SINGAPORE: Some oil-hungry Asian nations are taking advantage of the collapse in prices caused by the coronavirus pandemic to build up their crude stockpiles.
Here are some questions and answers about strategic reserves and the region’s oil supplies:
Strategic reserves are stockpiles of oil and other fuels held by governments in secure storage facilities to cover unexpected disruptions to energy supplies.
Major economies such as the US, China and Russia began to build up reserves after oil shocks in the 1970s, according to Ravi Krishnaswamy, regional senior vice president for energy and environment at consultancy Frost & Sullivan.
The events that spurred them to take action were principally the 1973 Yom Kippur War between Israel and the Arab nations, and the 1979 Iranian revolution, which fueled worries about supplies.
China is believed to have the biggest in the Asia-Pacific. Beijing does not give an official estimate but analysts say it is at around 550 million barrels. In comparison, the United States’ strategic reserves currently hold around 630 million.
State-owned China National Petroleum Corporation said recently that the country’s reserves were “obviously insufficient, and have not yet reached the international standard ‘90-day safety line’.”
The International Energy Agency requires its members to hold emergency oil stocks equivalent to at least 90 days of net oil imports. China is an associate member, but not a full member.
Japan’s oil reserves were around 500 million barrels at the end of February, equivalent to national consumption for more than seven months, according to the latest official data, while South Korea had around 96 million barrels in strategic reserves as of December 2019, enough for 89 days.
India, by contrast, has reserves with storage capacity of approximately 40 million barrels — which would last just 10 days in the country of 1.3 billion people.
Strategic reserves are stored largely in secure underground depots like natural rock caverns. The US Strategic Petroleum Reserve, the world’s largest supply of emergency crude, is stored in huge underground salt caverns along the Gulf Coast.
But building underground storage is challenging as it needs to have the right geological formation, and countries also need to build infrastructure to pump oil in and out.
The high cost of building reserves has stopped many countries developing them to sufficient levels.
In Asia, India uses caverns to store its reserves but other countries, such as Japan, put theirs in above-ground tanks.
Australia, which has long had one of the lowest levels of emergency stockpiles in the developed world, said it will take advantage of the fall in prices to develop a strategic reserve in the United States.
The country’s own storage capacity is already full but it has an agreement with the US allowing it to lease space in its Strategic Petroleum Reserve.
In China, the Shanghai International Energy Exchange last month gave approval for state-owned Sinopec Petroleum Reserve to add more storage capacity.
One storage depot in southern Guangdong province can hold up to 600,000 cubic meters (3.8 million barrels), while another in northern Hebei province can hold up to one million cubic meters.
India’s Ministry of Petroleum tweeted on April 15 it was buying crude to fill its reserves, stored in rock caverns, “to their full capacity.”
Madhu Nainan, editor of industry publication PetroWatch, however, questioned whether the country had enough available storage space to build up capacity quickly.
“In India, storage tanks and pipelines are full and dealers’ tanks are full,” he told AFP.
Japan and South Korea, with ample stockpiles, have not announced plans to build up their reserves substantially.
A Japanese trade ministry official said current levels were sufficient, while Seoul plans to increase stockpiles by less than one percent this year.
It looks unlikely, in the short term at least. Many observers believe economic activity won’t bounce back quickly with the gradual lifting of lockdowns but only when a vaccine for the virus is discovered — which could be some time away.
“Low oil prices won’t turbocharge Asian economic recovery,” Jeffrey Halley, OANDA senior market analyst, told AFP.
Major oil-importers in Asia — such as China, Japan and South Korea — would in usual times benefit from low prices but this is unlikely to be the case immediately given the economic devastation caused by the pandemic.
In Japan, for example, “the price crash has hit financial markets hard, which is negatively affecting the Japanese economy,” said Toshihiro Nagahama, an economist at Dai-ichi Life Research Institute.
“We can’t apply our usual framework to this unprecedented period.”
Some economists, however, expect oil prices to stay low for a long period, meaning major importers could eventually emerge winners.
“Oil prices are expected to remain low to some extent when the post-corona era comes, and given the current situation, it will have a positive effect on (South Korea’s) economy in terms of recovery,” said Jung Jun-hwan, a researcher at the Korea Energy Economics Institute.
There are also “obvious losers” in Asia, such as oil exporters Malaysia, Indonesia and Brunei, said OANDA’s Halley.
