Aramco Increases Production in Offshore Fields

An Aramco employee walks near an oil tank at Saudi Aramco's Ras Tanura oil refinery and oil terminal in Saudi Arabia May 21, 2018. (File Photo: Reuters)
An Aramco employee walks near an oil tank at Saudi Aramco's Ras Tanura oil refinery and oil terminal in Saudi Arabia May 21, 2018. (File Photo: Reuters)
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Aramco Increases Production in Offshore Fields

An Aramco employee walks near an oil tank at Saudi Aramco's Ras Tanura oil refinery and oil terminal in Saudi Arabia May 21, 2018. (File Photo: Reuters)
An Aramco employee walks near an oil tank at Saudi Aramco's Ras Tanura oil refinery and oil terminal in Saudi Arabia May 21, 2018. (File Photo: Reuters)

Saudi Aramco has pressed ahead with plans to increase production from offshore fields to maintain its capacity of producing 12 million bpd in the coming years.

The company has set a $300 billion budget for oil and gas projects in the next 10 years.

On Tuesday, Aramco said it awarded a contract to China Harbour Engineering Arabia for the construction of two drilling islands under the company’s Berri Increment Program (BIP).

The objective of the BIP is to produce an additional 250,000 barrels per day (bpd) of Arabian Light crude oil from the Berri Oil Field to reach 500,000 bpd to maintain Aramco’s maximum sustained capacity by early 2023.

Last week, Aramco awarded the first large-scope integrated services contract for its Marjan oilfield to GE’s Baker Hughes.

Baker Hughes will provide drilling services, coiled tubing services and drilling fluids engineering services in Marjan, which is the first of three major offshore expansions in Saudi Arabia, and the company’s largest upstream development project this year.

Aramco has announced in its annual report that it restored one of the units at Zuluf field, which had been shut down for 23 years. This would help the field maintain an 800,000 bpd production.

The annual report also indicated that Dammam field will begin producing 25,000 bpd in 2021, which will be increased to 75,000 in 2026.

On Tuesday, Aramco signed a contract with China Harbour Engineering in Dhahran.

The Program includes the installation of a new Gas Oil Separation Plant (GOSP) in Abu Ali Island and additional gas processing facilities at the Khursaniyah Gas Plant (KGP) to process 40,000 bpd of hydrocarbon condensate associated with the Berri Crude Increment. Related pipelines, water injection facilities, onshore drilling sites, drilling islands and offshore facilities are also included.

Under the contract, two drilling islands shall be constructed near shore at the north and south sides of the King Fahad Industrial Port (KFIP) causeway in Jubail, to support the Berri field production capacity islands.

The two drill sites referred to as Site A and Site B will have an approximate overall area of 616,553 square meters and 263,855 square meters respectively.

At least three North Asian buyers will receive extra supplies of Saudi oil after the kingdom cut its prices for most grades in October and as they look to cushion the impact on supply of US sanctions on Iran, sources told Reuters.

Buyers have asked to lift more Saudi oil than contracted volumes in October amid fears that the sanctions will crimp supply during peak winter demand in Asia, the sources said.

The sources, who preferred to remain anonymous as they are not authorized to speak to the media, indicated that Aramco will supply more oil to the buyers in October, with one to receive more Arab Light crude.

Washington has asked buyers of Iranian oil to cut imports to zero in the run up to early November to force Tehran to negotiate a new nuclear agreement and to limit its influence in the Middle East.

Increase in Brent price has also made European and African oil more expensive for Asian refiners, while the US-China trade war has sharply reduced China’s oil imports from the United States.

However, last week, Aramco cut its official selling prices for most of the crude grades it sells to Asia in October, making Saudi oil competitive.

Saudi Arabia, the world’s top crude oil exporter, and other producers from the Middle East and Russia have increased exports after a June meeting where they agreed to raise output by 1 million bpd. The rise in supply is to replace falling exports from Venezuela and Iran.



Norway's Sovereign Fund Proposes Deep Cuts to US Treasury Holdings

A general view of the Norwegian central bank in Oslo, Norway March 6, 2018. Picture taken March 6, 2018. REUTERS/Gwladys Fouche
A general view of the Norwegian central bank in Oslo, Norway March 6, 2018. Picture taken March 6, 2018. REUTERS/Gwladys Fouche
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Norway's Sovereign Fund Proposes Deep Cuts to US Treasury Holdings

A general view of the Norwegian central bank in Oslo, Norway March 6, 2018. Picture taken March 6, 2018. REUTERS/Gwladys Fouche
A general view of the Norwegian central bank in Oslo, Norway March 6, 2018. Picture taken March 6, 2018. REUTERS/Gwladys Fouche

The manager of Norway's $2.3 trillion sovereign wealth fund has proposed significantly cutting its exposure to US Treasuries as part of a wider shake-up of its bond investments to improve returns, according to a letter published this week.

