The United States of Petroleum

The United States of Petroleum

The United States quietly surpassed Saudi Arabia and Russia in 2018 as the world’s largest crude oil producer, according to the Energy Information Administration. If you count all petroleum liquids, the U.S is by far the world’s largest producer. This table below, from the EIA, gives you a sense of U.S primacy in petroleum production.

The 10 largest oil1 producers and share of total world oil production2 in 20183

Country Million barrels per day Share of world total
United States 17.87 18%
Saudi Arabia 12.42 12%
Russia 11.40  11%
Canada   5.27   5%
China   4.82   5%
Iraq   4.62   5%
Iran   4.47   4%
United Arab Emirates   3.79   4%
Brazil   3.43   3%
Kuwait   2.87   3%
Total top 10 70.96 70%
World total 100.66

1 Oil includes crude oil, all other petroleum liquids, and biofuels.
2 Production includes domestic production of crude oil, all other petroleum liquids, biofuels, and refinery processing gain.
3 Most recent year for which data are available when this FAQ was updated.

For the link to the EIA site where this table was found, go here.

U.S Oil and Gas By the Numbers

12.1 million barrels/day – Estimated 2019 crude oil production in the United States

12.9 million barrels/day – Estimated 2020 production

90.2 billion cubic feet/day – Estimated U.S natural gas production in 2019

92.2 billion cubic feet/day – Estimated U.S natural gas production in 2020

DP World Primer

DP World Primer

DP World Primer – By Afshin Molavi (Part of the Dubai Silk Road Series)

Dubai-headquartered DP World is the world’s fifth largest container terminal network operator, handling 71.4 million twenty foot equivalent units (TEUs) last year at 78 marine and inland terminals across 6 continents. Founded in 2005 by merging the Dubai Ports Authority and Dubai Ports International, DP World has become a major trade enabler across emerging markets. According to DP World, some 75% of their trade volume flows through emerging/frontier markets.

It is also the only listed major port operator, listed on the Dubai International Financial Exchange in 2007.

Here’s a world map of their operations.

These are the Top 5 container port operators worldwide, according to Lloyd’s List, with DP World coming in at number 4 due to a recent purchase of  European container ship operator, Unifeeder.

Terminal Operator HQ Annual TEU (2018)
COSCO Shipping Ports China 117.36 Million
Hutchison Port Holdings Hong Kong 84.6 Million
PSA International Singapore 81 Million
DP World Dubai 71.4 Million
China Merchant Port Holdings HK Subsdiary of China HQ 80.73 Million

TEU’s compiled by Afshin Molavi from public data. Order above based on Lloyd’s List; TEU’s not the sole criterion.

According to my calculations, these five port operators handle about half of the world’s containerized trade.

DP World’s flagship operation is located in Jebel Ali, in the United Arab Emirates. The Jebel Ali port is the ninth busiest container terminal port in the world. Here’s a cool visual on the biggest container ports in the world.

DP World in Africa

DP World operates, develops and manages 7 marine and inland terminals in Africa. They include Senegal’s busiest container terminal as well as DP World Maputo, three berths on the Suez port of Sokhna, Egypt, an inland logistics facility in Rwanda, as well as facilities in Algeria, and a new facility in Berbera, Somaliland.

The company was recently awarded more than $500 million by a London court arbitrating its dispute with Djibouti over the managing and developing of the Doraleh Container Terminal. Quartz Africa has a good piece on the background and the business and geo-strategic elements of the conflict between DP World and Djibouti, and the tussle between DP World and China Merchant Port Holdings. The tussle, however, has done nothing to dent the dramatically rising commercial relationship between China and the UAE.

In a press release issued on February 5, 2019, Group Chairman and CEO Sultan Ahmad bin Sulayem, said “performance in Africa remains robust driven by Dakar (Senegal) and Sokhna (Egypt).”

