Saudi Arabia Economical and other News

[حسن خليل]

Value of Saudi oil exports hit SR 474 billion in 8 months　
　
Saudi Arabia's oil exports reached 1.84 billion barrels in the first eight months of the current year (2014) with proceeds amounting to SR747 billion, local media said quoting an expert.
Meanwhile, domestic consumption during the same period reached nearly 553 million barrels, or 23 percent of the total output, Fahad bin Jumaa was quoted by Al-Riyadh daily.
The above figures came on the back of statements made by Saudi Aramco CEO Khalid Al-Falih that his company is planning to invest SR40 billion (SR150 billion) in the next 10 years to main stability in oil production and double gas production, the daily said.
Jumaa said the last few weeks had witnessed a substantial drop in oil prices at global level in light of geo-political developments and economic sanctions imposed by the US and the European Union (EU) countries on Russia.
Global oil supplies are still abundant and, accordingly, demand tends to be weak.
Oil supplies of the Organization of Oil Exporting Countries (OPEC), however, remain strong than ever before with a record of 30.44 million barrels per day (mbpd) in July supported by the Saudi increased production, he said.
He said West Texas crude oil continued to register low prices to reach $ 93.65 per barrel last week and, likewise, Brent crude dropped to $ 102.29, leaving a price gap of $ 8.64. Similarly, price of OPEC oil basket dropped to $ 99.52 same week, he said.
Source: Arab News

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[حسن خليل]

Saudi French trade rises to SR 455 billion in 20 years

The volume of trade between Saudi Arabia and France reached SR454.71 billion in the last 20 years (1994-2013) with a growth rate estimated at 166.7 percent, according to a financial report.
France came in the 11th rank among countries to which the Kingdom sent exports by the end of 2013 at SR 32.2 billion, or 2.3 percent of Saudi Arabia’s total exports to foreign countries, the report carried by Al-Eqtisadiah daily said.
The trade balance between the two countries registered a surplus in favor of the Kingdom in 17 years. France registered surpluses in only 3 years — 1998 (SR406 million), 2009 (SR2.9 billion) and 2010 (SR656 million).
However, trade balance witnessed a robust growth at 69.3 percent in favor of the Kingdom in 2013 at SR 5.13 billion compared to figures of 2012, the report said.
Back in 1994, trade exchange between the two countries stood at SR12.3 billion whereas the lowest level of trade came in 1998 at SR11.3 billion. The highest level of trade exchange happened last year (2013) at SR51.8 billion, according to the report.
On the other hand, Saudi exports to France dropped in seven years, notably in 1995, 1997, 1998, 2001, 2006, 2007 and 2009.
As regards Saudi imports from France, the Kingdom imported goods valued at SR19.7 billion by the end of 2013, an increase of 5.7 percent compared to figures of 2012, representing some 3.1 percent of the Kingdom’s total imports in 2013, the report said.Source: Arab News

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[حسن خليل]

Saudi's largest lender said to eye 15% stake sale

Saudi Arabia’s largest lender by assets is reportedly looking to sell a 15 percent stake on the Saudi Stock Exchange in the fourth quarter of 2014.
National Commercial Bank has submitted plans for the initial public offering to the Capital Market Authority, Bloomberg reported on Wednesday, citing unnamed sources.
The regulator may fast-track the approval so that the share sale can take place before year’s-end, the report said.
The IPO is set be the country’s largest since Saudi Telecom Co raised $3.92 billion in 2002, Bloomberg added.
NCB said in April that it had appointed HSBC Holdings and Gulf International Bank as financial advisers on the deal.
In July, National Commercial Bank posted a 22 percent jump in second-quarter net profit.
The bank made SR2.425 billion ($647 million) in the three months to June 30, compared with SR1.99 billion in the corresponding period of 2013.
Source: Arabian Business

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[حسن خليل]

