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Mohammed Al-Shatti

Ukraine issue poses a challenge to energy security

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Ukraine Crisis: BP to exit Rosneft; EU bans flights; Germany to cut Russian gas

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Updated 28 February 2022
Arab News
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Ukraine Crisis: BP to exit Rosneft; EU bans flights; Germany to cut Russian gas

  • The Group of Seven leaders said on Sunday that western allies had decided to cut off "certain Russian banks" from SWIFT
Updated 28 February 2022
Arab News

RIYADH: The EU decided to ban its aerospace to Russian flights and aircrafts in a fresh round of actions in response to Russia's invasion of the Ukraine.

Highlights:

  • The German government had asked utility firm Uniper UN01.DE to resume its plans to build a liquefied natural gas, or LNG, terminal in Wilhelmshaven, Handelsblatt newspaper reported on Sunday, as Germany steps up its plans to cut dependence on Russian gas.
  • UK considers using strategic oil reserves to stabilize prices, Bloomberg reported
  • British energy giant BP said on Sunday it had decided to exit its 19.75 percent stake in Russian state-controlled oil firm Rosneft after Russia's invasion of Ukraine.
  • BP Chief Executive Bernard Looney, who will step down from the Rosneft board, said in a statement that the invasion "caused us to fundamentally rethink BP's position with Rosneft."
  • Britain's business secretary Kwasi Kwarteng said on Sunday he welcomed BP's decision. "Russia's unprovoked invasion of Ukraine must be a wake up call for British businesses with commercial interests in [Russian President Vladimir] Putin's Russia," he said on Twitter.
  • US banks are preparing for retaliatory cyberattacks after Western nations slapped a raft of stringent sanctions on Russia for invading Ukraine, cyber experts and executives said.

 

From Earlier Today:

 

Fire in Ukraine oil and gas facilities

Huge explosions from Russian attacks on oil and gas installations lit up the night sky in Ukraine early on Sunday, while Western allies tightened sanctions to banish major Russian banks from the main global payments system.

Ukrainian forces were holding off Russian troops advancing on the capital Kyiv, President Volodymyr Zelensky said as the biggest assault on a European state since World War Two entered a fourth day.

But the night was brutal, with shelling of civilian infrastructure and targets including ambulances, Zelensky said.

Germany switch to LNG

Germany will make good on plans to build two liquefied natural gas (LNG) terminals and up its natural gas reserves to cut its dependence on Russian gas after Russia's invasion of Ukraine, Chancellor Olaf Scholz said on Sunday.

"We will do more to ensure secure energy supply for our country," he told lawmakers in a special Bundestag session called to address the Ukraine crisis.

"We must change course to overcome our dependence on imports from individual energy suppliers."

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Germany has been under pressure from other Western nations to become less dependent on Russian gas, but its plans to phase out coal-fired power plants by 2030 and to shut its nuclear power plants have left it with few options.

Earlier this week Germany halted the $11 billion Nord Stream 2 Baltic Sea gas pipeline project, Europe's most divisive energy project, in response to Russia's actions toward Ukraine.

Russian flights ban

A European Union-wide ban for Russian flights is now part of a fresh package of sanctions on Moscow discussed on Sunday by the bloc's foreign ministers.

A vast majority of EU member states have already closed their airspace to these flights.

EU officials meet for emergency refugee talks

European Union interior ministers are gathering Sunday for emergency talks on how to cope with an influx of refugees from conflict-hit Ukraine as tens of thousands of people flee across the border into Poland, Hungary, Romania and elsewhere.

The U.N. refugee agency, the UNHCR, estimates that more than 200,000 people displaced by the fighting in Ukraine have fled the country, and that up to four million could flee if the fighting spreads.

Poland said Saturday that over 100,000 people had entered from Ukraine in the previous 48 hours alone.

At a meeting in Brussels, the ministers will look at ways to shelter people, how to manage the security challenges that the conflict poses to the EU’s external borders, and what kind of humanitarian support can be provided to Ukraine.
Those arriving at the borders are mostly women, children and the elderly.