Norges Bank Investment Management has recommended reducing its weighting to government bonds within its benchmark bond index to 50% from 70%, with US Treasuries, the biggest holding, getting the biggest cut, according to the letter.

The changes would mean cutting nearly $80 billion from the fund's current holdings of about $215 billion of US Treasuries as of the end of June, according to Reuters calculations.

Government bond markets have been under pressure recently, with long-term borrowing costs soaring as rising inflation and government debt levels spooked investors.

Norway's sovereign wealth fund, the world's largest, owns on average 1.5% of ⁠all listed companies ⁠globally. Its scale means that portfolio decisions can influence broader market flows. Any cuts to its bond holdings are unlikely to be implemented until several months into 2027 at the earliest.

The letter containing the fund's proposals was sent in response to questions from Norway's finance ministry about the wealth fund's investment strategy for bonds.

Norges Bank IM said it would await the ministry's response, and any changes would be done gradually to limit market impact and transaction costs.

The proposals will form part of recommendations to the ministry in January.

They will be discussed ⁠as part of the fund's annual white paper process next spring, after which the ministry will make a final recommendation to parliament which will then hold a hearing, a Norges Bank IM spokesperson said.

"We recommend that the government subindex of the bond index be reduced from 70% to 50%," Ida Wolden Bache, governor of Norges Bank, and Norges Bank IM CEO Nicolai Tangen wrote in the letter.

"A government share of 50% will be sufficient to cover the liquidity needs, including in periods of turbulence in financial markets."

The fund also proposed considering an increase in investments in unlisted assets in a separate letter, in part as a way to reduce concentration risks that have grown in its equity portfolio amid the boom in the share prices of a handful of US tech companies.

Under its current mandate the fund can own unlisted real estate and renewable energy assets, but it has a lower share of unlisted investments ⁠than comparable funds.

Norges Bank IM said the biggest change to its bond index would be investing in more non-government debt, including mortgage-backed securities, to give it better diversification and exposure to risk premiums.

The spokesperson said total US dollar exposure would remain around 50%, adding: "What changes is the mix inside the dollar market: less US government debt, correspondingly more US mortgage and government-related bonds."

Under the proposals, the bond index weighting to US government bonds would reduce from 34.1% to 21.9%, according to the letter, with the allocation to euro area debt falling more modestly from 16.8% to 14.1%.

The allocation to Japanese government bonds would increase from 4.6% to 7.4%, while the UK allocation would remain unchanged at 4.2%. The fund said the changes would align the index more closely with the broader market weightings.

While US Treasuries exposure would fall, the proposed allocation to US non-government debt would jump from 16.2% to 27.6%, meaning that the overall bond index's weighting to the US dollar would fall only slightly, from 52.9% to 52.5%.

Europe's biggest pension fund, Dutch fund ABP, cut the value of its own US Treasury holdings in the first quarter of this year, Reuters previously reported.


J.P. Morgan, BNP Paribas Forecast December ECB Rate Hike

FILE PHOTO: The logo of the European Central Bank (ECB) is pictured outside its headquarters in Frankfurt, Germany, April 26, 2018. REUTERS/Kai Pfaffenbach/File Photo
FILE PHOTO: The logo of the European Central Bank (ECB) is pictured outside its headquarters in Frankfurt, Germany, April 26, 2018. REUTERS/Kai Pfaffenbach/File Photo
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J.P. Morgan, BNP Paribas Forecast December ECB Rate Hike

FILE PHOTO: The logo of the European Central Bank (ECB) is pictured outside its headquarters in Frankfurt, Germany, April 26, 2018. REUTERS/Kai Pfaffenbach/File Photo
FILE PHOTO: The logo of the European Central Bank (ECB) is pictured outside its headquarters in Frankfurt, Germany, April 26, 2018. REUTERS/Kai Pfaffenbach/File Photo

J.P. Morgan and BNP Paribas said on Thursday they expect the European Central Bank to deliver another 25-basis-point rate hike in December, as persistent inflation risks and elevated energy prices strengthen the case for further tightening.

Both brokerages had previously expected the ECB's tightening cycle to end without a December rate increase.

The revised outlooks suggest borrowing costs in the euro zone will remain elevated for longer than previously anticipated, reflecting resilient regional economic ⁠growth and ongoing energy ⁠supply concerns.

"We think the persistence of the energy shock and the resilience of the economy make second-round effects more likely to materialize," said analysts at BNP Paribas in a note.

