Opec strategy pays off

Opec

A series of events in the final weeks of 2017 provide a strong indication of what we can expect in the year ahead.

From an economic perspective, the most significant was the 30 November agreement between Opec and non-Opec oil producers to extend the oil production cap to the end of 2018. The move aims to rebalance global oil supply and demand, and remove damaging volatility in the energy markets.

The strategy is working. Oil prices are climbing and the improved outlook gives a degree of fiscal flexibility that will help governments to push ahead with difficult economic reforms.

An initial public offering (IPO) of shares in the fuel distribution arm of Abu Dhabi National Oil Company in December was the first of several listings planned in the region. This will be followed in 2018 by the Saudi Aramco IPO, which could be the biggest share sale in history. These sales pave the way for the more challenging privatisation of the region’s utilities and other state entities.

There is huge investor appetite to buy into the region’s prime assets, and as well as delivering substantial windfalls to governments, the privatisations will have a transformational effect on the region.

Set against this is rising political risk. The ongoing Qatar crisis, the anti-corruption arrests in Saudi Arabia and the missiles fired at the GCC from Yemen, all in December, could undermine investor confidence.

The coming year will continue to deliver shocks. But companies must not lose sight of the powerful, long-term fundamentals driving the region – a fast-growing, young population, an expanding middle class, ambitious and well-funded diversification programmes, and the world’s most abundant energy supplies. 

Related Posts
Adco ready to sign Bab expansion contract
The state-backed Abu Dhabi Company for Onshore Petroleum Operations (Adco) is ready to sign the contract for the Bab Integrated Facilities Project Expansion, one of the largest planned oil and ...
READ MORE
Adnoc powers the UAE’s gas ambitions
Abu Dhabi energy major aims to achieve its 2030 gas goal through large capex projects to raise production, as well as an exploration campaign to build the emirate’s gas reserves Abu ...
READ MORE
Companies call for greater financing support from Covid-19 fallout
The commercial impact of Covid-19 has dramatically changed the banking needs of companies in the UAE, says latest briefing from Mashreq Bank Download the complete media briefing here Over half of ...
READ MORE
Aramco charts a grounded downstream strategy
The state energy giant and its downstream partners favour bolt-on refining and petrochemicals capacity Saudi Aramco is executing major plans to expand its refining and petrochemicals production capacity primarily through expanding ...
READ MORE
Petrochemicals industry is starting to evolve
Steps have been taken to get around the region’s gas shortage, but competitive threats remain The seismic shift in the GCC petrochemicals sector that consultants and analysts have been predicting for more ...
READ MORE
Adnoc says its $10bn Bab sour gas project is seeing progress
Project has stalled since Shell pulled out in 2016 Abu Dhabi National Oil Company’s (Adnoc's) $10bn Bab sour gas project is seeing progress, according to the company’s chief economist Kamel Ben ...
READ MORE
Abu Dhabi’s ambition to create the downstream Silicon Valley
Adnoc intends to transform itself into a global downstream major by investing $45bn to create an integrated refining and petrochemical complex in Ruwais An astounding investment of $45bn has been announced by ...
READ MORE
The risk of US shale hype in global energy pricing
Prevailing energy analysis has focused heavily on US shale oil production and US oil storage, but perhaps at the cost of keeping an eye on the big picture Since the start ...
READ MORE
Energy investment to fall by $400bn
Oil and gas investment to fall by almost a third in 2020 Annual energy investment is set to fall by an historic $400bn in 2020, according to the International Energy Agency’s ...
READ MORE
Egypt upstream gas exploration gathers speed
Rising output from the mammoth Zohr gas field, coupled with ambitions to augment its reserves, have helped Cairo regain its gas exporter status after a five-year hiatus Italian energy major Eni’s ...
READ MORE
Adco ready to sign Bab expansion contract
Adnoc powers the UAE’s gas ambitions
Companies call for greater financing support from Covid-19
Aramco charts a grounded downstream strategy
Petrochemicals industry is starting to evolve
Adnoc says its $10bn Bab sour gas project
Abu Dhabi’s ambition to create the downstream Silicon
The risk of US shale hype in global
Energy investment to fall by $400bn
Egypt upstream gas exploration gathers speed
10 January, 2018 | .By RICHARD THOMPSON