Ukrainian President Volodymyr Zelensky has banned the departure of men aged between 18 to 60 so they can take up arms against Russian forces.

Separately, Reuters reported that Ukraine is seeking to take Russia to the international court in The Hague, citing President Zelensky.

UK to seek further sanctions as Russian banks face SWIFT ban

British foreign minister Liz Truss said she would press for further sanctions against Russia, especially cutting off their oil and gas supplies. 

“It doesn't end here. I've got a meeting today with my G7 counterparts. I am going to be pressing for further tightening against Russia, particularly including the access to Russian oil and gas,” said Truss. 

She also warned that Russian leaders will be prosecuted for war crimes. 

The Group of Seven leaders said on Sunday that western allies had decided to cut off "certain Russian banks" from the worldwide interbanking communication system called SWIFT.


The statement, in a joint declaration published by the French presidency, did not specify which Russian banks would be affected.

It added a transatlantic task force will soon be put in place to coordinate sanctions against Russia, Reuters reported.

Google, YouTube take action

Google has blocked the download of Russian state-owned media outlet RT's mobile app in Ukrainian territory. 

Alphabet Inc. which owns Google made this decision upon request from the Ukrainian government. 


Earlier, Google had barred RT and several other Russian channels from receiving money for ads on their websites and apps. 

YouTube has also suspended multiple Russian channels, including RT from revenue generation on the site. 

 

“In light of extraordinary circumstances in Ukraine...we're pausing a number of channels' ability to monetize on YouTube, including several Russian channels affiliated with recent sanctions,” said YouTube in a statement.

Russian Central Bank insists it can ride the storm

Russia's banking system is stable even after facing a raft of new sanctions from the US and the European Union, according to Russia's Central Bank. 

"The Bank of Russia has the necessary resources and tools to maintain financial stability and ensure the operational continuity of the financial sector," said the bank in a statement. 

On Saturday, the US, Europe, and Canada had announced the freezing of Russia's Central Bank's assets.

Reuters reported the bank as also saying it would be temporarily easing restrictions on banks' open foreign currency positions. 

Putin puts Russia’s nuclear forces on alert

In a dramatic escalation of East-West tensions, President Vladimir Putin ordered Russian nuclear forces put on high alert Sunday in response to what he called “aggressive statements” by leading NATO powers, AP reported.

The order means Russia’s nuclear weapons are prepared for increased readiness to launch, raising the threat that the tensions could boil over into nuclear warfare.

In giving it, the Russian leader also cited hard-hitting financial sanctions imposed by the West against Russia, including Putin himself.

Speaking at a meeting with his top officials, Putin directed the Russian defense minister and the chief of the military’s General Staff to put the nuclear deterrent forces in a “special regime of combat duty.”

 

Topics: energy

SABIC, Almarai, SEC able to absorb fuel price hike: S&P Global

Updated 09 January 2025
Reem Walid  
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SABIC, Almarai, SEC able to absorb fuel price hike: S&P Global

Updated 09 January 2025
Reem Walid  

RIYADH: Major Saudi companies, including chemical company SABIC, dairy firm Almarai, and Saudi Electric Co., are well-positioned to handle the impact of higher fuel and feedstock prices introduced on Jan. 1, according to a new report.

Released by capital market economy firm S&P Global, the analysis reveals that those corporates will be able to absorb the marginal increase in production costs by further improving operational efficiencies as well as potentially via pass-through mechanisms.

This came after Saudi Aramco increased diesel prices in the Kingdom to SR1.66 ($0.44) per liter, effective Jan. 1, marking a 44.3 percent rise compared to the start of 2024. The company has kept gasoline prices unchanged, with Gasoline 91 priced at SR2.18 per liter and Gasoline 93 at SR2.33 per liter.