Riyadh-Dammam high - speed line: Railway studies options　
　
Saudi Railways Organization ( SRO ) President Mohamed Khalid Al-Suwaiket has signed a contract for SR6,000,621 with Spanish consortiums headed by Consultrans Company to study options for a high-speed line between Riyadh and Dammam with a design speed of 350 km/h to enable trains to operate at 300 km/h.
Commenting on signing the contract, Al-Suwaiket said that the 10-month contract will include the traffic movement study between the two cities and determine the line comparing with existing main line as well as the preliminary technical description of the infrastructure for the project. It will also include the trainsets to be used for this high-speed line and the estimation of the financial cost of the overall project and the expected revenues.
Al-Suwaiket added that the contract comes within the development plans adopted by the SRO during this stage to raise the level of services provided to meet the growing demand for transportation services by train. This has taken advantage of the technical development and world's pioneering experience in the rail industry.
The new line aims to shorten the journey time of one and a half hours, which means that the use of high-speed line will represent a quantum leap for the services provided by the SRO and will have a positive impact in increasing the number of train users between Riyadh and Dammam, emphasizing the advantages of using the trains in terms of safety and security.
Al-Suwaiket pointed out that the signing of the contract will not affect the parallel plans made by SRO at the current phase to reduce the journey time between Dammam and Riyadh, which remains three hours.
It is possible under the potentials and technologies available in the new trains used until the introduction of the high-speed line trains.
He added that the SRO is planning to take advantage of the high-speed line technology to keep up with the development plans carried out recently, particularly the projects related to the development of its main activity represented in transporting passengers and cargo. This will contribute to improve performance and raise the level of quality in the transport sector to advance the development in all sectors.

Source: Arab News

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[حسن خليل]

Saudi builder says to diversify into solar, nuclear energy　
　
Major Saudi Arabian construction firm Abdullah Abdul Mohsin AlKhodari Sons Co said on Sunday that it would diversify into solar and nuclear energy.
Khodari's new activities will include supplying and installing solar energy equipment and systems, it said in a statement to the Saudi bourse.
It would also provide contractor services, maintenance and other operations for nuclear energy, the company said without giving details of the size of expected business.
The government body responsible for planning the Saudi energy mix said in 2012 that the world's top oil exporter planned to install around 41 gigawatts of solar power over the next 20 years as well as about 17 GW of nuclear capacity. Saudi Arabia currently has no nuclear reactors.
Source: Reuters

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[حسن خليل]

2nd bridge linking KSA and Bahrain to cost $ 5 billion　
　
A second causeway linking Bahrain with Saudi Arabia and providing a route for a regional railway network being built by Gulf kingdoms will cost about $5 billion, a minister said.
“The cost of the causeway will be roughly $5 billion,” Bahrain’s Transport Minister Kamal bin Ahmed told AFP on the sidelines of a two-day business conference, adding that it will be “part of the GCC railway network.”
Details of the project for the causeway — which will be used by vehicles as well as freight and passenger trains — will be discussed at a joint meeting next month, he said.
“We have almost finalized the routes of the causeway,” he told participants in the conference.
Teams from both countries are “still working on other technical issues including financing,” especially on how to get the private sector involved, the minister said.
Ahmed however said no date has been fixed for the start of the project. “We need it to start soon,” he said.
Bahrain and Saudi Arabia have been linked since 1986 by a 25-km causeway used by several million people every year.
Custodian of the Two Holy Mosques King Abdullah announced the plan for the new causeway last week in a meeting with King Hamad, saying the new link would be named after Bahrain’s monarch.
The GCC railway network, approved by the Gulf leaders in 2004, is expected to be completed by 2017, although progress has been very slow amid differences. The regional network is planned to stretch over a distance of 2,000 km and will cost an estimated $20 billion.
Source: Arab News

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[حسن خليل]

