Oil Dips as US Resumes Gulf of Mexico Production, Ups Shale Supplies

Oil prices dipped on Tuesday, extending losses from the previous session, as output in the U.S. Gulf of Mexico resumed after Hurricane Barry and as U.S. shale production is set to rise to a record. Brent crude futures LCOc1 were down 4 cents at US$66.44 a barrel by 00642 GMT. They fell 0.4% overnight.

U.S. West Texas Intermediate crude futures CLc1 dropped by 13 cents, or 0.2%, to US$59.45 a barrel. The U.S. benchmark fell about 1% in the previous session.

Producers on Monday began restoring some of the roughly three-quarters of output that was shut at U.S. Gulf of Mexico platforms ahead of Hurricane Barry.

“The previous storm expectations didn’t pan out, which is good, but you have still got platforms with about 69% of output off,” said Phin Ziebell, senior economist at National Australia Bank. “It was a bit of a shock to supply but a short-term one. The market has returned to a bit of normality,” he said.

There was 1.3 million barrels per day (bpd) of oil production offline in the U.S. waters of the Gulf of Mexico on Monday, about 80,000 barrels fewer than on Sunday.

Workers also were returning to the more than 280 production platforms that had been evacuated. It can take several days for full production to be resumed after a storm leaves the Gulf of Mexico.

The market was also weighed down by signs of further increases in output from the United States, which has ridden a wave of shale oil production to rise to become the world’s biggest crude oil producer, ahead of traditional top producers Russia and Saudi Arabia.

U.S. oil output from seven major shale formations is expected to rise by about 49,000 bpd in August, to a record 8.55 million bpd, the U.S. Energy Information Administration said in its monthly drilling productivity report.

Overall U.S. crude production is now more than 12 million bpd.

The rising U.S. output will further undermine the efforts by Russia and Saudi Arabia to reduce global oil inventories by convincing suppliers both in the Organization of the Petroleum Exporting Countries and outside of OPEC to cut production.

The global supplier group, known as OPEC+, agreed earlier this month to extend their production cuts for another nine months.

“On the one hand you have the OPEC output cuts and there’s some geopolitical issues around Iran. But the demand outlook is muted and U.S. supply is perennially good from shale oil, which seems to have structurally changed the nature of the oil market,” said Ziebell.


2 Phases of Combined-Cycle Power Plant Launched in Iran’s North Khorasan

The first and second steam units of Shirvan Combined Cycle Power Plant in Shirvan County, North Khorasan province, with a combined capacity of 320 megawatts were launched on Sunday morning in a ceremony attended by President Hassan Rohani. Shirvan Power Plant already has six gas units, each with a capacity of close to 160 MW (totaling 930 MW).

According to the managing director of Thermal Power Plants Holding Company, Mohsen Tarztalab, “The third 160 MW steam unit will come on stream by the end of the current fiscal [March 2020].” And when all the three steam units become operational, its overall capacity will reach 1,410 MW, he added. The official said that each steam unit will help save the plant as much as 250 Mcm of natural gas worth US$50 million annually.

Iranian Minister of Energy (Water and Electricity) Reza Ardakanian  announced on Sunday that during the past six years, some 230 trillion rials (about US$2.4 billion) of investments have been made on power and electricity industry.

Making the remarks on the opening ceremony of the first and second steam units of Shirvan Combined Cycle Power Plant in Shirvan County, North Khorasan province, the Iranian minister said that "some US$2.4 billion of investments have been made by both the state-run and the private sectors on domestic power industry."

"During the past six year, an average of US$40,000 billion (~US$307 million) of investments have been made per year on power industry," Ardakanian said. - Mehr


Qatar Financial Center Strengthens HK Ties

The Qatar Financial Center (QFC), one of the world’s leading and fastest growing onshore business and financial centers, signed a number of agreements and held high-level B2B meetings with key Hong Kong entities. QFC attended the Rise Summit, part of Web Summit, one of the largest and fastest-growing technology conferences in the world, as part of recent engagements in Hong Kong.

During the visit, Memorandum of Understandings (MoU) were signed with InvestHK and the Hong Kong General Chamber of Commerce (HKGCC) to promote investment between Hong Kong and Qatar; common interests and collaborative initiatives; proactively expose Hong Kong and mainland China firms to companies within the QFC; as well as facilitate meaningful dialogue and interaction especially with targeted cluster businesses that are interested in investing in Qatar and the region.

The MoU with InvestHK also aims at co-hosting focused investment promotion events that support bilateral relations between Hong Kong and Qatar, as well as jointly supporting local companies in each country to set up or expand their business in each of these respective markets.

The QFC’s engagement with the HKGCC will focus on hosting key meetings with suitable business delegations from the State of Qatar and Hong Kong, in addition to organizing relevant seminars and conferences.

Sheikha Alanoud bint Hamad Al Thani, Managing Director, Business Development, QFC Authority said: “Hong Kong and Qatar have enjoyed strong bilateral relations for many years and these agreements are a testament to these historical ties. Through these MOUs, we are also broadening the capacity of the QFC to create even more business prospects for organizations based in Qatar and Hong Kong, while paving the way for more avenues for mutually beneficial collaboration. I am confident that we will witness significant process as a result, and look forward to the many opportunities that will result from our combined efforts.”

The Consul General of the State of Qatar in Hong Kong, Mohammed Sultan Al Kuwari commented: “Hong Kong remains a pivotal partner for Qatar and the signing of these MOUs further shows the commitment and support both parties have for each other, including mutual cooperation to increase Foreign Direct Investment. We look forward to working with InvestHK and HKGCC more, and are excited to see the great accomplishments that will undoubtedly result from these agreements.”