Despite the hike, diesel prices in Saudi Arabia remain lower than those in many neighboring Arab countries. In the UAE and Qatar, a liter of diesel is priced at $0.73 and $0.56, respectively, while in Bahrain and Kuwait, it costs $0.42 and $0.39 per liter.

“For SABIC and Almarai, the increase in feedstock prices will not affect profitability significantly. In the case of utility company, SEC, additional support will likely come from the government if needed,” the report said.

The capital market economy firm projects that SABIC will continue to outperform global peers on profitability.

“We don’t expect the rise in feedstock and fuel prices to materially affect profitability, since the company estimates it will increase its cost of sales by only 0.2 percent,” the report said.

It further highlighted that SABIC is considered a government-related entity with a high possibility of receiving support when needed.

The report also underlines that Almarai anticipates an additional SR200 million in costs for 2025, driven by higher fuel prices and the indirect effects of increased expenses across other areas of its supply chain.

“We believe Almarai will continue focusing on business efficiency, cost optimization, and other initiatives to mitigate these impacts,” the release stressed.

With regards to SEC, S&P said that an unrestricted and uncapped balancing account provides a mechanism for government support, including related to the higher fuel costs.

“We believe any increased fuel cost will be covered by this balancing account,” the report said.

The study further highlights that the marginal increase “could significantly affect wider Saudi corporations’ profit margins and competitiveness.”

The S&P data also suggests that additional costs will be reflected in companies’ financials from the first quarter of 2025.

“Saudi Arabia is continuing its significant and rapid transformation under the country’s Vision 2030 program. We expect an acceleration of investments to diversify the Saudi economy away from its reliance on the upstream hydrocarbon sector,” the report said.

“The sheer scale of projects — estimated at more than $1 trillion in total — suggests large funding requirements. Higher feedstock and fuel prices would help reduce subsidy costs for the government, with those savings potentially redeployed to Vision 2030 projects,” it added.

Topics: SABIC Almarai Saudi Electric Company

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Lenovo to produce ‘Saudi Made’ PCs by 2026 following $2bn Alat deal closure

Updated 09 January 2025
MIGUEL HADCHITY 
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Lenovo to produce ‘Saudi Made’ PCs by 2026 following $2bn Alat deal closure

Updated 09 January 2025
MIGUEL HADCHITY 

RIYADH: Chinese tech giant Lenovo is set to manufacture millions of computer devices in Saudi Arabia by 2026, following the completion of a $2 billion investment deal with Alat, a subsidiary of the Public Investment Fund. 

First announced in May, the partnership has now received shareholder and regulatory approvals, paving the way for Lenovo to establish a regional headquarters and a manufacturing facility in the Kingdom. 

The deal marks a significant step in aligning Lenovo’s growth ambitions with Saudi Arabia’s Vision 2030 goals of economic diversification, innovation, and job creation, the company said in a press release. 

The factory will manufacture millions of PCs and servers every year using local research and development teams for fully end-to-end “Saudi Made” products and is expected to begin production by 2026, it added. 

“Through this powerful strategic collaboration and investment, Lenovo will have significant resources and financial flexibility to further accelerate our transformation and grow our business by capitalizing on the incredible growth momentum in KSA and the wider MEA region,” Yang said. 

He added: “We are excited to have Alat as our long-term strategic partner and are confident that our world-class supply chain, technology, and manufacturing capabilities will benefit KSA as it drives its Vision 2030 goals of economic diversification, industrial development, innovation, and job creation.” 

Amit Midha, CEO of Alat, underscored the significance of the partnership for both Lenovo and the Kingdom. 

“We are incredibly proud to become a strategic investor in Lenovo and partner with them on their continued journey as a leading global technology company,” said Midha. 

“With the establishment of a regional headquarters in Riyadh and a world-class manufacturing hub, powered by clean energy, in the Kingdom of Saudi Arabia, we expect the Lenovo team to further their potential across the MEA region,” he added. 

The partnership is expected to generate thousands of jobs, strengthen the region’s technological infrastructure, and attract further investment into the Middle East and Africa, according to the press release. 