Markets have almost fully priced in ⁠a 25-basis-point interest rate hike by the European Central Bank at its September 10 policy meeting, indicating a 99.2% probability, according to data compiled by LSEG.

Oil prices eased but remained above $95 a barrel. At the same time, eurozone bond yields retreated from multiyear highs, following recent market pressure as the escalating conflict in Iran boosted energy prices, stoking fears of persistent inflation and ⁠tighter ⁠monetary policy.

According to Reuters, J.P. Morgan said "an interaction between more persistent energy price pressures, solid growth, sticky core inflation and a neutral rate that the ECB sees edging higher" would be the reason for a further rate hike in December.

BNP Paribas expects the ECB to hike interest rates by 25 bps at its meeting next week while leaving the door wide open to delivering more if evidence of second-round effects builds.


US Sanctions Turkish Bank, 2 Subsidiaries to Pressure Iran

ASHEVILLE, NORTH CAROLINA - SEPTEMBER 1: Treasury Secretary Scott Bessent arrives for a press conference as the 2026 G20 Financial meetings come to a close on September 1, 2026 in Asheville, North Carolina. Melissa Sue Gerrits/Getty Images/AFPages via AFP)
ASHEVILLE, NORTH CAROLINA - SEPTEMBER 1: Treasury Secretary Scott Bessent arrives for a press conference as the 2026 G20 Financial meetings come to a close on September 1, 2026 in Asheville, North Carolina. Melissa Sue Gerrits/Getty Images/AFPages via AFP)
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US Sanctions Turkish Bank, 2 Subsidiaries to Pressure Iran

ASHEVILLE, NORTH CAROLINA - SEPTEMBER 1: Treasury Secretary Scott Bessent arrives for a press conference as the 2026 G20 Financial meetings come to a close on September 1, 2026 in Asheville, North Carolina. Melissa Sue Gerrits/Getty Images/AFPages via AFP)
ASHEVILLE, NORTH CAROLINA - SEPTEMBER 1: Treasury Secretary Scott Bessent arrives for a press conference as the 2026 G20 Financial meetings come to a close on September 1, 2026 in Asheville, North Carolina. Melissa Sue Gerrits/Getty Images/AFPages via AFP)

The US Treasury Department said on Friday it imposed new Iran-related sanctions on a small Turkish investment bank and two subsidiaries as part of the Trump administration's effort to increase economic pressure on Iran.

The entities targeted are Instanbul-based investment bank Golden Global Yatirim Bankasi Anonim Sirketi, asset manager Golden Global Portfoy Yonetimi Anonim Sirketi, and asset leasing company Golden Global Varlik Kiralama Anonim Sirketi, according to the Treasury's Office of Foreign Assets Control.

The sanctions put all three entities on the Treasury's OFAC Specially Designated Nationals list, cutting them off from the dollar-based financial system.

The Treasury Department also issued a general license to allow the wind-down of transactions with the sanctioned entities.

In an interview with news outlet America's Voice News, US Treasury Secretary Scott Bessent ⁠said that the ⁠latest action "is code for you are out of business."

"And we will probably sanction another bank next week, and we are telling the financial system bad actors: 'We know who you are, you know who you are, it's over, and our allies are helping with this," he said.

Golden Global Yatrim Bankasi is the 35th-largest bank in Turkey by total assets, according to database TheBanks.EU, with total assets of 25,024.68 million Turkish lira ($516.63 million) in 2025.

The bank did not immediately respond to a request for comment.

The Treasury said in a statement that Golden Global was established for the purpose of enabling Iran's shadow banking network to transfer oil revenues from China to Türkiye,
where it could then be converted to cash and gold by money exchangers.

The Treasury said that Golden Global has knowingly offered to provide correspondent banking services to Iranian financial institutions, enabling transactions through accounts controlled by the Iranian Revolutionary Guard Corps Qods Force and its proxies.

The action is the latest in the Trump administration's campaign to economically pressure Tehran six months into the US-Israel war with Iran, which has pushed energy prices higher worldwide.

Bessent, who last month announced an "economic onslaught" against Iran's financial links around the world, has said Washington is seeking to force Tehran back to the negotiating table.

Last week, Washington moved to impose Patriot Act curbs ⁠on Egyptian lender Banque Misr's ⁠branches in the United Arab Emirates from US dollar transactions over their dealings with Iran. But the action fell short of full OFAC sanctions on the institution that did not affect Misr's head office or branches elsewhere.

In an interview with Reuters on Sunday, Bessent said the Treasury Department was likely to roll out new secondary sanctions every week, initially focusing on banks, as part of a broader campaign to intensify economic pressure on Iran.