InvestHK’s vision is to strengthen Hong Kong’s status as the leading international business location in Asia by attracting and retaining foreign direct investment which is of strategic importance to the economic development of the region.

Stephen Phillips, Director-General of Investment Promotion at Invest Hong Kong (InvestHK) said: “The signing of the MOU today signifies an important milestone for Hong Kong and Qatar in terms of mutual investment promotion cooperation. The MOU offers a basis for both parties to enhance the existing ties beneficial to attracting foreign direct investment to each other’s jurisdictions. Towards this end, InvestHK will continue to work closely with QFC over future investment promotion work.”

The Hong Kong General Chamber of Commerce aims to promote, represent and safeguard the interests of the business community in Hong Kong, and simultaneously provide support, networks, training and business services to help the business community grow.

Shirley Yuen, CEO of HKGCC, said: “The GCC Region has long been a key market for Hong Kong companies, and it is also at the crossroads of the very important Belt & Road Initiative. We look forward to working with QFC through this MOU to help businesses expand their trade, investment and understanding of the rapidly diversifying Qatari economy to capture more opportunities in the country.”


Oil Exports from Basra Terminals Decline

Iraq's oil exports from its southern ports have reached 3.42 million barrels per day (bpd) so far in July, two oil officials told Reuters on Monday. Exports from its southern Basra terminals fell to 3.39 million bpd in June from 3.441 million bpd in the previous month.

Officials said repair works at a section of a marine pipeline in the Persian Gulf which transports crude oil to the Basra ports slowed shipments for three days in mid-June.


Abu Dhabi Sovereign Fund to Boost Active Investments in Fixed-Income

Abu Dhabi Investment Authority (ADIA), the world’s third-biggest sovereign wealth fund, plans to increase active investments in fixed-income in the coming years, reducing its reliance on passive investments. The move comes as ADIA, which manages the reserves of oil-rich Abu Dhabi, has been reducing its reliance on external fund managers and boosting in-house investment capabilities. Some 55% of ADIA’s portfolio is managed by external managers, down from 60% in 2016, with the rest managed internally.

ADIA said in its 2018 annual report its fixed income and treasury department aimed to go fully active in the coming years, with fund managers making “active” decisions on where to invest rather than “passively” following a benchmark index. Currently the department’s strategy is to be 40% active and 60% passive. During 2019, as part of the transition, the department plans to add a number of new positions, mostly investment and research-focused roles.

“This provides our investment professionals with the flexibility to allocate funds between different asset types according to where they see opportunities,” it said. ADIA said decisions in early 2018 to reduce exposure to credit and being overweight on the US dollar had benefitted its performance during the year. ADIA has been consolidating a number of investment portfolios since 2017.
It does not disclose the size of its overall portfolio, but according to the Sovereign Wealth Fund Institute, ADIA manages around US$700 billion in assets, ranking it behind the Norwegian sovereign fund and China Investment Corp.

ADIA said it took a decision last year to formally integrate climate change considerations into its investment proposal review process. It worked alongside five global sovereign wealth funds (SWFs) to develop and publish the One Planet SWF Framework that seeks to promote the integration of climate change analysis in the management of long-term portfolios.

ADIA, which does not publish detailed financial results, said its 20-year and 30-year annualized rates of return were 5.4% and 6.5% respectively in 2018 compared with 6.5% and 7% respectively in 2017.

“While these rolling averages were impacted somewhat by the exclusion of strong gains in the mid-to-late 1980s and 1990s, ADIA’s real returns remained largely consistent with previous years and historical levels,” said ADIA managing director Sheikh Hamed bin Zayed al Nahyan.

Outlining its long-term portfolio strategy by region, it said North America would account for a maximum of 50%, with Europe, emerging markets and developed Asia accounting for maximums of 35%, 25% and 20% respectively.

Equity markets seem finely poised in 2019, ADIA said, adding that over the longer term it remained confident about the relative prospects for emerging markets – particularly China and India – versus the developed world, and this would be reflected in the emphasis it places on these markets.



Egypt's Govt. Mulls Establishing Joint Desalination Projects with Private Sector

The government is considering implementing joint desalination projects with the private sector, with a capacity of 150,000 cubic meters per day. Government sources told Daily News Egypt that various companies have submitted proposals to implement joint water desalination projects, adding that negotiations between the Egyptian government and interested companies to begin next month.

Among these companies are Spanish Aqualia, French Schneider Electric, Swiss AquaSwiss, and Egyptian Metito. The government aims to add 1.7m cubic meters per day to the current capacity of seawater desalination plants by the year 2020. Thus, Egypt is implementing 19 desalination plants with a total capacity of 626,000 cubic meters per day in North Sinai, South Sinai, Matrouh, Port Said, and the Red Sea governorates.

Additionally, the Holding Company for Water and Wastewater (HCWW) aims to establish 16 other plants with a total capacity of 671,000 cubic meters per day, beside of the 58 existing stations with a total capacity of 440,000 cubic meters per day in the governorates of North Sinai, South Sinai, the Red Sea, Matrouh, and Ismailia.

HCWW Chairperson, Mamdouh Raslan, said earlier that saltwater desalination is one of the solutions to meet the increasing demand for drinking water in Egypt, especially with the steady increase of the population and the fixed share of the Nile water.

Raslan pointed out that the Ministry of Housing pays special attention to developing clear plans and a future vision for desalination in Egypt, in full coordination with the ministries of Water Resources, Irrigation, Health, Environment, Planning and all concerned bodies.