Al-Falih told reporters during an energy event in the United Arab Emirates capital Abu Dhabi that demand will pick up in the summer and OPEC wants to make sure markets are well-supplied.

“We don’t think it’s necessary, given the level of compliance we have seen and given the expectations of demand,” Al-Falih said on Monday. “The re-balancing, which started slowly in 2016, will have its full impact by the first half. Of course, there are many variables that can come into play between now and June, and at that time we will be able to reassess.”

Oil prices were down early Monday morning after Saudi Arabia signaled that OPEC is unlikely to extend the supply-cut deal beyond June.

Saudi Arabia is the world’s second largest producer of oil. It has cut production to less than 10 million barrels a day, below its targeted level, and is currently producing at a 22-month low, Al-Falih said.

Out of the total cut of 1.758 million barrels per day, which roughly equals 2 percent of overall global crude oil supply, OPEC members will contribute 1.2 million barrels per day.

Despite production cuts after the OPEC deal, many analysts forecast that the move may not be successful due to lack of commitment from all producers.

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IFM Correspondent

November 25, 2016: Chancellor Philip Hammond delivered the last Autumn Statement this year and said that the government is focused on preparing and supporting the economy as they begin to write a new chapter in the country’s history.

Hammond spoke about tackling the weaknesses in the economy and even stated that Britain is expected to be the fastest growing economy according to the IMF report.

He announced that, according to forecasts, the economy would grow at 1.4% as opposed to the previously forecast rate of 2.2%, and the reason behind the dip is the Brexit vote.

The government would invest in infrastructure and economic productivity. Central to the plans is a £23bn investment fund for infrastructure and innovation set to deliver a surge in spending on roads, rail, low-emission vehicles, broadband and 5G.

There will be a change in the country’s wage rate, as the government will boost wage rates by 30p an hour. The Chancellor is set to restrict the tax-free benefits offered by ‘salary sacrifice’ schemes and employees who use tax perks as a means to reduce their income tax bill are bound to suffer under the new scheme.

Many British companies are set to benefit from the slash in tax rates, as there corporation tax will be reduced to 17 percent. This announcement makes Britain an efficient and profitable place for business. However, companies will face limits on the tax deductions they can claim for UK interest expenses beginning next April.

Companies ‘cannot save taxes by borrowing in the UK’ to finance their overseas expansion, Mr. Hammond said.

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IFM Correspondent

October 26, 2016: Speaking at the World Energy Congress in Istanbul, Turkey, Saudi Arabia’s Energy Minister Khalid al-Falih said that as market fundamentals improve, the current down cycle of crude prices is close to an end.

Oil prices are currently hovering around $50 per barrel after hitting a 10-year low of less than $30 in January, after having fallen from a peak of over $100 in mid-2014.

“The current down cycle is nearing an end,” Falih told a joint press conference with his Russian counterpart Alexander Novak after a Gulf ministerial meeting in Riyadh. “Market fundamentals, in terms of supply and demand, have begun to improve.”

Qatar’s energy minister Mohammed al-Sada, whose country holds the rotating presidency of the OPEC oil exporting cartel, also said the ‘difficult phase is over’. Further, he added, “Although the market is heading to being balanced, it needs our joint effort, and we all agreed that we need to take measures to bring back this balance.”

Views now closer to those of Russia

Al-Falih stated that the points of view of Saudi and Russia – the world’s leading oil producer – on the need to stabilise the market ‘are getting closer’.

“Saudi Arabia has started to play an important role of coordinating between Russia, and OPEC, specifically the Gulf countries,” Falih said at a news conference in Riyadh with his counterparts from Russia and Qatar.

“We have managed today, through a common meeting, to reach a common notion to what we can reach in November,” Falih said, referring to an OPEC meeting to be held in Vienna on November 30, when the group is set to finalise an agreement on a cut in production.

OPEC has invited Russia and key non-members to a meeting later in October as the cartel and Moscow seek to tighten cooperation to boost historically low crude prices.

Russia: Deal to depend on OPEC accord 

Novak said that Russia’s production level in any accord to shore up prices would depend on the agreement OPEC members reached between themselves beforehand, and on Moscow’s discussions with the exporter group.

“I would like to stress once again that we are not ready to give figures because consultations are continuing and the levels would be dependent on the final agreement of OPEC and the result of our OPEC negotiations,” he told reporters in Riyadh after talks with his counterparts from Saudi Arabia and Qatar.

