A recent study commissioned by Saudi Aramco from Texas oil analysts DeGolyer & MacNaughton showed an increase in Saudi oil and gas reserves, but Sieminski said that may have underestimated the gas resources.

“It could be tremendously beneficial for the Kingdom in terms of opening up other possibilities for replacing oil in power generation and water desalination. It could open up the possibility of exports, by pipeline to other areas in the GCC. I can actually envisage the possibility the Kingdom could be both exporting and importing gas — exporting LNG by tanker or pipeline from the east, and in the west, which does not have the resource base, looking for ways to import gas,” he said.

“Then you let the market decide: Is the gas better used for petrochemical development or is it better sold to buyers on a global basis,” he added.

Sieminski also admitted to being “excited” at the prospect of significant deposits of shale gas in the Kingdom, especially in the northwest where Ma’aden, the mining company, could use gas produced from shale to fuel its operations, and also possibly fuel some of the gigantic NEOM development taking place there. Saudi Aramco is partnering with US oil services group Halliburton to look at potential shale developments in Saudi Arabia, Sieminski said.

I sense a spirit of opitimism among Saudi youth dirving Vision 2030 forward.

Adam Sieminski

He also touched on the current debate over whether there will be a mismatch in the world’s refining capabilities of different kinds of crude oil, with the possibility that there will be too much of the “light” crude produced from shale in the US compared with Saudi Arabia’s “heavier” product, which is more in demand for industrial purposes rather than transport. “I think that’s an idea that deserves more research,” he said.

Sieminski is especially proud of two programs the center has been working on: The KAPSARC Energy Model for Saudi Arabia, which evaluates the economic and social effects of the long-term strategy of Vision 2030; and the KAPSARC Global Energy Macroeconometric Model, an enhancement of the Oxford Economic Forecasting Model. “It has been useful as a tool for policymakers to explore ways to mitigate the impact of macroeconomic and energy shocks on Saudi consumers,” he said.

So, with the benefit of all that research, does he think the Vision 2030 strategy is on track? “We are seeing positive evidence of that every day. We see cinemas opening, tourism picking up, Saudi citizens taking on stronger roles in the shops we visit — and women are driving, which opens up employment opportunities,” he said.

“Entrepreneurship is clearly increasing, small and medium-size enterprises are growing, and we are experiencing faster government services through online portals. Most importantly, I sense a spirit of optimism among the Saudis that I meet — a feeling that is driving Vision 2030 forward.”

As he reeled off the “bucket list” of things he and his wife want to experience while in the Kingdom, you got the impression Sieminski sees his presidency of KAPSARC as both a professional posting and a personal voyage of exploration.


Saudi Arabia, UAE invest $26.8m in Pakistan in Q1 of 2024

Updated 9 sec ago
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Saudi Arabia, UAE invest $26.8m in Pakistan in Q1 of 2024

 

ISLAMABAD: Pakistan’s foreign investment surged by 48 percent in the first quarter of the current fiscal year, according to state-run media reports on Tuesday.

Saudi Arabia and the UAE contributed a total of $26.8 million during this period. In 2023, Pakistan established the Special Investment Facilitation Council, a joint civil-military body aimed at expediting foreign investment decisions in key economic sectors, including agriculture, mining, minerals, and tourism.

This initiative came amid Pakistan’s ongoing economic crisis, which had pushed the country to the brink of a sovereign default. The crisis was mitigated by a crucial $3 billion bailout from the International Monetary Fund last year, preventing further economic collapse.

According to a breakdown shared by Radio Pakistan, China led foreign investments in the first quarter with $404 million, followed by the UAE’s $25 million and Saudi Arabia’s $1.8 million. Other notable contributors included Hong Kong, with $98 million; the UK, with $72 million; and the US, with $28 million.

Radio Pakistan reported: “A significant increase of 48 percent has been seen in foreign investment in Pakistan in the first quarter of the current fiscal year, reflecting the effective strategies of the Special Investment Facilitation Council.”

During a recent visit to Saudi Arabia and Qatar, Pakistan’s Prime Minister Shehbaz Sharif held talks with leaders from both nations to discuss boosting cooperation in trade, investment, and energy. Notably, in October, Pakistani and Saudi businesses signed 27 agreements and memorandums of understanding valued at $2.2 billion.