Timeline of Key Events – DP World

  • 1972 – Port Rashid is launched with 11 berths; This begins Dubai’s journey as a sea trade hub for the region
  • 1976 – Ruler of Dubai launches Jebel Ali Port construction, x miles away from Port Rashid; At the time, many saw it as white elephant and unnecessary given the recent launch of Port Rashid. According to accounts at the time, some merchants even tried to get him to stop it.
  • 1979 – Jebel Ali completed, and it begins attracting major industrial players to set up business just outside the port
  • 1991 – Dubai Ports Authority is created to merge Port Rashid with Jebel Ali under one authority. By this time, traffic to Jebel Ali had been rising dramatically, and the two ports combined went over the one million TEU mark.
  • 1999-2004 – Dubai Ports goes international with the formation of a company to manage and operate container terminals outside the UAE; over the next few years, the newly formed entity, Dubai Ports International FZE, wins contracts in Djibouti, India, Romania, and Saudi Arabia
  • 2005 – DP World is officially established by merging Dubai Ports Authority and Dubai Ports International.
  • 2005 – DP World acquires CSX World Terminals, one of the world’s largest terminal operators, catapulting DP World into the “Premier League” of terminal operators
  • 2006 – DP World purchases Peninsular and Oriental Steam Navigation Company, P&O Maritime, increasing dramatically its global network.
  • 2007 – DP World listed on Dubai International Financial Exchange (DIFX) in what was at the time the largest IPO in the region, valued at $4.96 billion dollars.
  • 2008-9 – Major acquisitions and operating contracts won include Brazil’s EmbraPort as well as ports in Netherlands, Algeria, Spain and Peru
  • 2013-17 – Acquired Prince Rupert Container Terminal (Canada), Won 30 year concession for Port of Berbera (Somaliland); Consoidated Santos Brazil with 100% ownership
  • 2018-19 – Investment with National India Infrastructure Fund to invest up to $3 billion across the country; 30 year concession for port in Banana, DRC; 100% acquisition of Unifeeder Group, largest container feeder and shortsea network operator in Europe

Sources: Most of the timeline information above comes from DP World.

Now, if you really want a deep dive on DP World, I found this presentation online that they gave to investors in May 2019.

 

The 10 Largest Construction Projects in the World

The 10 Largest Construction Projects in the World

 

The largest construction project in the world is — no surprise — the massive new air hub planned in Dubai, Al Maktoum International Airport. Here’s a list of the Top Ten, courtesy of The Balance

 

  1. Al Maktoum International Airport, Dubai
  2. Jubail II, Saudi Arabia
  3. DubaiLand, Dubai
  4. International Space Station, Space
  5. South-North Water Transfer Project, China
  6. London Crossrail Project
  7. High Speed Railway, California
  8. Chuo Shinkansen (High Speed Railway), Japan
  9. Beijing Airport, China
  10. Great Man Made River Project, Libya
The Top Ten Fastest Growing Economies for 2019

The Top Ten Fastest Growing Economies for 2019

Photo: A view from King George VI Street at Arat Kilo District, Addis Ababa, capital of the the third fastest-growing economy in the world.

The IMF has just published its latest World Economic Outlook, including a downward revision to its earlier global growth forecasts for 2019 to 3.3%.

So, where is the fast growth coming from? Africa mostly, but also South and Southeast Asia. 

Here are the Top Ten fastest (forecast) growth economies for 2019 as tabulated by the New Silk Road Monitor from the IMF WEO report (Note: there’s more than 10 because of a few ties)

The Top Ten Fastest Growing Economies – 2019

  1. Ghana, South Sudan Tie – 8.8%
  2. Rwanda – 7.8%
  3. Ethiopia – 7.7%
  4. Cote D’Ivoire – 7.5%
  5. India, Bangladesh Tie – 7.3%
  6. Senegal – 6.9%
  7. Cambodia – 6.8%
  8. Lao PDR, Djibouti Tie – 6.7%
  9. Nepal, Philippines, Vietnam, Benin, Niger Tie – 6.5%
  10. Mauritania, Myanmar Tie – 6.4%

 

The Next Ten (11-20) Fastest Growing Economies – 2019

  1. China, Turkmenistan, Uganda Tie – 6.3%
  2. Burkina Faso, Panama Tie – 6.0%
  3. Guinea – 5.9%
  4. Kenya – 5.8%
  5. Egypt – 5.5%
  6. Republic of Congo – 5.4%
  7. Indonesia, Malta Tie – 5.2
  8. Dominican Republic – 5.1%
  9. Central African Rep, Togo, Tajikistan, Guinea Bissau, Timor Leste, Mali – 5%
  10. Bhutan – 4.8%

 

Note: Countries with population under 100,000 people not included here. This excludes the island nation of Dominica, expected to post 8% growth, and Cabo Verde at 5%.

 

 

 

 

 

 

New Silk Road Monitor LNG Weekly Must-Reads – April 9-16

New Silk Road Monitor LNG Weekly Must-Reads – April 9-16

The Five Must-Read Stories on the Global LNG Market This Week – April 9-16

 

Egypt To Nearly Double LNG Export Capacity by 2019

 

Egypt will nearly double its liquefied natural gas export capacity to 2 billion cubic feet per day by the end of 2019, and also plans to collaborate with Saudi Arabia in exploring hydrocarbon reserves in the Red Sea, reports the Abu Dhabi-based The National.

