Circular carbon economy holds promise in battle against global warming

Saudi Arabia has embraced the circular carbon economy (CCE) enthusiastically, and is now playing a leading role in advancing a strategic plan to tackle one of the most serious issues the world faces today — the existential threat from climate change. (AFP/File Photo)
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Updated 26 July 2020
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Circular carbon economy holds promise in battle against global warming

  • Tech-neutral approach forms key part of KSA’s strategic plan to achieve sustainable development goals
  • CCE offers a potential path to slow down and even reverse the inexorable process of global warming

DUBAI: “Carbon is not the enemy,” said Prince Abdul Aziz bin Salman, Saudi Arabia’s energy minister, when he laid out the foundations of the strategy that the Kingdom believes can halt the planet’s apparently inexorable slide toward climate catastrophe.

Saudi Arabia cannot be credited with inventing the idea of the circular carbon economy (CCE), which grew out of a body of work by environmentally conscious economists and thinkers over the past few decades.

But the Kingdom has embraced the concept enthusiastically, and is now playing a leading role in advancing a strategic plan to tackle one of the most serious issues the world faces today — the existential threat from climate change — even as it wrestles with the immediate challenge of the COVID-19 pandemic.

Last year, at the Future Investment Initiative forum in Riyadh, Prince Abdul Aziz said: “Considering our pivotal role as a global energy producer, it is our responsibility to find a solution through innovation and collaboration to create a sustainable framework for growth.”

Since then, CCE has become a central plank of the Kingdom’s long-term energy thinking, embedded in policies and proposals from the think tanks of the G20 leaders’ organization as it prepares for the global summit in November, as well as in practical projects and initiatives by Saudi Aramco, the Kingdom’s energy giant, and other big mega-projects of the Vision 2030 reform strategy, such as Neom.

In essence, CCE is a masterplan to slow down and even, hopefully, reverse the apparently inexorable global warming caused by the emission of carbon materials into the atmosphere, identified by scientists as the main factor behind climate change.

CCE aims to help the world meet the targets set by the 2015 Paris Agreement on climate, to keep the rise in global temperatures to 2 degrees above pre-industrial levels, and even cut to 1.5 degrees, by reducing emissions from the carbon products that create harmful “greenhouse gases.”

It plans to do this by developing a “closed loop” system that effectively mimics nature’s own cycles, enhancing and augmenting the process by which harmful carbon materials are neutralized.

Adam Sieminski, president of the King Abdullah Petroleum Studies and Research Center (KAPSARC) in Riyadh, told Arab News: “The CCE is a holistic approach to carbon management that can guide international efforts toward a more inclusive, resilient, sustainable, and carbon‐neutral or net‐zero energy system.”

The term “net zero” is key here. Some radical environmental activists want the world to commit to “absolute zero” on carbon emissions. But the Saudi approach to CCE — as you would expect from the world’s leading oil producer — is to continue to exploit the undoubted benefits from carbon as a source of energy, while attempting to minimize the harmful side-effects.

FASTFACT

Circular Carbon Economy

CCE employs a technology-neutral approach to achieve energy market stability and responsible economic growth.

KAPSARC research distinguishes between different types of carbon within the economic process. “Living carbon” is a positively beneficial phenomenon, essential to human life and the process by which we have fresh foods, healthy forests, and fertile soil.

More problematic are “durable carbon” — where it is locked in stable solids such as fibers and plastics — and “fugitive carbon” which consists of gases like carbon dioxide and methane that are released into the environment by energy generation, transportation, and industrial cycles.

Core to the problem of dealing with the carbon situation are the “three Rs” — to reduce, reuse, and recycle carbon products that can pollute the world’s environment. These ideas are increasingly familiar to consumers the world over, in calls or more awareness of the use of plastic products, through the development of clean electric vehicles, right down to the bags at the supermarket checkout.

