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Established in 2006 as a Community of Reality

Welcome to the Neno's Place!

Neno's Place Established in 2006 as a Community of Reality


Neno

I can be reached by phone or text 8am-7pm cst 972-768-9772 or, once joining the board I can be reached by a (PM) Private Message.

Established in 2006 as a Community of Reality

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    Economic report: Gulf states sell their oil assets for the benefit of foreign companies

    Rocky
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    Economic report: Gulf states sell their oil assets for the benefit of foreign companies Empty Economic report: Gulf states sell their oil assets for the benefit of foreign companies

    Post by Rocky Sat 01 May 2021, 2:27 pm

    [size=35][size=35]Economic report: Gulf states sell their oil assets for the benefit of foreign companies[/size]
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    2021-05-01 | 07:45
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    [size=18]The US agency Bloomberg has published a report about the intensification of sales of oil assets by several oil states in the region, and the agency says that all Saudi Arabia, the UAE, Qatar and Oman have accelerated, within a few weeks, billions of dollars of plans to sell energy assets or issue bonds from them.


    Concluding this trend, Saudi Crown Prince Mohammed bin Salman said on Tuesday 27 April that the kingdom is in talks with an unidentified "global energy company" to sell a $ 20 billion stake in the state oil company, Saudi Aramco.






    What does that mean for the economies of these oil-producing countries?

    This shift highlights how countries in a region that contains nearly half of the world's oil reserves have benefited from the recovery in energy prices after the crash caused by the emerging coronavirus last year to bolster their faltering finances.
    The global shift to green energy only adds to this push, as governments request new money to invest in new sectors and diversify their economies. Investors, bogged down by record low interest rates, are seizing the opportunity.
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    [ltr]12:02 | 2020-07-31[/ltr][/rtl]
    "It makes sense for these countries to sell stakes when the valuations are good," Justin Alexander, chief economist at MENA Advisors, the UK-based consultancy, tells Bloomberg. "Some of these stakes are financial stakes, and some of them are an increasing recognition of the speed of energy mobility and the need to generate value from these assets," he added.
    Oil exporters in the Middle East have seen their budget deficit swell to 10.8% of GDP last year, from 3% in 2019, according to the International Monetary Fund. GDP contracted in Saudi Arabia and the UAE[You must be registered and logged in to see this link.] By the most in about three decades.


    Saudi Aramco and ADNOC of the United Arab Emirates
    Saudi Aramco was the largest producer of crude oil in the world, and ADNOC, which pumps nearly all of the oil and gas in the UAE, is the most active state company in the region. Both companies began privatization before the pandemic, with Aramco realizing the stock market in Riyadh in 2019, and ADNOC sold part of its fuel distribution business in late 2017, also through an initial public offering.
    Since then the deals have grown in number and complexity, as has the focus on foreign funds. On April 10, Aramco said that a US-led group would invest $ 12.4 billion in oil pipelines. For its part, ADNOC is planning a drilling rigs IPO. This follows a series of transactions that, as of June 2020, saw companies such as Brookfield Asset Management and Apollo Global Management invest about $ 15 billion in gas pipelines and real estate belonging to the Abu Dhabi-based company.
    Prince Mohammed, the de facto ruler of Saudi Arabia, sees Aramco as a key part of Vision 2030, the grand project designed to boost everything from tourism to investing in solar parks and pharmaceuticals. Sheikh Mohammed bin Zayed from the UAE has similar ideas to ADNOC, and in March he gave himself more control over the company to extract more money from it.

    Selling and privatization While maintaining control of assets in the

    midst of the flurry of activity, companies have been careful to structure transactions so that they do not lose control of their salient assets. When the subsidiaries are sold, they hold the bulk of the shares, and through pipeline deals, Aramco and ADNOC have offered contracts of leasehold rights rather than direct equity. Moelis & Co acts as a consultant to both companies.
    "The Gulf oil companies have realized that they can sell parts and parts of their empire, and all the money without ceding control, for companies and governments this is a good model," said Ben Cahill, a researcher at the Center for Strategic and International Studies in Washington.
    Elsewhere in the Gulf, a company is being exploited[You must be registered and logged in to see this link.]Petroleum, Oman Oil Company OQ SAOC marketed dollar bonds for the first time. Is seeking[You must be registered and logged in to see this link.]Petroleum has amounted to $ 10 billion to increase its capacity to export liquefied natural gas.
    And is prepared[You must be registered and logged in to see this link.]It is among the richest countries in the world per capita, and the government in the past may have funded the $ 29 billion project using its own money. Fitch Ratings said in a report at the end of April that it was now trying to reduce the debt burden that swelled last year. Taking advantage of SOEs allows the government to increase its balance sheet.

    Oman joins pace with privatization of oil assets

    On Wednesday April 28th, OQ Oman sold $ 750 million in seven-year Eurobonds. The Energy Development Corporation may follow[You must be registered and logged in to see this link.], Which is another state company, followed suit later this year as it seeks to raise $ 3 billion in debt.
    These plans are part of a large-scale jolt of the oil sector since Sultan Haitham bin Tariq came to power just over a year ago. It seeks to attract foreign funding and revive the ailing economy.
    Meanwhile, the state-owned Kuwait Petroleum Corporation is studying its first international bond. This will be part of a strategy to borrow up to $ 20 billion over the next five years to make up for an expected decrease in revenue.

    Further privatization in the oil sectors

    Asset and debt sales are likely to represent the lion’s share of future deals, according to Hasnain Malik, head of equity research at Tellimer, a London-based firm that provides analyzes of emerging stocks.
    “Securitization of future cash flows and bond issuance, as well as private equity sales, appears to be a much less stressful way of raising financing from international investors than selling shares through an IPO,” said Malik, who has covered the Middle East markets for more than 20 years. "They rightly know that the fixed income and private equity investor base is larger than the regional equity base," he added.
    For now, foreign investors, who have rarely had such a set of options to put their money in Middle East oil and gas, seem happy to raise money. "There is definitely more to come. NOCs are watching each other and picking up some new tricks," Cahill said.    [/size]
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