 

Russia Sees Arctic LNG as Key to Greater Energy Dominance

 

Almost 1,500 miles from Moscow, the tiny port of Sabetta nestles in a desolate Russian Arctic peninsula. A former outpost for Soviet geologists, it’s now the site of Russia’s most ambitious liquefied natural gas project, operated by a company that only entered the market just over a year ago.

Several times a week, a giant tanker leaves this remote place carrying the super-chilled fuel to buyers in Europe and Asia. It’s not the only LNG plant beyond the Arctic Circle, but it’s by far the largest.

Novatek PJSC, the main shareholder of the Yamal LNG plant, says plans for further projects will transform Russia into one of the biggest exporters of the fuel within a decade, Bloomberg reports.

 

World’s Top LNG Buyer Posts an Order From LNG Canada

 

Japan’s JERA, the world’s top buyer of liquefied natural gas, on Tuesday said it had signed an agreement with a Mitsubishi Corp unit to buy up to 16 cargoes, or 1.2 million tonnes per annum (mtpa), of LNG from the LNG Canada project, Reuters reports.

 

China Set To Build the World’s Largest LNG Carrier

 

China’s Hudong-Zhonghua shipyard and classification society DNV GL have agreed a joint development project for a new 270,000 cubic meter LNG carrier – the largest ever ship of this type, Maritime Executive reports.

 

Saudi Aramco Eyes First Ever LNG Sale With Overture to Pakistan

 

The world’s largest oil company is moving into the world of liquefied natural gas, offering to supply Pakistan with cargoes of the fuel even though it doesn’t produce any, according to a Pakistan government official.

 

New Silk Road Weekly Saudi Arabia Chronicle – April 8-15

New Silk Road Weekly Saudi Arabia Chronicle – April 8-15

The New Silk Road Weekly Saudi Arabia Chronicle

 

A compendium of the key numbers, quotes, and stories reflecting the economy of Saudi Arabia, curated from global and domestic news sources.

Sources: News Agencies, Financial Times, Bloomberg, CNBC, Reuters, Arab News, Saudi Gazette, The National

 

Key Numbers

 

$100 Billion+

 

Demand for Saudi Aramco’s inaugural international bond has skyrocketed to some $100 billion by mid-Tuesday, according to news reports. This represents an oversubscription of ten times the original bond offering, reflecting intense international investor interest in the world’s largest oil company.

 

1.8%

 

The IMF forecast for Saudi Arabia’s economic growth in 2019, announced in the latest World Economic Outlook. This marks a downward revision of its previous forecast of 2.4%, in line with a broader global downward revision in growth.

 

$71.27

 

The international benchmark Brent crude futures price as of Tuesday, April 8. This marks the highest Brent price since November 2018.

 

$111 Billion

 

Saudi Aramco’s net income for 2018.

 

12.2 Million bpd

 

US Crude oil production in March, a global record. Additionally, the US exported more than 3 million barrels per day, a US record. The U.S has increasingly become a competitor in global oil markets and new US shale discoveries exert downward pressure on global oil prices.

 

$69.1 Billion

 

The amount Saudi Aramco agreed to pay to buy a 70% stake in state petrochemicals firm Saudi Basic Industries Corporation (SABIC) from Saudi Arabia’s Public Investment Fund (PIF).

 

SG 33 and SG 34

 

The new flight listing for the daily SpiceJet flight from Hyderabad to Jeddah (33) and Jeddah to Hyderabad (34), marking the first Indian budget carrier flying direct to Saudi Arabia. On April 20, SpiceJet will add a new daily flight between Jeddah and Kozhikode.

 

56.8

 

Saudi Arabia’s non-oil private sector witnessed strong growth in March as evidenced by a high reading on a monthly purchasing manager’s index compiled by Emirates NBD Bank. The Dubai-based lender’s Saudi Arabia Purchasing Managers’ Index – a reflection of  operating conditions in the non-oil private sector economy – climbed to 56.8 in March. A reading above 50 shows expansion, while below 50 indicates contraction. Emirates NBD said the current figure was the highest since December 2017

 

Quotable Notable

 

On reports that Saudi Arabia would abandon the dollar in oil sales

 

“Recent reports claiming that Saudi Arabia is threatening to sell its oil in currencies other than the dollar are inaccurate and do not reflect Saudi Arabia’s position on the matter.”