Saudi Arabia already has in place various programs that address these issues. There has been an energy efficiency program in place for nearly a decade, designed to help industry, transportation, and buildings optimize their use of energy. Phasing out of energy subsidies is also a crucial part of that plan.

The Kingdom also has well-developed and ambitious programs for renewable energy sources, such as wind and solar, as well as a strategy for civil nuclear power generation that is being steadily implemented, in accordance with international atomic power standards.

But on their own, the 3 Rs are unlikely to help the world meet the targets of the Paris Agreement. Saudi Arabia has emphasized a fourth R — remove — which is an altogether more ambitious proposition.

Energy expert Christof Ruehl, senior research fellow at the Center on Global Energy Policy at New York’s Columbia University, told Arab News: “The first three Rs are good general principles, but the fourth R, remove, is a significant technological and commercial challenge.”

Removing carbon via technology involves a process known as carbon capture, utilization, and storage (CCUS) which is a complicated and expensive business.

Another energy expert agreed that implementing CCUS was an essential but challenging goal.

Robin Mills, chief executive of consultancy Qamar Energy, said: “The technologies for reusing carbon are limited in scale, costly and/or technologically immature. However, a major scale-up of carbon capture, carbon use or storage, and direct capture from the air, are all essential parts of decarbonizing the Saudi economy in the longer term and keeping its fossil-fuel resources viable.”

The Kingdom already operates the largest CCUS plant in the world. Neom, the gigantic mega-city being planned in the north east of the Kingdom, has declared it will be the world’s biggest carbon-free hub, and is working on plans for environmentally friendly water desalination in addition to a big program of renewables and the use of “green hydrogen” as fuel.

Saudi Aramco, which is one of the leading global investors in clean energy techniques, is working actively on developing processes in its oil drilling, refining, and transportation.

It already uses carbon-capture technology to extract CO2 from the industrial process, employing it to maintain pressure in oil reservoirs and for enhanced oil recovery.

Aramco crude is recognized as among the cleanest in the world thanks to low carbon intensity and efficient refining processes, in comparison with its international peer group.

Industrial and technological developments such as these will contribute to reducing emissions of greenhouse gases and slowing the pace of global warming. But, the experts agree, there will also have to be a serious effort to reduce use of carbon fuels if the Paris Agreements are to be met.




This picture taken on December 11, 2019 shows a view of Jubail Desalination Plant at the Jubail Industrial City, about 95 kilometers north of Dammam in Saudi Arabia's eastern province overlooking the Gulf. (AFP)

Ruehl said: “There are technologies out there, but none works on the scale necessary to make a serious dent in global levels of emissions. So, you need a means — either via regulation, tax, or a market mechanism — that incentivizes carbon emitters to reduce their output. But this has proved to be very difficult to organize on a global level.”

The European authorities tried to put in place a carbon-trading system that would allow industrial producers to buy and sell the right to produce carbon, but it fell victim to market manipulation and corruption. Other schemes suffered similar challenges.

Prince Abdul Aziz said recently that Saudi Arabia would soon announce its own carbon-trading strategy to address these vulnerabilities, stressing the commercial benefits of such a plan.

“Carbon is a resource. It is not something that we should just throw and just emit it. Actually, capturing it lets us make money out of it,” he said.

Such a project would bring its own advantages, Ruehl agreed. “For KSA, which is a comparatively ‘clean’ oil producer, it would be a competitive advantage over other oil producers if an effective carbon market could be set up,” he said.

Carbon is not an enemy. But it will take a lot of ingenuity and global co-operation to turn it into a committed ally. The hope must be that the experience hard won during the pandemic will help forge that collaboration once the virus is conquered.

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Twitter: @frankanedubai

 


Qatar commits to investing $10bn in India

Updated 19 February 2025
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Qatar commits to investing $10bn in India

NEW DELHI: Qatar has committed to investing $10 billion in India across various sectors, the two nations said in a joint statement on Tuesday, after Qatar’s Emir Sheikh Tamim bin Hamad Al-Thani visited New Delhi.

