Feb 2020 review: Ambitious energy outlook in line with Saudi Vision 2030
28/02/2020 Argaam Special
by Parag Deulgaonkar & Christine El Cheikh
Saudi Arabia continues to gain momentum towards achieving its Vision 2030 objectives with a particular focus on the energy market for the month of February 2020.
The Kingdom is also pursuing the implementation of several reforms to create a promising regulatory environment and propose new business models for investors across all sectors, including the untapped ones.
Perhaps the major event to start with is the announcement of oil giant Saudi Aramco receiving regulatory approval for the development of Jafurah unconventional gas field in the Eastern Province, paving the way for boosting the Kingdom’s position to become the world’s third gas producer by 2030.
Before moving to Argaam’s review of key events that took place in February, the growing fears of the spread of coronavirus (COVID-19) reached Saudi Arabia, which proactively took a list of precautionary measures to safeguard its citizens and visitors.
1) Jafurah field
The field’s production is set to commence early 2024, and reach nearly 2.2 billion standard cubic feet per day of sales gas by 2036, with an associated 425 million SCFD of ethane, representing nearly 40% of current production. It is also forecast to produce almost 550,000 barrels per day of gas liquids and condensates, the oil giant said.
Saudi Aramco signed 66 memorandums of understanding (MoUs), as well as strategic and commercial collaborations worth more than SAR 78.75 billion with international entities from 11 countries.
3) Aramco and Saipem
Saudi Aramco also awarded an engineering, procurement, construction and installation contract to Italian oil and gas contractor Saipem as part of the long-term agreement in force until 2021.
4) Desalination plants
The Ministry of Environment, Water and Agriculture and Saline Water Conversion Corp (SWCC) signed a SAR 1.6 billion bridge finance deal with local banks, to finance 2 projects that aim to improve asset utilization and increase the efficiency of the 2 desalination plants in Jubail and Al Khobar.
5) Visa suspension
The Saudi government temporarily suspended entry to the Kingdom for Umrah pilgrims and those planning to visit the Prophet’s Mosque in Madinah. It also suspended visas for tourists coming from countries in which the coronavirus (COVID-19) poses a "danger".
6) Impact on crude oil
Energy Minister Prince Abdulaziz bin Salman downplayed the possible impact of the spread of the coronavirus on crude oil prices, while urging caution against gloomy expectations.
7) Impact on oil demand
Saudi Aramco CEO Amin Nasser expected the coronavirus impact on oil demand to be short-lived.
Finance and Markets
8) Positive earnings
A number of listed companies on the Saudi Stock Exchange (Tadawul) continued to announce their financial results for the fiscal year 2019, with the majority recording robust performance.
The companies that posted higher profits include Samba Financial Group (Samba), Qassim Cement Co., Hail Cement Co., Bank Aljazira, Bank Albilad, Mobile Telecommunication Company Saudi Arabia (Zain Saudi), Abdullah Al Othaim Markets Co., Al Kathiri Holding Co., United International Transportation Co. (Budget Saudi), Banque Saudi Fransi (BSF), Al Rajhi Bank, Yamama Cement Co., Etihad Etisalat Co. (Mobily), Saudi Airlines Catering Company, National Medical Care Co. (Care), Saudi Ceramic Co., Bupa Arabia for Cooperative Insurance, Taiba Investments Co., Zahrat Al Waha for Trading Co., Dallah Healthcare Co., and Thob Al Aseel Co.
9) Lower profits
However, only a few firms reported a drop in net earnings such as Alinma Bank, Abdulla Saad Abo Moati For Bookstore Co. (Abo Moati), Arabian Centres Co., Fawaz Abdulaziz Alhokair Co. (Alhokair), Arab National Bank, Rabigh Refining and Petrochemical Company (Petro Rabigh), Saudi Investment Bank, Saudi Electricity Co., Saudi Paper Manufacturing Co., and Dur Hospitality Co.
10) Dr. Sulaiman Al Habib Medical Group goes public
Dr. Sulaiman Al Habib Medical Group (HMG) floated 52.50 million shares, or 15% of its capital in an initial public offering (IPO) on Tadawul.
11) Sumo’s IPO prospectus
Meanwhile, Sumou Real Estate Company issued the IPO prospectus on the Nomu Parallel Market.
12) Falcom’s IPO approval
In addition, the Capital Market Authority (CMA) approved the public offering of FALCOM Gold Fund and Albilad Gold ETF.
Several listed-companies announced dividends for 2019, including Al Rajhi Bank, Saudi Cement Co., Al Rajhi Capital, Budget Saudi, Bank Albilad and Yamama Cement Co., Dur Hospitality Co., Thob Al Aseel Co. Dallah Healthcare Co., Taiba Investments Co., Saudi Industrial Services Co., Zahrat Al Waha Trading Co., and Saudi Airlines Catering Co.
14) Riyad Bank’s Sukuk
Riyad Bankcompleted the first offering of its international Tier 2 dollar-denominated sukuk worth $1.5 billion.
ACWA Power is in talks with the Public Investment Fund (PIF) to increase the latter’s stake in the company to 45% from the current 25%.
27) STC Pay
STC Pay, the mobile wallet launched by Saudi Telecom Co. (STC), became one of the first companies to be granted the non-bank financial institutions license by SAMA.
28) Riyadh’s Media City
Minister of Culture and Media City project CEO, Prince Badr bin Abdullah bin Fahran, signed 4 agreements with leading institutions across cultural, media and technological fields to establish offices and headquarters at Riyadh’s Media City.
29) SEVEN’s expansion
The Saudi Entertainment Ventures Company (SEVEN), a wholly-owned subsidiary of PIF, announced the expansion of new entertainment complexes to major locations across the Kingdom.