“The Kingdom has been trading its oil in dollars for decades and that has served well its financing and monetary needs. Furthermore, the Kingdom remains committed to be a stabilizing force to energy markets and does not want its key priority to be out at risk, including changes to the financial terms of oil trading relationships around the world.” Khalid Al-Falih, Minister of Energy, Saudi Arabia (Editor’s note: The rumors began to circulate as the U.S Congress debates “NOPEC” legislation targeting the global oil grouping led by Saudi Arabia)

 

UAE Energy Minister on oil sales in non-dollar terms

“The trading in the US dollar is something that you don’t change overnight. I think that [has been] a norm in the industry for years and years so let’s not jump into some of those ideas … Opec did not claim that they will change the currency in trading.” UAE Minister of Energy and Industry Suhail Al Mazrouei speaking on the sidelines of the Middle East Petroleum & Gas Conference (MPGC) in Dubai.

 

On Saudi Arabia’s strong PMI reading

 

“The average PMI reading for the first quarter of 2019 was 56.5, indicating the strongest quarterly expansion in the non-oil private sector since the fourth quarter 2017.” Khatija Haque, head of Mena research at Emirates NBD.

 

 

Global Media on the Saudi Aramco Bond Sale

 

Bloomberg

The Aramco deal is one of the most hotly anticipated debt deals of the year, marking the first time the Saudi oil giant has tapped the international bond market, reports Bloomberg. When Qatar, a rival Middle East nation, sold $12 billion in bonds earlier this year, it got a record $50 billion in orders, evidence of investor appetite for debt of rich, oil-producing nations.

 

The deal is largely seen as Plan B to raise money for the country’s economic agenda after the initial public offering of Aramco, slated for 2018, was postponed until at least 2021. In effect, Saudi Crown Prince Mohammed bin Salman is using the company’s pristine balance sheet to finance his ambitions.

 

CNBC

Aramco, the world’s top oil producer, earlier this month received an “A+” rating from Fitch and an “A1″ rating from Moody’s in its first ever credit ratings, following 2018 earnings that dwarfed those of international oil majors, reports CNBC.

Saudi Arabia has already seen formidable success in its recent tapping of the bond market: It issued $7.5 billion in sovereign bonds in January which drew an impressive $27 billion in orders. Saudi Arabia has “A1” and “A+” ratings from agencies Moody’s and Fitch, respectively, a sign of reliability and low risk for investors.

 

The Financial Times

 

Investors have been lured in by the disclosure of hefty profits for the oil company, backed by a high, “single-A” credit rating, the FT reports.

Aramco has told investors that credit rating agency Moody’s would have given it a top-notch triple-A credit rating, if it was not for the close links to the Saudi state. Saudi Aramco provided the Saudi government with 63 per cent of its revenues in 2017 but the government still runs a deficit, and some investors fear further cash could be diverted away from the company, to the detriment of bondholders.

“It is a rare issuer and if you look at the pure credit of the issuer it is extremely attractive,” said Tim Jagger, head of emerging-market debt at Columbia Threadneedle. “But the fate of this company is inextricably tied to the fate of the sovereign and we know the sovereign is running a large fiscal deficit.”

The oil company has been meeting fund managers behind the scenes for several months to lay the groundwork for this debut bond sale. It even enlisted the help of veteran investor Mohamed El-Erian, chief economic adviser at Allianz and a former chief executive of bond giant Pimco, to consult on “technical aspects” of the $10bn offering.

 

New Silk Road Weekly China Chronicle – April 8-15

New Silk Road Weekly China Chronicle – April 8-15

New Silk Road Weekly China Chronicle

A compendium of the key numbers, quotes, and stories shaping China, curated from global and domestic news sources.

Sources: News Agencies, Shanghai Daily, China Daily, Beijing Review

     

Key Numbers

2.6%

 

The World Trade Organization revised downward its projections for trade growth for 2019. Originally, it forecast 3.7% growth. In 2018, its initial forecast of 4.4% trade growth fell to an actual trade growth of 3%. 

 

$3.099 trillion

 

China foreign exchange reserves as noted in March, the highest since August 2018. This marks the fifth straight month of growth in China foreign exchange reserves, a signal that hopes remain high that a trade deal will ultimately be reached between the U.S and China. 

 

20%

 

China stock market rally as of April 8, 2019. In the beginning of April, Chinese stocks notched their best performance in a year. The CSI 300 index, composed of major companies listed in Shanghai and Shenzhen, has reached its highest level since March 2018.