　Kingdoms' insurance industry outlook bright as SAMA moves to end price ware
　
The insurance price war that raged in Saudi Arabia during 2012-2013 has now largely ended, although competition to win large, prestigious corporate accounts remains intense, according to Standard & Poor's Ratings Services.
In a report titled "Insurance In Saudi Arabia: The Price War May Be Over But The Fight For Market Share Continues", S&P said that anecdotal evidence suggests that market tariffs for the sector's principal lines of group medical and motor insurance have risen by an average of some 20 percent so far in 2014. Several companies have told the international ratings agency that policyholders have accepted price hikes of up to 40 percent on persistently loss-making accounts.
So far in 2014, motor insurance appears to have experienced the strongest recovery, but pricing in medical insurance is also significantly improving. Only the larger corporate accounts still achieve the best terms when purchasing group medical cover.
The substantial reserve strengthening of late 2013 is also likely to distort the insurance sector's 2014 results If, as many insurers still maintain, a sizable proportion of the extra reserving that external actuaries demanded was overly prudent, then we may well see reserve releases boosting the third- and fourth-quarter results for 2014.
But on the back strong economic recovery and improved operating conditions, a few weaker companies apart, S&P expects that on average across the Saudi Arabian insurance sector, the market recovery is even stronger than current interim and even year-end 2014 results may suggest.
"Anecdotal evidence suggests that market tariffs for the sector's principal lines of group medical and motor insurance have risen by an average of some 20 per cent so far in 2014, and several companies have told us that policyholders have accepted price hikes of up to 40 per cent on persistently loss-making accounts," said David D Anthony, Primary Credit Analyst at S&P.
Despite ongoing competitive pressures between the local 34 insurers in the sector, we expect insurers to maintain today's stronger pricing into 2015 and beyond because the insurance regulator, Saudi Arabian Monetary Agency ( SAMA ),has taken a number of steps to encourage the maintenance of reasonable pricing and prudential reserving.
After a number of modest initiatives failed to turn the decline in tariffs around in 2013, SAMA ultimately dealt the price war a fatal blow by openly reminding the kingdom's licensed consulting actuaries of their duty to ensure prudent reserving at the companies with which they work. This had an immediate effect as all Saudi Arabian insurers are obliged to have their reserves signed off by a consulting actuary, and external auditors cannot contest the actuaries' calculations.
Despite ongoing competitive pressures between the local 34 insurers in the sector, S&P expects insurers to maintain the current stronger pricing into 2015 and beyond because the insurance regulator, Saudi Arabian Monetary Agency ( SAMA ), has taken a number of steps to encourage the maintenance of reasonable pricing and prudential reserving.
After various more modest initiatives failed to turn the decline in tariffs around in 2013, SAMA ultimately dealt the price war a fatal blow by openly reminding the Kingdom's licensed consulting actuaries of their duty to ensure prudent reserving at the companies with which they work. This had an immediate effect as all Saudi Arabian insurers are obliged to have their reserves signed off by a consulting actuary, and external auditors cannot contest the actuaries' calculations.
As a result, the 2013 year-end accounts at most Saudi Arabia-based insurers and reinsurers saw very significant reserve strengthening both in respect of incurred liabilities and the unexpired risk of insurance policies that were still in force, many of which are now regarded as severely underpriced. SAMA has also recently implemented a requirement that new clients provide insurers with their claims history.
The 2013 year-end accounts at most Saudi Arabia-based insurers and reinsurers saw very significant reserve strengthening both in respect of incurred liabilities and the unexpired risk of insurance policies that were still in force, many of which are now regarded as severely underpriced. SAMA has also recently implemented a requirement that new clients provide insurers with their claims history.
"We believe the enforcement of actuarial pricing by external consulting actuaries will allow larger insurers to factor their economies of scale into premium quotations. Their generally lower overall expense ratios (expenses as a percentage of premium income) should permit large, cost-effective companies to apply actuarial pricing that is below the rate calculated as appropriate for smaller peers that have higher fixed costs relative to turnover. We therefore expect expense control to become just as important to most insurance management teams as market share has been in the recent past," said Anvar Gabidullin, an analyst at S&P.
Source: Saudi Gazette

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[حسن خليل]

Saudi stocks mixed　
　
Saudi Arabia’s stocks were mixed and its main index rose just 0.07 percent. Heavyweight Saudi Basic Industries pulled back 0.5 percent.
But shares in construction firm Abdullah Abdul Mohsin Al Khodari Sons Co jumped 4.2 percent after the company said on Sunday that it would diversify into solar and nuclear energy projects.
Saudi Real Estate Co rose 1.4 percent after the firm said it would pay a 5 percent dividend for the first half of 2014, the same as a year earlier, and that shareholders as of Sept. 10 would be eligible.
Elsewhere, Qatar’s index edged up 0.6 percent to 13,969 points but, for the second time this month, failed to hold above 14,000 points. Conglomerate Industries Qatar was the main support, gaining 1.1 percent.
Dubai’s bourse climbed 1.1 percent to 5,091 points after briefly dipping below the psychologically important 5,000 point level early in the session. Abu Dhabi index rose 0.5 percent to 5,186 points.
However, Kuwait index slipped 0.08 percent to 7,467 points, so too Oman index which pulled back 0.08 percent to 7,491 points. Bahrain index as well slipped 0.3 percent to 1,467 points.
Egypt index edged down 0.2 percent to 9,703 points.
Source: Saudi Gazette