Indian Prime Minister Narendra Modi said he had a “very productive meeting” with Qatar’s Emir, who was on a two-day visit to New Delhi.

“Trade featured prominently in our talks. We want to increase and diversify India-Qatar trade linkages,” Modi said in a post on X. It was the first such visit by a Qatari Emir to the South Asian nation in 10 years.

According to the statement, Qatar will invest $10 billion in India in infrastructure, technology, manufacturing, food security, logistics, hospitality and other sectors.

The two countries will aim to double their annual trade to $28 billion in the next five years and are exploring the signing of a free trade agreement, the Indian foreign ministry said earlier in the day.

Bilateral trade between the two nations stood at $18.77 billion in the fiscal year that ended in March 2023, mainly comprising liquefied natural gas imports from Qatar.

Qatar accounted for more than 48 percent of India’s LNG imports that year.

The two sides said they would work to enhance bilateral energy cooperation, including mutual investments in energy infrastructure, as well as look at settlement of bilateral trade in their respective currencies. 


Oil Updates — crude gains on US, Russia supply worries; market seeks Ukraine talks clarity

Updated 19 February 2025
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Oil Updates — crude gains on US, Russia supply worries; market seeks Ukraine talks clarity

HOUSTON/SINGAPORE: Oil prices edged up on Wednesday amid worries of oil supply disruptions in the US and Russia, and as markets awaited clarity on the Ukraine peace talks.

Brent crude futures were up 14 cents, or 0.2 percent, at $75.98 a barrel at 7:50 a.m. Saudi time, and possibly set for a third day of gains.

US West Texas Intermediate crude futures for March rose 16 cents, or 0.2 percent, to $72.01, up 1.8 percent from the close on Friday after not settling on Monday because of the Presidents’ Day public holiday. The March contract expires on Thursday and the more active April contract gained 14 cents, or 0.2 percent, to $71.97.

“The psychologically important $70 level appears to have held firm, aided by the Ukrainian drone attack on the Russian oil pumping station and fears that cold weather in the US may curtail supply,” said IG market analyst Tony Sycamore.

“On top of that there is some speculation that OPEC+ may decide to delay its planned supply increase in April,” he said, referring to the Organization of the Petroleum Exporting Countries and allies.

Russia said oil flows through the Caspian Pipeline Consortium, a major route for crude exports from Kazakhstan, were reduced by 30 percent to 40 percent on Tuesday after a Ukrainian drone attack on a pumping station. A 30 percent cut would equate to the loss of 380,000 barrels per day of supply to the market, according to Reuters calculations.

Meanwhile, cold weather threatened US oil supply, with the North Dakota Pipeline Authority estimating that production in the country’s No. 3 producing state would be down by as much as 150,000 bpd.

US President Donald Trump’s administration said on Tuesday it had agreed to hold more talks with Russia on ending the war in Ukraine. A deal could ease or help remove sanctions that have disrupted the flows of Russian oil shipments.

Analysts at Goldman Sachs said a potential Ukraine-Russia peace deal and associated easing in sanctions on Russia is unlikely to significantly raise Russia oil flows.

“We believe that Russia crude oil production is constrained by its OPEC+ 9 million barrels per day production target rather than current sanctions, which are affecting the destination but not the volume of oil exports,” they said in a report.

Israel and Hamas will also begin indirect negotiations on a second stage of the Gaza ceasefire deal, officials said on Tuesday.

However, Trump said on Tuesday he intends to impose auto tariffs “in the neighborhood of 25 percent” and similar duties on semiconductors and pharmaceutical imports.

Tariffs could raise prices for consumer products, weaken the economy and reduce demand for fuel. 


Saudi Arabia raises $818m in February sukuk sale 

Updated 19 February 2025
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Saudi Arabia raises $818m in February sukuk sale 

RIYADH: Saudi Arabia raised SR3.07 billion ($818 million) through its February sukuk issuance as the Kingdom continues to tap debt markets to support economic diversification efforts. 

