Saudi Arabia to Activate the Arab Common Market for Electricity

A general view of power plant number 10 at Saudi Electricity Company's Central Operation Area, south of Riyadh (Reuters)
A general view of power plant number 10 at Saudi Electricity Company's Central Operation Area, south of Riyadh (Reuters)
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Saudi Arabia to Activate the Arab Common Market for Electricity

A general view of power plant number 10 at Saudi Electricity Company's Central Operation Area, south of Riyadh (Reuters)
A general view of power plant number 10 at Saudi Electricity Company's Central Operation Area, south of Riyadh (Reuters)

The Saudi Cabinet, chaired by the Custodian of the Two Holy Mosques King Salman bin Abdulaziz, approved the draft general agreement to establish the Arab common market for electricity, authorizing the Minister of Energy or his deputy to sign it.

The approval is a step towards activating the project, which is close to operating, after completing most of its technical details.

Arab countries look forward to implementing the project to achieve energy integration and remove obstacles and challenges that prevent access to a trade market for electricity.

They aim to achieve many technical, economic, environmental, social, and political benefits.

- The Arab Common Market for Electricity

According to information issued earlier, the project will improve the reliability of electric power systems economically, enhance operating efficiency, and reduce the fixed reserve ratios for emergency response in the electrical networks for each system separately.

It also aims to increase the dynamic stability of the electrical network and reduce the cost of generating a power unit—electricity, due to direct savings in capital investments resulting from postponing the establishment of new production stations.

The deal will also achieve financial revenues for the transit countries where the electrical interconnection lines pass. It will help utilize all available energy sources, especially renewable energies, reduce emissions, and exchange technical, financial, and legal experiences.

- The efficiency of surplus electricity

Economic professor at King Faisal University, Mohammed al-Qahtani, indicated that the project would raise the spending efficiency on electricity surpluses and ensure their financial benefit.

Qahtani told Asharq Al-Awsat that the project would help accelerate the development in Arab countries that suffer from power shortages, adding that it would activate the economic unity between the states, including the inter-trade exchange.

The expert pointed out that some Arab countries that suffer from power outages will benefit from the surpluses in other countries, which will meet their development needs and provide soft loans for electricity.

It will also achieve economic revenues for other countries with electric surpluses, leading to a common market that will benefit all parties.

- The Role of Saudi Arabia

Qahtani stated that Saudi Arabia, due to its pivotal economic and central role in the Middle East, will be one of the most critical countries in linking electrical surpluses between the Gulf countries rich in excesses and the rest of the Arab countries.

He noted that such projects that the Saudi government constantly announces confirm the Kingdom's progress following Vision 2030 towards boosting its role and economic local, regional, and international position.

- The Arab Common Market for Electricity Agreement

It is a document detailing the obligations specified in the Memorandum of Understanding and the General Agreement and covers the commercial aspects of the market.

It determines the roles and responsibilities of each party, defines services and procedures for that, and calculates electricity quantities.

- Consumption

According to recent studies, the growth rates of electric energy use in Arab countries vary according to the nature of use and the availability of energy sources in each country.

Statistics indicate a 36 percent increase in the average per capita electricity consumption in 2017, bringing the average share of the Arab citizen to 3,000 kilowatt-hours.

The Arab demand for electric energy increased 6.2 percent on average between 2000 and 2010, reaching 655.8 TWh in 2010, while the demand for electric power rose 19.4 percent between 2010 and 2014, reaching about 1166.4 terawatts per hour.

Demand is expected to rise to 1,639 terawatts per hour in 2023 and 2029 terawatts per hour until 2028, according to the Arab Union of Electricity (AUE).



Oil Prices Ease but Remain Near 2-week Highs on Russia, Iran Tensions

FILE PHOTO: Pump jacks operate in front of a drilling rig in an oil field in Midland, Texas US August 22, 2018. Picture taken August 22, 2018. REUTERS/Nick Oxford//File Photo
FILE PHOTO: Pump jacks operate in front of a drilling rig in an oil field in Midland, Texas US August 22, 2018. Picture taken August 22, 2018. REUTERS/Nick Oxford//File Photo
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Oil Prices Ease but Remain Near 2-week Highs on Russia, Iran Tensions

FILE PHOTO: Pump jacks operate in front of a drilling rig in an oil field in Midland, Texas US August 22, 2018. Picture taken August 22, 2018. REUTERS/Nick Oxford//File Photo
FILE PHOTO: Pump jacks operate in front of a drilling rig in an oil field in Midland, Texas US August 22, 2018. Picture taken August 22, 2018. REUTERS/Nick Oxford//File Photo

Oil prices retreated on Monday following 6% gains last week, but remained near two-week highs as geopolitical tensions grew between Western powers and major oil producers Russia and Iran, raising risks of supply disruption.
Brent crude futures slipped 26 cents, or 0.35%, to $74.91 a barrel by 0440 GMT, while US West Texas Intermediate crude futures were at $70.97 a barrel, down 27 cents, or 0.38%.
Both contracts last week notched their biggest weekly gains since late September to reach their highest settlement levels since Nov. 7 after Russia fired a hypersonic missile at Ukraine in a warning to the United States and UK following strikes by Kyiv on Russia using US and British weapons.
"Oil prices are starting the new week with some slight cool-off as market participants await more cues from geopolitical developments and the Fed’s policy outlook to set the tone," said Yeap Jun Rong, market strategist at IG.
"Tensions between Ukraine and Russia have edged up a notch lately, leading to some pricing for the risks of a wider escalation potentially impacting oil supplies."
As both Ukraine and Russia vie to gain some leverage ahead of any upcoming negotiations under a Trump administration, the tensions may likely persist into the year-end, keeping Brent prices supported around $70-$80, Yeap added.
In addition, Iran reacted to a resolution passed by the UN nuclear watchdog on Thursday by ordering measures such as activating various new and advanced centrifuges used in enriching uranium.
"The IAEA censure and Iran’s response heightens the likelihood that Trump will look to enforce sanctions against Iran’s oil exports when he comes into power," Vivek Dhar, a commodities strategist at Commonwealth Bank of Australia said in a note.
Enforced sanctions could sideline about 1 million barrels per day of Iran’s oil exports, about 1% of global oil supply, he said.
The Iranian foreign ministry said on Sunday that it will hold talks about its disputed nuclear program with three European powers on Nov. 29.
"Markets are concerned not only about damage to oil ports and infrastructure, but also the possibility of war contagion and involvement of more countries," said Priyanka Sachdeva, senior market analyst at Phillip Nova.
Investors were also focused on rising crude oil demand at China and India, the world's top and third-largest importers, respectively.
China's crude imports rebounded in November as lower prices drew stockpiling demand while Indian refiners increased crude throughput by 3% on year to 5.04 million bpd in October, buoyed by fuel exports.
For the week, traders will be eyeing US personal consumption expenditures (PCE) data, due on Wednesday, as that will likely inform the Federal Reserve’s policy meeting scheduled for Dec. 17-18, Sachdeva said.