When asked whether Russia would freeze production at current level or cut below them, Novak replied, “We are looking at a number of options. I don’t want to give the final decision yet but we are considering a few options at the moment.”

Bid to stabilise the market 

Earlier, al-Falih said that he had invited Novak to join the meeting of Gulf Arab oil ministers in Riyadh as part of efforts to cooperate with non-OPEC members to stabilise the oil market.

“Russia is one of the world’s biggest oil producers, and is one of the influential parties in the stability of the oil market,” Falih said at the opening session of the ministers of the six-member Gulf Cooperation Council (GCC).

Falih said Novak had welcomed the invitation, “as a clear indication of [a] sincere desire to continue cooperation and coordination with the oil producing and exporting countries for more stability in the market.”

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July 28, 2016: Lloyds Banking Group is set to cut 3,000 jobs and shut 200 branches as it prepares for a cut in interest rates following Britain’s decision to quit the European Union, it said. The bank, which is 9 per cent owned by the government, posted a pre-tax profit of £2.5bn in the six months to June, up from £1.2bn in the same period last year.

The bank will target an extra £400m of cost savings with the removal of branches and jobs by the end of 2017. The latest measures are in addition to Lloyds’ original 2014 plan of £1bn in savings through 9,000 job cuts and 200 branch closures over a period of three years.

António Horta-Osório, chief executive of Lloyds Banking Group, said the use of branches had fallen by 15% year-on-year, faster than had been the case at the time of the previous announcement of cut jobs.

Following the EU referendum, the outlook for the UK economy is uncertain and, while the precise impact is dependent upon a number of factors, including EU negotiations and political and economic events, a deceleration of growth seems likely.

Economists expect the Bank of England to cut interest rates next week.

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IFM Correspondent

July 20, 2016: Keeping a close eye on Brexit and its anticipated impact, the International Monetary Fund (IMF) has cut its global growth forecasts for the next two years. The move included a nearly full percentage point reduction in the UK’s 2017 growth forecast.

Cutting its World Economic Outlook forecast for the fifth time in 15 months, the IMF said that it now expects global GDP to grow at 3.1 percent in 2016 and at 3.4 percent in 2017 — down 0.1 percentage point for each year from estimates issued in April.

On the day before Britain’s June 23 EU referendum, the IMF was ‘prepared to upgrade our 2016-17 global growth projections slightly’, IMF Chief Economist Maury Obstfeld said in a statement. “But Brexit has thrown a spanner in the works.”

The IMF said that the impact will be hardest in Britain, where the institution cut its 2016 growth forecast to 1.7 percent, down 0.2 percentage points from its April forecast. It cut the 2017 UK forecast more sharply, by 0.9 percentage points, to 1.3 percent.

The IMF lifted its euro zone forecast slightly for 2016, but cut its 2017 outlook by 0.2 percentage point to 1.4 percent for 2017.

As far as China’s outlook is concerned, IMF has kept it largely unchanged. Recessions in Brazil and Russia will be less severe than previously forecast this year due partly to some recovery in oil and commodities prices, the IMF said, adding that both countries will return to positive growth in 2017.

The Fund urged policymakers not to accept the tepid growth rates as a ‘new normal’ and said that they should support demand in the near term and structural reforms to aid medium-term growth.

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Suparna Goswami Bhattacharya

June 28, 2016: In a move that has surprised many, Saudi Arabia has scaled back its renewable power targets as the world’s largest producer of oil plans to use more natural gas, backing away from goals set when crude prices were about triple their current level.

The Kingdom has now brought down its renewable target from 50% of the energy mix to 10%. “Our energy mix has shifted more towards gas, so the need for high targets from renewable sources isn’t there anymore,” said Energy Minister Khalid Al-Falih. Generating more power from gas should help Saudi reserve more crude for exports, which otherwise gets burned to meet the Kingdom’s electricity demand.

Saudi Arabia has for years sought to develop gas resources to provide fuel for power plants and industries, and to free up more oil to sell overseas. Saudi Arabian Oil Co., the state-run producer, has also set up several ventures with international partners to explore gas.

Jeremy Leggett, founder and chairman, Solarcentury, UK’s largest and independent solar company, says, “The emphasis on gas is disappointing for various reasons. For instance, solar energy is cheaper than gas, and this has been shown in recent auctions.”  Leggett adds that it does not reflect well on the Kingdom which only recently announced a $2 trillion post-oil economy.