Oil-hungry Asian nations pounce on low prices to build stockpiles
https://arab.news/9nd79
Oil-hungry Asian nations pounce on low prices to build stockpiles
- In Asia, India uses caverns to store its reserves; others, such as Japan, put theirs in above-ground tanks
- There are also “obvious losers” in Asia, such as oil exporters Malaysia, Indonesia and Brunei
Riyadh Air secures license for advanced flight simulator
RIYADH: Saudi Arabia’s Riyadh Air has obtained a General Authority of Civil Aviation license for its first Boeing 787-9 full-flight simulator, a key step in its preparations for a 2025 operational launch.
The device, aimed at enhancing pilot training and safety standards, is a major addition to Riyadh Air’s training infrastructure.
This comes as Saudi Arabia aims to become a regional aviation hub, aligning with Vision 2030 goals to expand annual passenger capacity to 330 million, increase air cargo volumes to 4.5 million tonnes, and connect to 250 global destinations by the end of the decade.
Peter Bellew, chief operating officer at Riyadh Air, said: “This milestone underscores our commitment to world-class pilot training and operational excellence. The advanced simulator will enhance our pilots’ capabilities, aligning with Riyadh Air’s ambition to redefine aviation standards and deliver a next-level flying experience.”
He added: “We will continue investing in cutting-edge solutions that drive efficiency, safety, and excellence across our operations.”
Captain Sulaiman Al-Muhaimedi, GACA’s executive vice president for aviation safety and environmental sustainability, presented the operational certificate to Bellew during a ceremony.
Riyadh Air, a subsidiary of the Public Investment Fund launched by Crown Prince Mohammed bin Salman in March 2023, completed its first non-commercial flight from Riyadh to Jeddah for certification on Sept. 12.
Jordan’s exports to GAFTA countries rise by 15.6%
RIYADH: Jordan’s exports to countries within the Greater Arab Free Trade Area recorded a year-on-year rise of 15.6 percent by the end of November, new figures revealed
According to official statistics compiled by the Jordan News Agency, the Middle Eastern nation’s exports to GAFTA countries reached 3.25 billion Jordanian dinars ($362 billion), up from 2.81 billion dinars in the same period of the previous year. Jordan’s exports to the 18 GAFTA countries include fertilizers, pharmaceuticals, and agricultural products.
Similarly, the data showed that Jordan’s imports from the free trade zone also grew during the same period, rising by 8.5 percent to reach 4.69 billion dinars.
Imports from GAFTA countries primarily consist of crude oil and its derivatives, jewelry, and food products, as well as plastic sheets, titanium oxide, polystyrene, iron, and steel products, among others.
The newly released data falls in line with the recent rise in exports and imports recorded between Jordan and GAFTA countries, which jumped 9.7 percent and 9.3 percent, respectively, in the first three months of 2024.
The data also showed that the increase in exports and imports helped reduce the trade deficit with GAFTA countries to 1.43 billion dinars, down from 1.50 billion dinars in the same period last year.
Meanwhile, trade volume between Jordan and GAFTA countries surged to 7.95 billion dinars by the end of November, compared to 7.14 billion dinars in the same period a year earlier.
Saudi Arabia emerged as Jordan’s top export destination within the group, with exports to the country amounting to 1.07 billion dinars, a 13.7 percent rise from the same period in 2023.
The Kingdom also ranked as Jordan’s largest import source, with exchange totaling 2.69 billion dinars, resulting in a trade deficit of 1.66 billion dinars with Saudi Arabia by the end of November.
Jordan’s exports to US surges 14.9 percent
Additional data from Jordan News Agency disclosed that the country’s exports to the US increased 14.9 percent year on year in the first 11 months of 2024 to reach 2.04 billion dinars.
The country’s primary exports to the North American country include garments, jewelry, fertilizers, and pharmaceuticals as well as IT services, food products, live animals, and engineering goods.
Similarly, the data showed that Jordan’s imports from the US hit 1.13 billion dinars during the period, reflecting 4.7 rise compared to the corresponding period in 2023.
Jordan’s imports from the US consist of mineral products, transportation equipment, machinery, electrical appliances, and grains as well as chemicals, medical devices, processed foods, and wood pulp, among others.
This is in line with the fact that the trade partnership between the two nations was strengthened by the Free Trade Agreement, which was signed in October 2000 and took full effect in January 2010. This deal has led to an eightfold surge in bilateral trade, highlighting its importance in fortifying economic connections.
As a result of the rise in exports and imports, the trade balance between Jordan and the US recorded a surplus of 910 million dinars during the period.
The total volume of trade between the two countries climbed to 3.17 billion dinars by the end of November, compared to 2.86 billion dinars in the same period of 2023.
Saudi property sector poised for growth, key leaders at Real Estate Future Forum announce
RIYADH: Industry leaders, policymakers, and investors gathered at the Real Estate Future Forum in Riyadh, where key announcements highlighted Saudi Arabia’s ongoing focus on property development, investment strategies, and tourism expansion.