The latest riyal-denominated offering, managed by the National Debt Management Center, follows a SR3.72 billion issuance in January. The Kingdom raised SR11.59 billion in December and SR3.41 billion in November, according to official data. 

Sukuk, a Shariah-compliant financing instrument, allows investors to hold partial ownership in an issuer’s assets while adhering to Islamic finance principles. Saudi Arabia has been a key player in the global sukuk market, leveraging debt sales to finance projects under its Vision 2030 economic transformation plan. 

According to the NDMC, the February issuance was split into four tranches. The first, valued at SR585 million, matures in 2029, while the second, at SR1.70 billion, is set to mature in 2032. The third tranche, worth SR404 million, is due in 2036, and the final portion, totaling SR376 million, will expire in 2039. 

Saudi Arabia is expected to play a leading role in driving global debt and sukuk issuance over the next two years, Fitch Ratings said earlier this month. The Kingdom’s financial institutions and corporations are increasingly turning to international debt markets to diversify their funding sources, the agency noted. 

A separate report by Fitch projected Saudi Arabia’s debt capital market to reach $500 billion by the end of 2025, supported by a growing pipeline of infrastructure and development projects. 

The Kingdom is also set to lead bond and sukuk maturities in the Gulf region, with redemptions expected to total $168 billion between 2025 and 2029, according to a December report by Kamco Invest. Government-issued debt will account for the largest share, with maturities projected to reach $110.2 billion during the period. 

Across the Gulf Cooperation Council, the debt capital market surpassed the $1 trillion mark in outstanding issuances by the end of November, Fitch said in a separate report. 

Meanwhile, global sukuk issuance is forecast to range between $190 billion and $200 billion in 2025, driven by activity in key markets such as Saudi Arabia and Indonesia, according to S&P Global. The credit rating agency reported that global sukuk sales totaled $193.4 billion in 2024, slightly down from $197.8 billion in 2023.


Experts highlight importance of data in capital markets at Saudi forum

Updated 18 February 2025
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Experts highlight importance of data in capital markets at Saudi forum

  • Industry specialists said that real-time data availability is equally crucial for other participants

RIYADH: Accessing and interpreting data effectively is crucial for investors’ success in capital markets, as it enables them to make informed and timely decisions, according to experts. 

During a panel discussion at the Capital Markets Forum in Riyadh on Feb. 18, industry specialists said that real-time data availability is equally crucial for other participants, such as brokers, asset managers, and external institutions.

“What I believe is that data is the new alpha. So, those who master it will not only participate or win in the market, but they will define the market,” said Mehdi Miri, CEO of DirectFN. 

He added: “For investors, data is really about making smart and fast decisions. What investors need to see today is real-time AI-powered data that will help them look into insights and foresight so that they can see market opportunities before the market moves.” 

Miri further said that brokers and banks are using advanced analytics to build their trading and hedging strategies, ultimately improving their execution process. 

Yazeed Al-Domaiji, CEO of Wamid, a subsidiary of Saudi Tadawul Group, highlighted the importance of accessing data while maintaining rules and regulations. 

“Capital markets are driven by data. Data is there from more than 100 years ago. Everybody in capital markets is looking for data, using data to make decisions. As a capital market institution, it is necessary to find the balance of how we can innovate while maintaining the regulations,” said Al-Domaiji. 

He added that Wamid is aiming to play a major role in enabling the capital market industry in the Kingdom as it has announced a recent partnership with Google, with Saudi Arabia having strategic plans to adopt data and artificial intelligence in the sector.

Al-Domaiji said that Wamid is encouraging innovation in the capital market by focusing on two pillars, including data solutions and infrastructure technology. 