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[حسن خليل]

SABIC the only Mideast firm on 2014 Global Innovation 1000 list　
　
Saudi Arabia’s Saudi Basic Industries Corp. (SABIC) is the only company in the Middle East to make it into the Global Innovation 1000 list this year. SABIC ranked 272 out of the 1,000-strong list of innovative companies. The company’s ranking this year is an improvement over last year’s 304th position. Total R&D spend by SABIC in 2014 was $440 million, a 19 percent increase from $371 million in 2013. SABIC’s average R&D intensity increased from 0.7 percent in 2013 to 0.9 percent in 2014.
The tenth annual Global Innovation 1000 Study, which analyzes the R&D investment at the 1,000 biggest-spending public companies in the world, found although R&D spending at large companies rose to its highest level ever in 2014, the rate of growth was the second lowest in a decade.
The new study from Strategy&, formerly Booz & Company, said R&D spending rose by only 1.4 percent last year – a more modest increase than the 3.8 percent rise the year before and a marked drop from the 10-year average growth rate of 5.5 percent. R&D spending as a percentage of revenue fell by 17 percent between 2005 and 2014.
“Companies say they’re better at innovating today than they were a decade ago,” said Barry Jaruzelski, senior partner at Strategy& and a co-author of the report. “It seems that companies can now do more with less, allowing them to moderate spending growth while still achieving results.”
“The decrease in R&D spending growth and intensity may indicate that companies have realized more spending doesn’t always produce better results, or that innovation leaders are making progress in leveraging their R&D investments into greater financial performance,” said Georges Chehade, Partner with Strategy&.
The software and Internet industry generated the most rapid growth, 17 percent, in R&D spending in 2014. However, despite the industry’s ongoing increase in spending, software and Internet companies still accounted for just 9 percent of total corporate R&D spending in 2014. Meanwhile, the computing & electronics and healthcare industries accounted together for 50 percent of total innovation spending over the same period – though in 2014, those industries’ R&D spending dropped by 1.8 percent and 1.2 percent, respectively.
“It is striking that half the industries in the study saw a decline in R&D spending growth. Among them were two of the largest industries within the Global Innovation 1000, computing & electronics and healthcare. And yet, significant investments by smaller industries like software and Internet were large enough to compensate and even drive an overall positive R&D spending growth,” said Jaruzelski.
Companies headquartered in China generated a 46 percent increase in R&D spending last year, while North American and European companies increased spending by only 3.4 percent and 2.5 percent, respectively, and Japanese companies spent 14 percent less. Furthermore, the number of Chinese companies represented in the Global Innovation 1000 rose from only eight in 2005 to 114 in 2014 – an increase of 1,325 percent.
Apple, Google, Amazon and Samsung top the list of the 10 Most Innovative companies in 2014 as identified by survey respondents. Among the full list, only three – Google, Samsung and Microsoft – are also on the Top 10 R&D Spenders list. In fact, over the past ten years only Microsoft has been among the Top 10 R&D Spenders and Top 10 Most Innovative companies each year. And although four of the Top 10 R&D Spenders in 2014 were healthcare companies, not a single healthcare company were voted among the 10 Most Innovative as identified by survey respondents.
“For the 10th year, our research demonstrates that there’s no correlation between how much you spend on innovation and how well you perform,” said Chehade. “You can’t just buy your way to the top.”
“What many highly innovative companies have in common is not a high level of R&D spending, but an understanding of end-users’ wants and needs,” adds Jaruzelski. “Instead of depending on market research, these companies intimate connections with customers and innovate around their yet-to-be-articulated needs.”
More than three-quarters of innovation leaders (76 percent) said that they are better at innovation today than they were 10 years ago, according to a survey of over 500 innovation leaders across nearly 500 companies. And about the same number (78 percent) believes they have developed a more detailed understanding of their customers’ wants and needs over the past decade.
“Despite this strong sense of improvement, most surveyed innovation leaders believe they have room to grow. Only 41 percent say their companies are highly proficient in the innovation areas that they have tried to improve in the past, and just 27 percent believe they are mastering the elements they will need for innovation success over the next 10 years,” Chehade noted.
Source: Saudi Gazette