In May, Lenovo raised $1.15 billion through the issuance of warrants to support its future growth plans. The initiative, which was fully subscribed by investors, signals confidence in Lenovo’s strategic approach and its plans for global expansion. 

The investment deal was advised by Citi and Cleary Gottlieb Steen & Hamilton for Lenovo, while Morgan Stanley and Latham & Watkins represented Alat. 

Topics: Lenovo Alat computer manufacturing

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Lebanon’s bonds climb as parliament elects first president since 2022

Updated 09 January 2025
Reuters
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Lebanon’s bonds climb as parliament elects first president since 2022

Updated 09 January 2025
Reuters

LONDON: Lebanon’s government bonds extended a three-month long rally on Thursday as its parliament voted in a new head of state for the crisis-ravaged country for the first time since 2022.

Lebanese lawmakers elected army chief Joseph Aoun as president. It came after the failure of 12 previous attempts to pick a president and the move boosts hopes that Lebanon might finally be able to start addressing its dire economic woes.

Lebanon’s battered bonds have almost trebled in value since September when the regional conflict with Israel weakened Lebanese armed group Hezbollah, long viewed as an obstacle to overcoming the country’s political paralysis.

Most of Lebanon’s international bonds, which have been in default since 2020, rallied after Aoun’s victory was announced to stand between 0.8 and 0.9 cents higher on the day and at nearly 16 cents on the dollar.

They have also risen almost every day since late December, although they remain some of the lowest priced government bonds in the world, reflecting the scale of Lebanon’s difficulties.

With its economy still reeling from a devastating financial collapse in 2019, Lebanon is in dire need of international support to rebuild from the war, which the World Bank estimates to have cost the country $8.5 billion.

 

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Closing Bell: Saudi main index closes in green at 12,097

Updated 09 January 2025
Miguel Hadchity
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Closing Bell: Saudi main index closes in green at 12,097

Updated 09 January 2025
Miguel Hadchity

RIYADH: Saudi Arabia’s Tadawul All Share Index rose on Thursday, gaining 9.01 points, or 0.07 percent, to close at 12,097.75. 

The total trading turnover of the benchmark index was SR7.48 billion ($1.99 billion), as 96 stocks advanced, while 133 retreated.    

The MSCI Tadawul Index decreased by 3.28 points, or 0.22 percent, to close at 1,510.14. 

The Kingdom’s parallel market, Nomu, surged, gaining 251.24 points, or 0.82 percent, to close at 31,027.39. This comes as 56 of the listed stocks advanced, while 32 declined. 

The best-performing stock was Nice One Beauty Digital Marketing Co. for the second day in a row, with its share price increasing by 7.69 percent to SR49. 

Other top performers included Fawaz Abdulaziz Alhokair Co., which saw its share price rise by 6.5 percent to SR14.74, and Abdullah Saad Mohammed Abo Moati for Bookstores Co., which saw a 4.42 percent increase to SR35.45. 

Arabian Pipes Co. and Dr. Sulaiman Al Habib Medical Services Group also saw positive change with their share prices moving up by 4.10 percent and 3.89 percent to SR12.70 and SR298.80, respectively. 

The worst performer of the day was Salama Cooperative Insurance Co., whose share price fell by 5.88 percent to SR19.52. 

Almoosa Health Co. and Al Hassan Ghazi Ibrahim Shaker Co. also saw declines, with their shares dropping by 5.13 percent and 3.91 percent to SR133.20 and SR28.25, respectively.   

On the announcements front, Riyad Bank declared its intention to fully redeem its $1.5 billion fixed-rate reset tier 2 sukuk, issued in February 2020, on Feb. 25, 2025.  

According to a Tadawul statement, the sukuk originally maturing in 2030, will be redeemed at face value in accordance with the terms and conditions. The redemption, approved by the regulators, will include any accrued but unpaid periodic distributions.  

On the redemption date, Riyad Sukuk Limited will deposit the full amount into the accounts of sukuk holders, marking the completion of the issuance. This redemption will conclude the sukuk’s life, with no remaining value post-redemption. 

