Riyadh asserts Khashoggi killing was ‘rogue’ operation

Riyadh said on 21 October that Saudi journalist Jamal Khashoggi was killed in the kingdom’s consulate in Istanbul on 2 October, after entering to collect divorce papers, in a rogue operation by officers operating without the knowledge of the royal court. 

In an interview with US TV station Fox News on 21 October, Saudi Arabia’s foreign minister Adel al-Jubeir said that Riyadh did not have the full details about the incident, but labelled the killing a “tremendous mistake”. “This was an operation where individuals ended up exceeding the responsibilities they had … and they tried to cover up for it,” Al-Jubeir said.

He said such a cover-up was “unacceptable in any government” and the investigation into Khashoggi’s death would be the start of a long process, and that King Salman was determined to hold those responsible to account. “We want to make sure that those who are responsible are punished and we want to make sure we have procedures in place to prevent it from happening again,” he said. READ MORE

Separately, the Saudi government resolved to go ahead with the Future Investment Initiative in Riyadh on 23-25 October, despite the withdrawal of several figures, including Richard Branson, World bank president Jim Yong Kim, IMF chief Christine Lagarde, and ministers from the US, UK and Germany. READ MORE

IMF predicts the Saudi economy will grow in 2018

The IMF upgraded its growth forecasts for Saudi Arabia, despite downgrades to the overall projections for the Middle East and the rest of the world. The IMF expects the Saudi economy to grow 2.2 per cent in 2018 and 2.4 per cent in 2019, with improvement “driven by a pickup in non-oil economic activity and a projected increase in crude oil production in line with the revised Opec Plus agreement”.

For the broader Middle East, North Africa, Afghanistan and Pakistan, the IMF forecasts growth to increase to 2.4 per cent in 2018 and 2.7 per cent in 2019. READ MORE

Manama takes steps to tackle fiscal deficit

In an effort to restructure its economy and reduce debt, Bahrain’s parliament has approved the introduction of VAT from 1 January 2019. VAT is expected to be implemented at a standard rate of 5 per cent, similar to the level introduced in the UAE and Saudi Arabia this year.Earlier this year, the IMF’s Article IV consultation emphasised that reforms were necessary to reduce Bahrain’s fiscal deficits over the medium term. READ MORE

Bahrain also recently signed a $10bn (BD3.77bn) financial aid agreement with the UAE, Saudi Arabia and Kuwait. This will support Bahrain’s fiscal balance programme, which aims to eliminate the country’s budget deficit by 2022 by delivering annual fiscal savings of BD800m ($2.1bn). READ MORE

Tripoli warns of refinery closure due to security concerns

Libya’s National Oil Corporation warned on 14 October that it may be forced to close its Zawiya refinery due to the complex’s lack of security. The 1.2 million barrel-a-day Zawiya refinery in western Libya is one of the country’s most important refining complexes. It supplies fuel for most of the western region, including Tripoli, and is a key outlet for crude from the Sharara oil field, Libya’s largest.

The warning was issued to the Petroleum Facilities Guards (PFG), which are responsible for securing Libya’s key oil infrastructure. Libyan oil production is currently at its highest level in several years. Closing the refinery would mean slashing production rates at the field, which would be a blow to export revenues and would further disrupt domestic fuel supplies. READ MORE

Saudi-Kuwait Neutral Zone dispute nears resolution

Saudi Arabia’s Crown Prince Mohammad bin Salman bin Abdulaziz al-Saud has indicated that his government could soon reach an agreement with Kuwait about the Khafji and Wafra oil field dispute. The oil-rich Neutral Zone, or Divided Zone, lies on the border between the two countries.

Production at the Khafji field came to a halt in October 2014, and the Wafra field stopped production in May 2015. The stoppage was officially attributed to technical problems, but it is widely understood that long-standing sovereignty issues between the two countries caused production to cease.

The resumption of production from the Neutral Zone could lead to the revival of stalled projects worth billions of dollars, which would greatly benefit contractors. Restarting operations in the zone would also add to the spare production capacities of these two key Opec members, at a time when there is strong pressure to raise output and drive down crude prices. READ MORE

BP pilots water project to boost Iraq’s oil production

UK oil major BP is implementing a 12-month pilot project testing the feasibility of using recycled water produced at the Rumaila oil field to maintain pressure at the giant oil reservoir. BP has so far injected 30,000 barrels of water produced from the field, resulting in an extra 8,000 barrels of oil coming out of the ground.

Rumaila is Iraq’s largest oil field, and produces about 1.46 million barrels a day, contributing approximately 25 per cent of Iraq’s entire GDP. Along with other international oil companies developing Iraq’s southern oil fields, BP has been relying on Iraq to develop a giant seawater treatment facility, which will be key to maintaining pressure in the southern oil fields. READ MORE

Abu Dhabi announces expansionary budget for 2019

On 1 October, the UAE cabinet approved a zero-deficit federal budget of AED180bn ($49bn) for the next three years, focusing on “education and social development” in 2019. The 2019 budget sees a 17 per cent increase on the planned spending for 2018. The 2019 expenditure includes 42.3 per cent for community development, 17 per cent for education development and 7.3 per cent for healthcare services.

The IMF’s 2018 UAE Article IV mission conclusion noted that the UAE economy has been adapting well to lower oil prices. The IMF’s mission leader for the UAE Natalia Tamirisa said: “The government has appropriately switched to providing stimulus to the economy.” READ MORE

Kuwait to borrow $52bn for new oil projects

State-owned Kuwait Petroleum Corporation (KPC) is looking to borrow KD16bn ($52.7bn) to finance its capital spending programme over the next five years, the local Al-Rai newspaper reports. The borrowing is part of KPC’s plan to boost Kuwait’s oil production capacity to 4.75 million barrels a day (b/d) by 2040, up from 3.2 million b/d currently, and to expand its downstream refining industry, Al-Rai reported.

Kuwait is aggressively investing in downstream refining capacity at home and abroad. Under its 2040 strategy, KPC wants to expand its downstream sector, with a planned capacity of 2 million b/d by 2035 from 936,000 b/d currently. READ MORE

Saudi Aramco has increased its oil handling and export capacity on the kingdom’s Red Sea coast by 3 million barrels a day with the integration of the new Yanbu South Terminal (YST) with the country’s existing crude oil supply network. The first very-large crude carrier was loaded from YST on 12 October. UK-based SDX Energy, an international exploration and production company, announced its negotiations with BP for the latter’s upstream assets in Egypt have ended without a deal. BP has been looking for firms to buy its stake in an oil and gas business in Egypt, valued at about $500m. Morocco debuted in the Islamic bond market last month, selling MD1.1bn ($116m) of sukuk with a five-year maturity and an annual yield of 2.66 per cent. Moody’s said the bonds “access an alternative source of long-term financing via a diversified investor base”. The UAE has signed an alternative fuel PPP deal with a consortium led by Belgium’s Besix for a solid waste power plant in the emirate of Umm al-Quwain. The deal has an estimated building cost of AED132m ($36m) and the project is the first of its kind in the country.