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
EXCLUSIVE: Phase one of Kuwait heavy oil scheme to be finished March 2019
The Kuwait Oil Company project is worth $4.1bn The first phase of the Kuwait Oil Company (KOC) Ratqa Lower Fars Heavy Oil megaproject is on course to be completed in March ...
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
Adnoc plans to award stakes in refining business in early 2019
Adnoc is evaluating bids received from companies looking to invest in its refineries unit Abu Dhabi National Oil Company (Adnoc) could make a decision about awarding stakes in its refining business ...
READ MORE
Producers renew upstream investment
Oil producers continue to focus on developing projects to increase production capacity, while the gas sector is set to benefit from the move away from coal and oil Global demand for ...
READ MORE
Ushering in a new oil era
How a robust outlook for global oil demand is triggering exploration and production in the region In spite of the downside risk for oil prices, there is therefore an ongoing need ...
READ MORE
Oiling the Wheels of the Economy
The privatisation of state oil companies shows the desire to reform outdated economic models is genuine. The fight between the London and New York stock exchanges to secure the listing of ...
READ MORE
UAE oil and gas contract awards rebound
So far in 2017, there have been engineering, procurement and construction (EPC) contract awards worth a total of $2,265m in the UAE’s oil, gas and petrochemicals sector, according to regional ...
READ MORE
Busy years ahead for upstream operators
National oil companies in the Middle East and North Africa are forging ahead with oil and gas field development projects and exploration drives Middle East oil and gas is entering an ...
READ MORE
Adnoc
As oil production cuts boost confidence in the energy sector, Abu Dhabi National Oil Company (Adnoc) is pushing ahead with bullish plans to expand its refining capabilities, add value to ...
READ MORE
Abu Dhabi energy major will detail investment plans for downstream players at event in Abu Dhabi
Abu Dhabi energy major will detail investment plans for downstream players at event in Abu Dhabi Abu Dhabi National Oil Company (Adnoc) wants to intensify its downstream expansion drive in order ...
READ MORE
EXCLUSIVE: Phase one of Kuwait heavy oil scheme
Aramco to spend $100bn on refining and chemicals
Adnoc plans to award stakes in refining business
Producers renew upstream investment
Ushering in a new oil era
Oiling the Wheels of the Economy
UAE oil and gas contract awards rebound
Busy years ahead for upstream operators
Adnoc eyes diversified growth
Adnoc to launch downstream investment opportunities in May
10 January, 2018 | .By RICHARD THOMPSON