Riyad Bank ended today’s trading session edging up by 0.91 percent to SR27.85.

Topics: TASI MSCI NOMU

Rotana eyes growth in smaller Saudi cities amid hospitality expansion

Updated 09 January 2025
Nadin Hassan
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Rotana eyes growth in smaller Saudi cities amid hospitality expansion

Updated 09 January 2025
Nadin Hassan

RIYADH: Rotana Hotels is turning its attention to smaller cities in Saudi Arabia as part of its ambitious growth strategy to strengthen its presence in the Kingdom. 

Speaking on the sidelines of the third Saudi Tourism Forum, the firm’s Chief Operating Officer Eddy Tannous told Arab News the company is engaging with tourism authorities, development funds, and private investors to explore opportunities in emerging destinations such as Al-Baha and Asir.

Rotana has previously announced its plans to develop nine new properties in Saudi Arabia, five of which are scheduled to open in 2025. This follows the launch of three hotels in 2024, including Nova M, the first Edge by Rotana property, as well as Dar Rayhaan by Rotana in Alkhobar and Al Manakha Rotana in Madinah.

Tannous said: “We have development on properties that will probably open in the next, I want to say, two to five years. Probably six to eight properties in those tertiary cities where it’s becoming a destination that people want to go to as well.”

With Saudi Arabia ranking third globally for international tourist arrival growth in 2024, with a 25 percent increase compared to the previous year, the Kingdom’s hospitality sector is seeing rapid growth.

The company’s goal is to triple its current key count in the Kingdom to 6,000 within the next three years, bolstered by strong demand for hospitality services.

Rotana’s upcoming developments, including Yasmina Rayhaan by Rotana in Riyadh, aim to meet this increasing demand.

“We are a regional brand. We are a brand that grew up in this region, so Saudi Arabia has always been a focus for us. But I think with the announcement of Vision 2030, it became more of a catalyst for us to continue focusing on Saudi Arabia,” Tannous said.

He added: “Saudi Arabia is the region or is the country in this Middle East region that’s growing the fastest and that’s growing with the biggest magnitude from a hospitality standpoint. Our main focus in Saudi Arabia is to focus both on the government sector projects and individual investors.”

Rotana’s expansion strategy is also geared toward major international events, including Saudi Arabia’s hosting of the FIFA World Cup in 2034. This event is expected to attract millions of visitors, creating significant opportunities for the hospitality sector.

Commenting on the company’s plans, Rotana CEO Philip Barnes said in a press release: “We see tremendous potential for expansion in Saudi Arabia. Our ambitious pipeline for KSA underscores our commitment to the hospitality and tourism sectors, both in the Kingdom and regionally, as demand for business and leisure travel soars to new heights in anticipation of major events such as the FIFA World Cup 2034.”

Beyond Saudi Arabia, Rotana is expanding across the Middle East, Africa, Eastern Europe, and Turkiye, where it currently operates 81 properties. The company has a pipeline of 36 new properties in 22 cities, including its projects in Saudi Arabia.

Rotana is also strengthening its presence in key markets such as the UAE, Turkiye, and Africa, where demand for leisure and business travel is on the rise.

“As a company today, we run 86 properties in the world. Some of our source markets to Dubai and Abu Dhabi, which are two of our biggest markets, include the UK, Germany, and Russia,” Tannous said.

Rotana is also preparing for significant updates to its loyalty program, which are expected to be announced later this year — although details remain under wraps.

“It’s not something I can talk about today, but we will hopefully in 2025,” Tannous said. “The most exciting thing for me right now is what we’re doing on our loyalty program because that will open the door for bank partnerships, credit card partnerships, airline partnerships.”

Rotana’s expansion in Saudi Arabia and beyond reflects its commitment to meeting the growing demand for hospitality services while positioning itself as a leader in both regional and international markets.

Topics: Rotana Hotels Saudi Tourism Forum business

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