Also, the move will only help countries like India, China and US grow domestic solar industries that can lead the world in the emerging energy transition away from fossil fuels.

There are others who, however, do not read much into the announcement.

“This is simply a public statement that tries to reset the renewable energy targets set in 2012 under K.A.CARE. Once the details of the King Salman Renewable Energy Initiative are announced, we will know what to expect in the future from Saudi Arabia. They now have a chance to reset the Saudi renewable program and manage expectations,” says Browning Rockwell, global business executive, Horizon Tradewinds.

In 2012, K.A.CARE, the body tasked with weaning Saudi Arabia off oil for domestic power consumption, launched an ambitious plan for solar. It had proposed investing $109 billion in 41 GW of solar power to supply a third of the Kingdom’s electricity by 2032. An initial procurement round of 600 MW, split evenly between PV and concentrated solar power, was due to kick off in January 2013. However, the announcements remained only on paper and nothing concrete started.

The exact reason for the retreat on solar is not known.

“I feel until competitive solar energy storage is achieved by the Kingdom, gas will probably be prioritised,” says Rockwell adding that K.A.CARE was never really given any real authority to implement the announced projects.

Various reports suggest a lack of alignment between K.A.CARE and other potential stakeholders, such as the Saudi Aramco and King Abdullah University of Science & Technology.

Saudi Arabia’s proven reserves of gas rank third largest in the Middle East. According to figures by World Energy, proven natural gas reserves in the Kingdom are over 7 trillion cubic metres.

“Industrial expansion requires cheap and dependable energy source. Gas is a safe bet and does not have the inefficiency issues of solar. Storage of solar energy is still a problem,” says Graham Little, an independent energy and power expert.

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IFM Correspondent

June 7, 2016: About 50% of all oil and gas companies in the UK were forced to cut jobs in the past 12 months, says a recent report. The Bank of Scotland/Lloyds Banking Group surveyed 141 companies in the sector. The report further states that a third of the businesses planned to cut jobs further during the year. Since the slump in oil prices, the industry has been facing a tough time. Cuts have been announced by producers, contractors who work alongside producers’ workforces, and by suppliers of specialised skills and equipment, but many of these announcements also include positions that are based overseas. There have also been announced losses – jobs which have gone in low, single digits from smaller companies, self-employed workers whose contracts have dried up, or by the non-replacement of retirees. Since the survey has not picked up these minute details, it has not sought to quantify the UK employment.

The worst hit sectors have been drilling (83% of companies recording jobs lost), marine services (66% have made reductions) and inspection, repair and maintenance companies (70% recording job losses). Further, the study states that the younger generation prefer to look away from the oil and gas industry, thanks to its uncertain nature. Two-fifths (41%) of those surveyed thought that young people would not see the sector as a viable career option, creating a skills gap that is further exacerbated by the cyclical nature of the industry.

It may be recalled that during the 2008 global recession, a number of organisations cut back or stopped their graduate programmes for a couple of years. Stuart White, industry specialist with Bank of Scotland, says, “This trend is a big concern and will automatically mean that there is a gap in the supply of talented men and women coming into the industry. But there are some who believe that concerns surrounding the sector would dissipate once the industry is on an upwards trajectory.”

Silver lining among dark clouds

It has been often noticed that adversities create great ideas. And the same has been true for the oil and gas industry. The industry has faced some severe employment downside, but there are still opportunities which present some potential upside. Though the sector as a whole is reducing its capital spending, many companies have developed strategies to move forward. More than half of all companies surveyed (55%) believed that there are new opportunities despite the current business climate. Amongst all businesses, diversification tops the list of potential new opportunities (51%).

For example, Total, Europe’s third-largest company in deepwater production and liquefied natural gas (LNG), aims to raise $15 billion through asset sales between 2015 and 2017 to spend on projects such as the Laggan/Tormore gas fields west of Shetland, which came on stream in February 2016. Although it cost £3.5 billion ($5 billion) to develop, its use of sub-sea installations instead of platforms keeps operational cost low.

Patrick Pouyanne, chief executive, Total, said, “The opportunities will really come if oil prices remain low over a longer period. Then you will see real opportunities for major companies like Total”.

At the same time, there are opportunities at the other end of the business size scale,particularly for small companies which have developed specialist skills and technologies that cut costs and improve efficiency. The smaller companies want to invest in renewables,though many are unsure about the government’s stand towards the sector.

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