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[حسن خليل]

Saudi Arabia adds to oil power with new refineries
　
　
Saudi Arabia's tighter grip on the oil market from the desert derrick to the petrol pump, thanks to two new refineries, is redefining its role as a crude exporter and OPEC kingpin.
The two state-of-the-art plants will give it 800,000 barrels per day in refining capacity online in 2015, part of an ambitious downstream drive which will see its refining capacity rise to 8 million bpd in a decade.
While a lot of that will target its rapidly growing economy with the majority likely to be consumed domestically after 15-20 years, for now Riyadh is to become a major exporter of refined oil products such as gasoline, diesel and jet fuel.
"There is clearly a rebalancing in the kingdom as it is becoming a bigger player in the downstream. While Saudi may lose on crude exports, it will be gaining as product exports rise in the coming years," said Yasser Elguindi of Medley Advisors.
"So you are giving with the right hand even if you are taking away with left."
Crude exports from the OPEC heavyweight have been sliding in recent months to their lowest levels in almost three years.
State run Saudi Aramco and its subsidiaries own, or have equity interest in, domestic and international refineries with a total worldwide refining capacity of 4.9 million bpd, of which its equity share is 2.6 million bpd, making it the world's sixth-largest refiner.
In the kingdom a 400,000-bpd refinery, known as SATORP, in Jubail, reached full capacity in mid 2014 and another 400,000 bpd plant, the Yasref refinery in Yanbu, started trial runs in September with the first gasoil export cargo seen in December.
Aramco's CEO Khaled al-Falih said in May the company's downstream investments would exceed $100 billion over the next decade as high growth markets of the Far East and the Middle East "will make us one of the largest downstream players on the planet by volume."
The company has set up offices in Europe and Singapore to sell more oil products, industry trading sources say.
It has been exporting hundreds of thousands of tonnes of product monthly to Europe and Asia and snapped up spot deals through its trading arm to supply jet fuel to the United Arab Emirates, and gasoline to Kuwait and Bahrain this year, the sources said.
"One thing I think is very sure you are going to see in the next 3-5 years is going to be a shift in Saudi exports away from crude and towards products," Bob McNally, a White House adviser to former President George W. Bush and now president of the Rapidan Group energy consultancy, said after a recent trip to Saudi Arabia.
OPEC ROLE
Aramco Trading was set up in 2012 to trade and sell products directly to refiners. Other national oil companies, including China's Sinopec and CNPC, have significantly increased their trading arms too.
Traders are keeping an eye on Aramco as it starts direct sales of gasoil cargoes in Europe, reducing the role of middle men traders. Privately traders say if more companies followed Aramco's model it could squeeze them out of their niche markets.
"They are very active. They have a lot of volumes of gasoil, they are going to target end users, European customers and they will be moving cargoes that way. We have also seen them moving jet fuel this year," said one Gulf-based trader.
Saudi exported 6.663 million barrels of crude per day in August, down from 6.989 million bpd in July, according to the latest official data reported by the Joint Organisations Data Initiative (JODI). The August crude export figures were the lowest since March 2011.
At the same time, products exports in August were at record high at 1.023 million bpd, the highest since at least 2002, the start of JODI's records. That was up from 707,000 bpd a month earlier and compared to 621,000 bpd in August 2013.
That would take total oil exports from Saudi in August to 7.686 million bpd, close to its crude export levels last year.
The forecast shift to products exports could weaken its hand in the Organization for the Petroleum Exporting Countries (OPEC), some analysts say.
"By 2018-19 Saudi Arabia will be producing two thirds product and one third crude. That will have great implication for OPEC," Fereidun Fesharaki, chairman of energy consultant FGE, said on the sidelines of the Oil and Money conference in London.
"You can't be the king of crude if you're not the number one exporter."
Source: Reuters

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