 

22%

 

The percentage of gas imports provided to China by Qatar over the past decade

 

6.3%

 

The latest Asian Development Outlook 2019, ADB’s flagship economic report, said China’s economy is forecast to grow 6.3 percent in 2019 and 6.1 percent in 2020. The ADB report noted that consumption was the main driver of growth in 2018, contributing 5 percentage points, underscoring China’s move away from investment-led growth toward a more sustainable consumption-driven model.

 

29

 

The number of unicorns – start-up companies with a valuation of more than $1 billion – that have emerged in Beijing since 2012, according to CB Insights. Shanghai, on the other hand, accounts for 11 unicorns in that same time period. Over the past six years, Beijing’s startup companies alone have received $72 billion in funding, ranking the second highest in the world.

 

Notable Quotable

 

On the threat of U.S tariffs on auto imports

 

“US-China trade is about 3 percent of global trade. Automobile trade globally is about 8 percent of global trade. So you can imagine that the impact of automobile tariffs is going to be bigger than the impact of the US-China trade conflict.

“I think it’s pretty clear that any automobile tariff would likely have bigger knock-on effects through the global economy than what we see from the US-China conflict.” WTO Chief Economist Robert Koopman

 

On growth in China

“Growth [in China] remains remarkably robust, underpinned by resurgent global demand, stimulus-boosted infrastructure spending, and a deleveraging program that remains more honored in the breach than the observance.” Tom Orlik, Bloomberg chief Asia economist

 

On climate change and natural gas

 

“There is no realistic achievable plan to address the climate change problem that doesn’t involve natural gas.” Mike Wirth, Chairman and CEO, Chevron, speaking at the 19th International Conference & Exhibition on Liquefied Natural Gas in Shanghai

 

How One Company — and One Man — Is Transforming India

How One Company — and One Man — Is Transforming India

The Nikkei Asian Review has an excellent cover story on the phenomenon – and there is no other way to describe it – of Jio, the company that brought low-cost mobile services to tens of millions of Indians. The story highlights the vision of Mukesh Ambani, India’s richest man, who has used his money-spinning Reliance Industries — focused on energy and petrochemicals — to finance his forays into the worlds of retail, telecoms and content. At the heart of the strategy was his Jio mobile service that gave tens of millions of Indians free mobile service for six months, dramatically pushing prices lower across the board while expanding connectivity.

One Mumbai-based venture capitalist went so far as to call Ambani “India’s Elon Musk” for his vision and few will disagree that widespread mobile usage is transforming the world’s soon-to-be most populous country.

Some highlights of the story below:

Once known simply as the richest man in India, Ambani is now known for the dramatic way he has reinvented his family’s business in recent years. He has shifted Reliance Industries from heavy industrial operations such as energy and petrochemicals to softer businesses including telecoms, media content and retail.

In the process, Ambani is also reshaping India. Since its launch in 2015 and its first sales the following year, Jio has started to reduce the yawning disparities between city and countryside, privilege and poverty, connections and capability.

While his rise in business may have been built on controversy, today Ambani is perhaps the only national champion and true visionary the country has.

“Lots of baggage of the past has been erased by the efforts of the last five years,” said one venture capitalist in Mumbai. “He is our answer to Elon Musk. He is the only one in India willing to take a moonshot.”

Since Ambani entered the telecoms business, revenues in the Indian mobile market have shrunk by 35% in just over two years, thanks almost exclusively to the low prices and six months of free service offered by Jio, according to data from UBS. That is because Reliance has far deeper pockets than any of its rivals and has used its cash flow from petrochemicals and energy to subsidize newer initiatives under Jio, said Rohit Prasad, a professor of economics at MDI in Gurgaon.

To read the full story, go here

And for a deeper dive into India’s smartphone revolution, see Ravi Agrawal’s excellent book in the New Silk Road Monitor library.

Malaysia Airlines Fate Hangs in the Balance: To Be Or Not to Be?

Malaysia Airlines Fate Hangs in the Balance: To Be Or Not to Be?

From a report in the Malaysia Star – 12 March 2019

KUALA LUMPUR: The Malaysian government is considering whether to shut, sell or refinance national carrier Malaysia Airlines (MAB), Prime Minister Tun Dr Mahathir Mohamad said on Tuesday.

The government was studying options for the national carrier, and a decision should be made “soon”, Mahathir said, when asked about analysts’ suggestions the airline be shut down or spun off.

“It is a very serious matter to shut down the airline,” Dr Mahathir told a news conference at Parliament.

“We will nevertheless be studying and investigating as to whether we should shut it down or we should sell it off or we should refinance it. All these things are open for the government to decide.”

For the full article, see here

 

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