Page 10 - AsiaElec Week 15

EurOil INVESTMENT EurOil
Saudi fund buys into European oil
EUROPE
The fund exploited low share prices to grab stakes in Shell, Total, Equinor and Eni.
SAUDI Arabia’s sovereign wealth fund Public Investment Fund (PIF) has reportedly exploited low oil prices to snap up $1bn worth of shares in four European oil and gas companies on the cheap.
The four in question are Anglo-Dutch Shell, France’s Total, Norway’s Equinor and Italy’s Eni. Like many of their peers, these companies’ shares have been hit hard by the oil price rout over the past month. Saudi Arabia is in part responsible for the collapse, having cut its prices in early March and subsequently flooded the market.
PIF, a $320bn vehicle that the kingdom uses to invest at home and overseas, acquired the shares on the open market during recent weeks and may make similar acquisitions in the future, sources told the Wall Street Journal (WSJ) on April 8. The investment in Equinor was worth $200mn, they said.
“The Saudis have been buying every day almost for the past few weeks, especially since the share prices of many of these companies were in correction territory and dividend yields were very high,” sources told Reuters. “They’ve
been buying on the basis that everything is much cheaper and that they are bullish on the long- term outlook for oil prices.”
PIF has bought into other companies that do not require disclosure as well, the sources claimed.
As of press time, neither PIF nor any of the four European majors have commented on the deals.
London-listed shares in Shell plc fell by 57% between the start of the year and mid-March, bottoming out at GBP9.78 ($12.20) apiece. They have since rebounded, however, closing at GBP15.17 on April 9. Total’s stock shed similar value by the middle of last month, ending up at €21.55 ($23.55) per share, before rising again. They closed at €33.55 on April 9.
The share prices of Equinor and Eni have fol- lowed a similar trajectory in recent months.
PIF is playing a key role in Riyadh’s efforts to diversify the Saudi economy away from oil. Its high-profile investments in recent years include in Uber Technologies and Tesla, as well as Soft- bank Group’s Vision Fund. ™
SOCAR, BP delay greenlight for $1.6bn Turkish petchem venture
TURKEY
Construction had been due to get underway this year.
AZERBAIJAN’S state oil firm SOCAR and its partner BP have delayed taking a final invest- ment decision (FID) on the construction of a new petrochemical complex in western Turkey, in light of the oil price collapse.
With oil benchmarks trading at $20-30 per barrel, the pair have decided to push back the FID by a year, to the fourth quarter of 2021, the head of SOCAR’s Turkish business, Zaur Gahra- manov, told local media.
SOCAR and BP signed a heads of agreement (HoA) on the project, known as Mercury, in late 2018. The planned complex will be sited in Izmir Province on the shore of the Mediterranean, and will turn out 1.25mn tonnes per year of purified terephthalic acid (PTA), 840,000 tpy of parax- ylene (PX) and 340,000 tpy of benzene at peak capacity. It will run on feedstock provided by SOCAR’s nearby STAR oil refinery and its Pet- kim petrochemicals plant.
The partners initially aimed to sanction the $1.8bn project by the end of 2019 but then post- poned the decision until late 2020. They had
hoped to break ground on construction as early as this year. Production was originally slated to begin before the end of 2023.
Mercury is set to be one of the biggest com- bined PTA, PX and aromatics complexes in the world. PTA is used to manufacture polyesters – a key product in Turkey’s growing textile and packaging industries that the country currently imports.
Petrochemicals are tipped to see rapid growth over the coming decades. But the sector has struggled over the last several years as a result of lacklustre global economic growth. The corona- virus (COVID-19) pandemic has further weak- ened its outlook. BP and SOCAR, which both rely predominately on oil and gas sales for their revenues, also have less available capital for new investments following the oil price crash.
The pair each have a 50% stake in Mercury. They are yet to announce an engineering, pro- curement and construction (EPC) contractor for the venture, despite holding a tender to select one early last year. ™
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