“In data solutions, we announced our partnership to launch our project for the data terminal. What we are planning to do is to offer a set of data that suits the demand of the market. We are focussing on satisfying the issuers, the capital market institutions, and the investors through a series of data with easier accessibility and good quality,” said Al-Domaiji. 

He added: “On the infrastructure side, we are helping the capital market to increase the access of institutional investors, especially for the HFTs (high-frequency trading). So, today, in Saudi Arabia, HFT trading is around 25 percent of the daily average trading.” 

Miri further said that data has become a strategic asset over time, and it is not just a global trend but a local and regional reality. 

“Data is a strategic asset. When we talk about monetization, data is a business in itself. This is a Spotify moment for data, where we are bringing and converging raw data into an on-demand revenue-generating machine,” added Miri. 

He said the capital market currently demands data that are not just numbers but enriched pieces of information, which should give foresight on what to do next. 

Miri also underscored the vitality of personalizing the data and integrating them into one single platform for better efficiency and quick decision-making. 

Regarding the future outlook of the importance of data in capital markets, Miri said: “Further down the road, if you have the data and if you have the liquidity, this could be the new asset class. A few decades ago, no one was thinking about carbon trading. In the future, we will be talking about data trading. Obviously, we have to balance it with data protection and regulation.” 

Underscoring the importance of datasets, Al-Domaiji added that data will become the “new currency for the capital market” in the future. 

Doug Peterson, special adviser and member of the board of directors at S&P Global, stressed the importance of data privacy and said: “The first question you have to ask from a governance standpoint is how I am going to protect my data. Do you want your data to be the one that is used in a model that is being built? Once it is there, that model is going to be using your data forever, and you are going to get paid for it.” 

He added: “I am really encouraged by what is happening in the Saudi market. We are very pleased at S&P Global to start building the local presence, because we think this is one of the most important markets in the future.” 

Katharine Furber, global head of emerging markets trading product at Bloomberg LP, said that fixed income space is seeing huge potential in the usage of data. 

“In the fixed income space, of course, it is the sell side indication, which indicates the desire to buy or sell a bond. But also trading data, and by trading data, I do not just mean what did they trade at what price. They want to build a rich story around the trade to learn as much as possible, which includes how many counterparties they asked on the trade; whether or not those counterparties responded to the trade request,” said Furber. 


ADNOC Drilling eyes $1bn in investments, Gulf expansion plans

Updated 19 February 2025
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ADNOC Drilling eyes $1bn in investments, Gulf expansion plans

RIYADH: UAE’s ADNOC Drilling is projecting significant growth, expecting over $1 billion in investments for 2025. The company also has plans to expand its operations into Oman and Kuwait, an official revealed.

In an interview with Arab News at the Capital Markets Forum, Youssef Salem, the company’s chief financial officer, discussed the expansion strategy, emphasizing the confidence ADNOC Drilling has in the long-term, robust plans of operating companies in these countries.

“For example, Kuwait Oil Co. is going to 4 million barrels of production capacity of oil per day, also launching for the first time their offshore operations. Similarly with Oman, a lot of tenders for new rigs to upgrade their drilling field,” he explained.

Salem shared that the firm’s expansion into these Gulf nations, along with its existing operations in Jordan, is based on establishing strong relationships with local operators. ADNOC Drilling has already pre-qualified with these entities and is focusing on organic growth through partnerships and joint ventures with established regional companies.

Regarding the financial impact of the investments, Salem noted that Kuwait is currently a large market with plans to expand to 200 rigs, while Oman is also growing its market to 100 rigs. “So, these two markets combined are almost three times the size of the UAE rig market, and hence, we see it as a very substantial opportunity,” he added.

Salem pointed out the ongoing shift in ADNOC Drilling’s revenue sources. “Today, if you look in general, the vast majority of our revenues come from the UAE. That is something that is evolving. For example, on the Enersol side, which is our global investment, we expect by next year to have around 7 percent of our net income to come from these global operations.”

