Page 13 - MEOG Week 28 2021

MEOG NEWS IN BRIEF MEOG

referring to IAEA reports detailing production oil market would remain tight unless Saudi COMPANIES
of the material as far back as 1995. “Their Arabia and its OPEC+ allies boost production.
production of metal now is actually removing “In the past, the weakness of the Saudi Israel Shipyards’ Coating
nuclear material from the pipeline that could budget process was as oil prices go up
otherwise be enriched to higher levels at short spending would go up, and when prices Services wins work for
notice.” turn around you then have to make difficult
The IAEA reported last week that Iran decisions,” Callen said. “We don’t think that Chevron
notified inspectors it would begin producing pro-cyclicality is helpful for the economy, so
uranium metal at a fuel-fabrication plant it’s exactly right to stick with the expenditure Oil and gas giant Chevron has through
in Esfahan, a city in central Iran. That as it was set out, even if oil prices are higher.” its Israeli subsidiary Noble Energy
announcement followed an earlier declaration Saudi Arabia set spending this year at 990 Mediterranean awarded Israel Shipyards a
in February that Iran sought to produce billion riyals ($264 billion), while revenue coating program contract for its offshore and
uranium-silicide fuel for its Tehran research is projected to rise to 849 billion riyals. As onshore assets.
reactor. a result of that deficit, and transfers to the Under the 16-month agreement, Israel
Such production of metallic uranium kingdom’s sovereign wealth fund, net foreign Shipyards will provide coating repair services
silicide fuel was originally developed at U.S. assets dropped to their lowest level in about 10 for these facilities. Israel Shipyards did not
national laboratories precisely in order to years in May. share the financial details of the deal.
reduce the risk that nuclear material might The Arab world’s largest economy To remind, U.S. oil major Chevron last
be used to make weapons and “has been contracted sharply in 2020 due to the double year acquired rival Noble Energy, gaining
successful in its goal of reducing proliferation shock of lower oil prices and the coronavirus access to Noble’s “low-capital, cash-generating
risks,” according to IAEA documents. pandemic. The government took measures to offshore assets in Israel,” namely the Leviathan
BLOOMBERG cushion the fiscal impact, tripling the value- and Tamar offshore gas fields, and associated
added tax, cutting expenditure plans and infrastructure.
Higher oil income will boost raising import fees. Chevron, Israel Shipyards’ CEO Eitan Zucker
Commenting on the contract award with
While Crown Prince Mohammed bin
Saudi saving not spending, Salman has suggested the VAT hike was a said the deal marked the company’s entry
in a new field of activity for the offshore gas
response to Covid-19 and the rate could be
IMF says reduced in the next few years, the IMF advises operations in Israel.
against it. “Having now raised the VAT rate,
“This is the first time we will carry
Saudi Arabia is likely to use surplus oil it is important that it stays where it is,” Callen out maintenance work on production
revenue to rebuild reserves, breaking with said. “You don’t want to use tax rates in a pro- platforms, which will involve significant
its historical practice of boosting spending cyclical or even a counter-cyclical way.” scope and duration. The work will be done
when crude prices rise, according to the The IMF also suggested the government in collaboration with a British company with
International Monetary Fund. could afford to use more targeted financial the requisite expertise that will assist us in
“The message that we very strongly got support for low-income households. The carrying out the project and implementing the
was that the expenditure path set out in the kingdom, which has been reducing fuel localization program that includes training of
budget will be stuck to, regardless of where oil subsidies, set an upper limit for the domestic Israeli workers, project managers, and coating
prices go to, which I think is the right thing to cost of gasoline last week and said the state inspectors and their gradual integration into
do,” Tim Callen, the IMF mission chief to the would shoulder the burden of prices above the project,” Zucker said.
kingdom, said in an interview late Monday. that level. Zucker said that Israel Shipyards would
Sticking to targeted spending “allows you then Rather than imposing a cap, Callen said the also assist with compliance with international
to really build the financial assets that have government should use a program called the standards for quality and safety, acquisition of
been run down in recent years.” Citizens Account to direct financial support know-how, and authorization to perform such
Crude prices around $75 a barrel are to low-income households. “Stick with the work scope almost independently following
only slightly lower than what Saudi Arabia reforms that you’ve been doing and don’t completion of the project.
needs to balance the budget, according to reverse them,” he said. “This project is a stepping stone for
IMF estimates. They may rise further as the The IMF is also giving technical assistance providing offshore maintenance and
global economy rebounds from the impact to the Saudi government in managing its construction packages in additional areas,”
of the pandemic and the International sovereign asset liability, Callen said. said the CEO of the company.
Energy Agency warned on Tuesday that the BLOOMBERG According to Israel Shipyards, the

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