During Sharif’s visit to the Kingdom last week, the two countries agreed to increase this figure to $2.8 billion.

The UAE remains Pakistan’s third-largest trading partner, after China and the US, and serves as an important export market due to its proximity, which helps minimize transportation costs and facilitates trade exchanges.

In recent months, Sharif has been actively pursuing economic diplomacy in the region, focusing on securing investments, boosting trade, and improving regional connectivity.

Pakistan has sought to leverage its strategic position as a trade and transit hub, connecting landlocked Central Asian countries with the global market while promoting mutually beneficial economic partnerships with Gulf nations.


Saudi Arabia’s CMF Selects holds first-ever market event at LSE

Updated 7 min 27 sec ago
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Saudi Arabia’s CMF Selects holds first-ever market event at LSE

RIYADH: Saudi Arabia’s CMF Selects has successfully concluded its inaugural international market event, hosted at the London Stock Exchange.

The gathering, as announced in a press release, marked a key milestone for CMF Selects, an initiative under the Saudi Capital Market Authority. The event aimed to strengthen strategic partnerships between the Kingdom and global markets.

Organized by CMF Selects, the event attracted more than 245 influential participants, including industry experts and investors from the UK, Saudi Arabia, and other international markets.

CMF Selects is a targeted series of events under the CMF umbrella, focusing on specialized topics that are relevant to Saudi Arabia and its global partners.

Sarah Al-Suhaimi, chairperson of the Saudi Tadawul Group, stated: “The forum has contributed to strengthening the relationships between Saudi Arabia and the United Kingdom, enabling both sides to leverage promising growth opportunities and foster investments between the two markets.”

She added: “We are pleased to continue the journey of success and expand the Financial Markets Forum, aspiring to establish its position as a leading platform for innovation in financial markets. We aim to organize the first Financial Markets Forum in London by 2026.”

Michael Mainelli, the Lord Mayor of the City of London, commented: “The first edition of the event has highlighted the strength of the Saudi-British partnership and their fundamental role in achieving joint Saudi-British visions of growth, as well as strengthening links between the financial markets.”

Discussions throughout the event focused on exploring economic and investment opportunities across a range of sectors, including finance, technology, and sustainable development.

One of the key themes of the event was sustainability and technological innovation—both central to Saudi Arabia’s Vision 2030. Conversations explored how these areas could be advanced through international investment, with the goal of driving economic growth and resilience in both Saudi Arabia and the UK.

Looking ahead, CMF Selects plans to host a series of similar market hub events in other global financial centers, including New York, Tokyo, and Frankfurt.

The press release also revealed that this initiative is part of a broader strategy to position Saudi Arabia as a global financial powerhouse by 2026, supporting the Kingdom’s efforts to diversify and strengthen its economy.


Saudi cabinet approves framework to boost foreign direct investment

Updated 05 November 2024
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Saudi cabinet approves framework to boost foreign direct investment

RIYADH: The Saudi Cabinet has initially approved the national general framework and guiding principles for foreign direct investment, setting the stage for enhanced economic engagement with international organizations.

The session, chaired by Crown Prince Mohammed bin Salman, addressed significant developments on both domestic and international fronts, according to the Saudi Press Agency.

The Kingdom’s foreign direct investment inflows reached SR96 billion ($25.6 billion) in 2023, marking a 50 percent annual increase from the previous year.

The crown prince briefed the Cabinet on his recent discussions with leaders from several allied countries, focusing on bolstering ties across diverse sectors.

The Minister of Media, Salman Al-Dossary, highlighted that among these decisions the Cabinet authorized Saudi Arabia’s accession to the Cement and Concrete Breakthrough Initiative, launched on the sidelines of the UN Climate Change Conference.

This aligns with the Kingdom’s sustainability goals and commitment to the global climate agenda.

The Cabinet also approved an agreement with Qatar to avoid double taxation and prevent tax evasion.

This move underscores the Kingdom’s dedication to fostering economic cooperation within the Gulf region, facilitating smoother cross-border investments, and enhancing transparency in financial dealings.