The CFO elaborated on the company’s anticipated growth in 2025, with expectations of the onshore segment potentially crossing $2 billion, the offshore segment reaching over $1.4 billion, and oil field services surpassing $1.2 billion—an approximate 50 percent year-on-year growth.

“So, in 2025, we are expecting the onshore to potentially cross $2 billion, the offshore to cross $1.4 billion, and the oil field services to cross $1.2 billion, another almost 50 percent year-on-year growth,” Salem said.

He also revealed that the company plans to invest more than $1 billion in 2025.

“Out of that, $350 million to $550 million will be in additional rigs and oil field service equipment inside the UAE on our roadmap to reach 151 rigs by 2028,” he said.

Additionally, ADNOC Drilling is allocating $700 million to Enersol, its joint venture with Alpha Dubai, which focuses on investing in global energy technology companies, especially those involved in artificial intelligence.

Salem also highlighted the company’s recent acquisitions, noting that ADNOC Drilling completed four acquisitions worth $800 million in the previous year and plans further acquisitions totaling $700 million in 2025.

Discussing the company’s 2024 results, which reached a record revenue of $4 billion, Salem stated: “The onshore segment generated $1.9 billion of revenues from 95 land rigs, which is the largest drilling feed on the onshore side in the Middle East and North Africa. Similarly, the offshore segment generated $1.3 billion of revenue from 47 offshore rigs. Again, the largest, and then the oil field services, which is our fastest-growing segment, growing more than 100 percent year on year.” He also added that the oil field services segment generated $100 million in the fourth quarter and expects further growth in each segment in the upcoming year.

Regarding the forum’s agenda, Salem mentioned: “Tomorrow and the day after, we have two full days of investor meetings. Saudi investors obviously are a very key part of our shareholder register, but also, you have a lot of global investors who are flying into the forum to attend.”

He emphasized that the forum presents a valuable opportunity to engage with global investors.

Salem also spoke about ADNOC Drilling’s stock, saying it is the most covered in the UAE, with 18 analysts tracking it, and holds the highest number of buy recommendations in the Middle East, with 15 advisers endorsing it.

He acknowledged the increasing significance of Saudi Arabia’s financial sector, highlighting that the Kingdom hosts leading banks and noted that Tadawul is recognized for its liquidity and market activity, supported by a robust ecosystem of market makers, brokers, analysts, and investors.

“Similarly, on the Abu Dhabi exchange side in the UAE, one of the fastest growing exchanges across the trillion dollars of market capitalization between the Abu Dhabi exchange and the Dubai financial market,” Salem said, describing the event as the “biggest capital market in the world,” a collaborative gathering where regional exchanges unite.

On ADNOC Drilling’s operations in Saudi Arabia, Salem expressed the company’s deep commitment to its operations in the Kingdom. He explained that ADNOC Drilling operates multiple subsidiaries in close collaboration with Saudi Aramco, such as EV, a subsidiary from Enersol offering smart cameras for 3D visualization beneath wells. He also mentioned NTS, a manufacturing business with a significant facility in Dammam, employing over 100 people to manufacture drilling and service equipment for companies like Schlumberger, Halliburton, and Baker Hughes.

“For us, Saudi Arabia continues to be very strategic for our actual underlying operation, and we continue to find ways to build even deeper relationships,” Salem affirmed.

Regarding a potential dual listing on the Saudi Exchange, Salem shared that the company’s current focus is primarily on the Abu Dhabi Exchange, where they already enjoy significant liquidity, with over $20 million traded daily.

“We have the benefit of having a very liquid stock trading more than $20 million a day. Saudi investors are able to invest on the Abu Dhabi Exchange. We have a lot of the major Saudi sovereign wealth funds, pension funds, asset managers able to invest from here,” he said.

He added: “We do not see any technical limitation to their ability to invest, and we think we can continue to grow the Saudi investor base even more in ADNOC Drilling on the Abu Dhabi exchange.”