Building on these initiatives, the Governor of Asir Region Prince Turki Bin Talal revealed that the Public Investment Fund has nine projects in development, with four already launched and five underway.
“The largest PIF projects in the Kingdom are in the Asir region,” the governor said, adding that this is accompanied by an investment portfolio valued at SR30 billion ($7.9 billion).
Regarding hospitality, the governor highlighted that Asir currently has between 6,000 and 8,000 approved and licensed hotel rooms.
In line with this momentum, he also announced that the Ministry of Sports has officially recognized Abha’s World Cup bid as the best in the Kingdom.
Meanwhile, Prince Saud Bin Talal, governor of Al-Ahsa and acting CEO of the Al-Ahsa Development Authority, outlined plans for expanding the hospitality sector in the region.
“In our pipeline, we have more than seven or eight hotels and over 25 rural lodges. Among the key developments are three five-star hotels: Hilton, Radisson Blu, and Hilton Garden Inn,” he said.
The Saudi Minister of Tourism Ahmed Al-Khateeb underscored the rapid growth of the hospitality sector, revealing that the Kingdom currently has 475,000 hotel rooms, with projections to reach 675,000 by 2030.
Regarding hyper-tourism, he discussed the impact of the King Salman International Airport expansion and Riyadh Air, forecasting that at least 50 percent of the Kingdom’s tourism will be centered in the capital, while ensuring that efforts will not push the figure beyond 80–90 percent.
The expansion of King Salman International Airport is a key milestone in Saudi Arabia’s aviation growth, aligning with the country’s Vision 2030 objectives.
The first phase of the Terminal 1 expansion at King Khalid International Airport in Riyadh was inaugurated on Jan. 8, increasing the airport’s capacity to accommodate up to 7 million passengers annually.
This follows the completion of Terminals 3 and 4 in November 2022.
The airport has consistently been recognized as the Kingdom’s top-performing facility, upholding the highest compliance and operational standards.
In the financial sector, the Chairman of the Capital Market Authority Mohammed El-Kuwaiz highlighted the increasing focus on Saudi Arabia’s real estate investment market.
“Today, we have approximately 55 files for IPOs (initial public offerings) in the financial market, covering various sizes and companies. Around 20 percent of these files belong to real estate companies of different types,” he said.
He emphasized the growing diversity in real estate services, including developers and marketers, aligning with the Kingdom’s goal of securing financing across all productive sectors.
El-Kuwaiz further provided insights into best practices for listing companies, saying: “The best time to list a company is when its financial situation is stable and its funding needs are clear.”
He added: “If you’re prepared to share information as if they were partners, involve them in decision-making as if they were partners, and handle conflicts of interest as if they were partners, then you’re welcome.”
In a landmark decision, he also announced that listed companies owning properties in Makkah and Madinah can now welcome foreign investors, effective immediately. “On behalf of the CMA, we congratulate these companies,” he said.
Foreigners can now invest in Saudi-listed firms owning real estate in Makkah and Madinah, with non-Saudi ownership capped at 49 percent. The CMA said in a press release that the move enhances market competitiveness and supports Vision 2030.
The Real Estate Future Forum, running from Jan. 27 to 29 at the Four Seasons Hotel in Riyadh, aims to serve as a global platform for shaping the future of real estate.
With over 300 speakers from 85 countries, the event will focus on innovations, sustainability efforts, and investment strategies driving the sector under the theme, “Future for Humanity: Shaping Dreams into Reality.”
Saudi Arabia opens door for foreign investment in Makkah and Madinah real estate
RIYADH: Foreigners can now invest in Saudi-listed companies owning real estate in Makkah and Madinah, following a landmark decision by the Saudi Capital Market Authority.
Effective immediately, the move aims to boost the capital market’s competitiveness and align with the Kingdom’s Vision 2030 economic diversification objectives, the CMA announced in a press release.
While non-Saudis are allowed to purchase properties in the Kingdom, there are specific restrictions, and in the holy cities ownership is generally limited to Saudi nationals — although foreigners are allowed to lease properties there.
Under the new guidelines, foreign investments are limited to shares or convertible debt instruments of listed companies. Total non-Saudi ownership, including individuals and legal entities, is capped at 49 percent of a company’s shares.
However, strategic foreign investors are prohibited from holding stakes in these companies.
The move comes amid reforms across the region, with most neighboring countries allowing foreigners to own properties, primarily in free zones or designated areas under certain restrictions.
“Through this announcement, the Capital Market Authority aims to stimulate investment, enhance the attractiveness and efficiency of the capital market, and strengthen its regional and international competitiveness while supporting the local economy,” said the CMA.
