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
UAE records pick-up in oil and gas contract awards
So far this year, the UAE has awarded $2.3bn-worth of engineering, procurement and construction (EPC) contracts for hydrocarbons projects, according to regional projects tracker MEED Projects. This is already marginally above ...
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
Energy industry prepares to tackle life after peak oil
The timing of peak oil demand will be significant for oil producers in the Mena region as it will require stakeholders to transform their operations The world currently consumes about 99 ...
READ MORE
Abu Dhabi seeking IPO rewards
Stock listing of assets is becoming a preferred fundraising method for Abu Dhabi While Riyadh continues to work out its listing of Saudi Aramco, Abu Dhabi is moving ahead with more initial public ...
READ MORE
Adnoc formally signs contract for world’s largest oil storage project
South Korean contractor to build underground storage facility in the emirate of Fujairah Abu Dhabi National Oil Company (Adnoc) has formally signed a $1.21bn contract to South Korea’s SK Engineering and ...
READ MORE
MEED Mashreq Energy Partnership Newsletter – Annual roundup 2019/2020
ENERGY BRIEFING PAPERS UNCHARTED TERRITORIES Regional producers reel from the economic impact of Covid-19. As global oil demand takes the slow path to stabilisation as battered economies in the Middle East and ...
READ MORE
UAE’s gas discoveries bring self-sufficiency goal closer
Recent discoveries will make the Abu Dhabi-led drive for gas self-sufficiency a shared endeavour with the emirates of Sharjah and Dubai With natural gas now firmly established as the global power ...
READ MORE
China ramps up investment in Middle East power
China investment makes up an increasing proportion of the financial support for the largest projects in the region’s power sector The financial close of the $4.4bn fourth phase of Dubai’s Mohammed ...
READ MORE
Aramco to spend $100bn on refining and chemicals projects
Ultimate target is to reach refining capacity of 8-10 million barrels a day State-energy giant Saudi Aramco plans to spend more than $100bn on new refining and chemicals projects over the ...
READ MORE
EXCLUSIVE: Bidders submit in-country value plans for UAE gas project
Adnoc’s second IGD expansion project is estimated to be worth more than $1bn Bidders on Adnoc LNG’s second integrated gas development expansion project (IGD E2) have submitted In-Country Value (ICV) Improvement ...
READ MORE
UAE records pick-up in oil and gas contract
Adnoc says its $10bn Bab sour gas project
Energy industry prepares to tackle life after peak
Abu Dhabi seeking IPO rewards
Adnoc formally signs contract for world’s largest oil
MEED Mashreq Energy Partnership Newsletter – Annual roundup
UAE’s gas discoveries bring self-sufficiency goal closer
China ramps up investment in Middle East power
Aramco to spend $100bn on refining and chemicals
EXCLUSIVE: Bidders submit in-country value plans for UAE
10 January, 2018 | .By RICHARD THOMPSON