In line with advancing Saudi Arabia’s capabilities in science and technology, the Cabinet also endorsed a framework agreement with the US to cooperate in civil aviation navigation and the peaceful exploration of outer space.

Additionally, the Cabinet also reviewed regional and international developments, with the crown prince briefing members on recent discussions with various heads of state focused on strengthening ties across multiple sectors.

The meeting highlighted the Kingdom’s efforts in regional peace initiatives, its commitment to global health challenges through the G20 platform, and recent advancements in the tourism sector.

During the session, the Cabinet commended the outcome of the second ministerial meeting of the Saudi-Indian Strategic Partnership Council economic and investment committee, highlighting the progress toward achieving the two countries’ shared goals.

This was mainly in the fields of industry, infrastructure, and technology, as well as agriculture, food security, climate sciences, and sustainable transportation.

Domestically, the Cabinet underlined the Kingdom’s significant advancement of 15 places in the 2023 international tourist revenue rankings compared to 2019, leading the top 50 rankings in an upward movement.

This achievement underscores the country’s global leadership and ongoing success in the tourism sector.


Closing Bell: Saudi main index closes in red at 12,014

Updated 05 November 2024
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Closing Bell: Saudi main index closes in red at 12,014

RIYADH: Saudi Arabia’s Tadawul All Share Index dipped on Tuesday, losing 24.37 points, or 0.20 percent, to close at 12,014.94.

The total trading turnover of the benchmark index was SR5.73 billion ($1.52 billion), as 86 of the listed stocks advanced, while 140 retreated.   

The MSCI Tadawul Index decreased by 4.65 points, or 0.31 percent, to close at 1,507.83.

The Kingdom’s parallel market Nomu surged, gaining 768.81 points, or 2.74 percent, to close at 28,831.58. This comes as 42 of the listed stocks advanced while 32 retreated.

The best-performing stock of the day was Riyadh Cables Group Co., with its share price surging by 6.95 percent to SR117.  

Other top performers included Arabian Cement Co., which saw its share price rise by 4.51 percent to SR25.50, and Al Moammar Information Systems Co., which saw a 4.38 percent increase to SR185.80. 

The worst performer of the day was Wataniya Insurance Co., whose share price fell by 9.96 percent to SR24.04.

Al-Etihad Cooperative Insurance Co. and Shatirah House Restaurant Co. also saw declines, with their shares dropping by 9.34 percent and 5.77 percent to SR18.44 and SR21.22, respectively.  

On the announcements front, Saudi Public Transport Co. announced its interim consolidated financial results for the first nine months of the current year. SAPTCO’s shares dropped in today’s trading session, dipping by 1.01 percent to reach SR21.58.

According to a Tadawul statement, the firm recorded a net loss of SR20.8 million in this period of the year, reflecting a 53.3 percent dip compared to the same term in 2023.

The decline in net profit for the current period, compared to the same period last year, is due to lower operating revenue from reduced public transportation operations, along with higher general and administrative expenses, increased finance costs, and higher zakat and tax, combined with a decrease in finance income.

The Saudi Arabian Cooperative Insurance Co. also announced its interim financial results for the same period ending on Sept. 30. SAICO’s shares dropped in today’s trading session, decreasing by 2.89 percent to SR14.78.

Net profit before zakat attributable to the shareholders for the current period amounted to SR43.2 million compared to SR65 million during the same period of the previous year, which was mainly due to a decrease of 44.9 percent in the net insurance service, which was affected by a decrease in medical business.

​​For the first nine months of this year, Abdullah Al Othaim Markets Co. revealed its results for the first nine months of this year, with total comprehensive income amounting to SR220.6 million – a year-on-year decrease of 30.4 percent.

Abdullah Al Othaim Markets Co.’s shares decreased in today’s trading session by 1.92 percent to reach SR11.24.

Gulf Insurance Group’s income over the same period also dropped – with the SR78.2 million it registered representing an annual fall of 19.7 percent.

GIG’s shares also saw declines by 0.84 percent to reach SR29.50. 