The changes are also designed to stimulate foreign direct investment in the Kingdom’s capital market, as well as bolster its regional and international competitiveness.
“This includes attracting foreign capital and providing the necessary liquidity for current and future projects in Makkah and Madinah through the investment products available in the Saudi market, positioning it as a key funding source for these distinctive developmental projects,” added the CMA.
Strengthening the real estate sector and attracting more FDI into the Kingdom is one of the key goals outlined under the Vision 2030 program, as Saudi Arabia aims to reduce its dependence on crude revenues and diversify its economy.
The Kingdom aims to attract $100 billion in FDI by the end of this decade, and the government body has been implementing various initiatives and reforms to enhance the attractiveness of the capital market.
Some of these efforts include allowing foreign residents to directly invest in the stock market, enabling non-Saudi investors to access the market through swap agreements, and permitting qualified foreign capital institutions to invest in listed securities.
The CMA has also allowed foreign strategic investors to acquire strategic stakes in listed companies and directly invest in debt instruments.
In 2021, the CMA also allowed non-Saudis to subscribe to real estate funds investing within the boundaries of Makkah and Madinah, which played a crucial role in increasing the attractiveness of the capital market to both regional and international investors.
The share prices of real estate companies listed on Saudi Arabia’s stock exchange surged following the CMA’s announcement.
Knowledge Economic City saw its share price rise by 9.89 percent to SR16.66 ($4.44) at 12:45 p.m. Saudi time.
Jabal Omar Development Co.’s share price also increased by 10 percent to SR25.85, while Makkah Construction and Development Co.’s stock price climbed 9.84 percent to SR106, at 12:45 p.m. Saudi time.
Oil Updates — crude falls as Trump repeats call for OPEC to cut prices
- Trump reiterated call for OPEC to cut oil prices
- OPEC+ yet to react to Trump’s call for lower prices
- US puts on hold threat to slap tariffs on Colombia
SINGAPORE: Oil prices slipped on Monday after US President Trump called on OPEC to reduce prices following the announcement of wide-ranging measures to boost US oil and gas output in his first week in office.
Brent crude futures dropped 53 cents, or 0.68 percent, to $77.97 a barrel by 7:30 a.m. Saudi time after settling up 21 cents on Friday.
US West Texas Intermediate crude was at $74.16 a barrel, down 50 cents, or 0.67 percent.
Trump on Friday reiterated his call for the Organization of the Petroleum Exporting Countries to cut oil prices to hurt oil-rich Russia’s finances and help bring an end to the war in Ukraine.
“One way to stop it quickly is for OPEC to stop making so much money and drop the price of oil ... That war will stop right away,” Trump said.
Trump has also threatened to hit Russia “and other participating countries” with taxes, tariffs and sanctions if a deal to end the war in Ukraine is not struck soon.
Russian President Vladimir Putin said on Friday that he and Trump should meet to talk about the Ukraine war and energy prices.
“They are positioning for negotiations,” said John Driscoll of Singapore-based consultancy JTD Energy, adding that this creates volatility in oil markets.
He added that oil markets are probably skewed a little bit to the downside with Trump’s policies aimed at boosting US output as he seeks to secure overseas markets for US crude.
“He’s going to want to muscle into some of the OPEC market share so in that sense he’s kind of a competitor,” Driscoll said.
However, OPEC and its allies including Russia have yet to react to Trump’s call, with OPEC+ delegates pointing to a plan already in place to start raising oil output from April.
Both benchmarks posted their first decline in five weeks last week as concerns eased about sanctions on Russia disrupting supplies.
Goldman Sachs analysts said they do not expect a big hit to Russian production as higher freight rates have incentivized higher supply of non-sanctioned ships to move Russian oil while the deepening in the discount on the affected Russian ESPO grade attracts price-sensitive buyers to keep purchasing the oil.
“As the ultimate goal of sanctions is to reduce Russian oil revenues, we assume that Western policymakers will prioritize maximizing discounts on Russian barrels over reducing Russian volumes,” the analysts said in a note.
Still, JP Morgan analysts said some risk premium is justified given that nearly 20 percent of the global Aframax fleet currently faces sanctions.
“The application of sanctions on the Russian energy sector as leverage in future negotiations could go either way, indicating that a zero risk premium is not appropriate,” they added in a note.
On another front, Washington swiftly reversed plans to impose sanctions and tariffs on Colombia, after the South American nation agreed to accept deported migrants from the US, the White House said in a statement late on Sunday.
Sanctions could have disrupted oil supply, as Colombia last year sent about 41 percent of its seaborne crude exports to the US, according to data from analytics firm Kpler.