The individual investor subscription for Tamkeen Human Resources’ initial public offering on the Saudi stock market started Nov. 5 and runs until Nov. 6. 

According to a statement from the company, a total of 1.59 million shares, representing 20 percent of the offering, are allocated to individual investors at SR50 per share. 

The deadline for subscription and payment is Nov. 6, with the final allocation announced on Nov. 11. The minimum subscription is 10 shares, and the maximum is 250,000. Saudi Fransi Capital managed the initial public offering, which saw an institutional demand of SR55 billion, with coverage 138.2 times.


China to issue $2bn bonds in Saudi Arabia amid deepening bilateral ties

Updated 05 November 2024
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China to issue $2bn bonds in Saudi Arabia amid deepening bilateral ties

RIYADH: China has announced plans to issue dollar-denominated bonds in Saudi Arabia starting the week of Nov. 11, marking its first debt issuance in US currency since 2021. 

The Asian country’s Ministry of Finance disclosed on Nov. 5 that it will sell up to $2 billion in bonds in Riyadh.

This issuance comes as China and the Kingdom are strengthening a multifaceted alliance that extends across multiple spheres.

In recent years, both nations have sought to broaden their economic cooperation, aligning strategic initiatives such as China’s Belt and Road Initiative with Saudi Arabia’s Vision 2030 plan.

“With the approval of the State Council, the Ministry of Finance will issue US dollar sovereign bonds of no more than $2 billion in Saudi Arabia in the week of November 11, 2024. The specific issuance arrangements will be announced separately before the release,” the ministry’s statement read.

This step will positively impact the Kingdom’s financial market, “especially when considering that the Financial Development Program is playing a crucial role in shaping the future of Saudi Arabia’s financial sector,” according to Talat Hafiz, a Saudi-based economist. 

Talking to Arab News, he said such issuance supports one of the main pillars of Vision 2030, to advance the Saudi economy through diversification and enhancing the local financial market.

Strengthening Saudi-Chinese relations

“The issuance is part of China’s efforts to strengthen the relationship between the two friendly countries, which is witnessing huge improvements in several fields,” Hafiz said.

In September,Saudi Crown Prince Mohammed bin Salman and Chinese Premier Li Qiang co-chaired a pivotal meeting of the High-Level Saudi-Chinese Committee, where they reviewed aspects of joint cooperation and addressed regional and international developments. 

The session in Riyadh emphasized opportunities in energy, trade, and investment, as well as well as technology and security, while laying the groundwork for enhanced coordination across these sectors.

Expanding tourism and education links

Tourism has emerged as a significant focus in Saudi-Chinese relations. In October, Saudi officials, including the Minister of Tourism Ahmed Al-Khateeb, engaged with Chinese counterparts to expand travel and investment ties.

The Kingdom received the designation of “Approved Destination Status” from Beijing earlier this year, following participation in key events in China. 

To attract 5 million visitors from the Asian country by 2030, Saudi Arabia has introduced Chinese payment processing options, launched tailored tourism campaigns, and increased direct flights between the two countries.

Growing trade and investment

China has been Saudi Arabia’s largest trade partner since 2014, with bilateral trade reaching $97 billion in 2023. This figure includes $54 billion in Saudi exports and $43 billion in imports from China. 

This issuance will benefit both the Kingdom’s financial market and businesses in Saudi Arabia and China, especially with their strong economic ties and alignment with Vision 2030 and the Belt and Road Initiative, according to Hafiz.

The economist said “the Saudi-Chinese Business Council has a major role to play in promoting business between Saudi Arabia and China.”

He highlighted the trade size amounting to “about $96.5 billion in 2023, representing 18 percent of the total volume of Saudi trade globally.”

Investments between the two nations have also surged, with Chinese investments in the Kingdom rising from $1.5 billion in 2022 to $16.8 billion in 2023. Saudi investments in China are also substantial, totaling $75 billion.

Saudi Arabia and China are exploring new avenues for collaboration, including joint investments in renewable energy, infrastructure, and technology, with a focus on sustainable development. 

The crown prince’s 2019 visit to Beijing set a foundation for this strategic partnership, resulting in 12 agreements and memoranda of understanding that continue to shape bilateral cooperation.