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Saudi Arabia reassures on oil supply, says will meet demand

RIYADH (Reuters) – Saudi Arabia said on Tuesday it would continue to meet customer demand for crude despite looming U.S. sanctions that are expected to reduce oil exports from Iran.

Saudi Energy Minister Khalid al-Falih said at an investment conference in Riyadh that the oil market was in a “good place” and he hoped oil producers would sign a deal in December to extend cooperation to monitor and stabilize prices.

Benchmark Brent crude oil LCOc1 hit an intraday low of $78.32 a barrel, down $1.51, following Falih’s comments. U.S. sanctions on Iranian oil begin on Nov. 4 and Washington has said it wants to stop all of Tehran’s fuel exports.

“We have to continue to monitor the market in the next two to three months,” Falih said.

“We will decide if there are any disruptions from supply, especially with the Iran sanctions looming. Then we will continue with the mindset we have now, which is to meet any demand that materializes to ensure customers are satisfied.”

Oil prices have rallied this year on expectations that the sanctions will strain supplies by lowering shipments from Iran, OPEC’s third-largest oil producer.

Falih said he would not rule out that Saudi oil output would be 1-2 million barrels per day higher than current levels in future as oil demand growth is expected to keep rising. He did not mention a timeline for this.

The minister also said that if oil supply continues to build up, “we will have the mechanism to reconvene … and bring supply and demand in balance and to prevent inventories from growing”.

“It is a very unpredictable situation from supply in particular, but demand also has its uncertainties with the trade frictions,” he said.

He said the Organization of the Petroleum Exporting Countries and its allies hoped to extend their cooperation on oil supply when they meet in December in Vienna.

“It will become an open-ended agreement to continue to monitor (the oil market) and stabilize it,” Falih said.

Reporting by Rania El Gamal, Writing by Alexander Cornwell and Maha El Dahan, Editing by Ghaida Ghantous and Dale Hudson

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Saudi signs deals worth $50 billion in oil, gas and infrastructure

RIYADH (Reuters) – Saudi Arabia signed deals worth more than $50 billion in oil, gas, infrastructure and other sectors at an investment conference in Riyadh on Tuesday, officials there said.

Details were announced at the Future Investment Initiative, held in Riyadh in the face of boycotts by Western political figures, international bankers and executives that were prompted by the killing of journalist Jamal Khashoggi.

Companies involved in the deals included commodities trader Trafigura, Total (TOTF.PA), Hyundai (011760.KS), Norinco (000065.SZ), Schlumberger, Halliburton (HAL.N) and Baker Hughes (BHGE.N), state television said.

Swiss-based Trafigura said it had signed a deal for a joint venture partnership with Riyadh-based Modern Mining Holding Co.

The multi-billion dollar venture would develop a copper, zinc and lead integrated smelting and refining complex in Ras Al-Khair Mineral City, Trafigura said. This was part of the Kingdom’s Vision 2030 to develop its mining sector and plug the “midstream”, it added.

Saudi Aramco said it had signed agreements with 15 international partners worth more than $34 billion.

The deals include an agreement to build an integrated petrochemical complex and downstream park in the second phase of the SATORP refinery, jointly held by Saudi Arabia’s Aramco and Total; and investments in retail petrol stations also by Aramco and Total.

Saudi Arabia’s transport minister signed an agreement for the second phase of the Haramain high-speed railway with a Spanish consortium, state television channel al-Ekhbariya said on its Twitter account.

Saudi officials at the conference said the total value of the deals announced there topped $50 billion.

Reporting by Rania El Gamal, additional reporting by Julia Payne in London; Writing By Maha El Dahan; Editing by Susan Fenton and Dale Hudson

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Saudi sees deals worth $50 billion at investment conference despite boycotts

RIYADH (Reuters) – Saudi Arabia was set to sign deals worth $50 billion on Tuesday at the opening of an investment conference despite being overshadowed by the killing of journalist Jamal Khashoggi which prompted a boycott by Western politicians, top world bankers and company executives.

Energy Minister Khalid al-Falih told a panel that the world’s largest oil exporter was passing through a “crisis of a sort” but would power ahead with economic diversification plans.

“Nobody in the kingdom can justify it (Khashoggi’s killing) or explain it,” he said.

Speaking at the opening session, Saudi businesswoman Lubna Olayan described the killing of the dissident Saudi journalist which has sparked a global outcry and strained Riyadh’s ties with the West as “alien to our culture”.

“It is natural that our thoughts tend to focus on recent events surrounding the death of Jamal Khashoggi … may he rest in peace,” she said.

Hundreds of bankers and company executives joined officials at a palatial Riyadh hotel for the Future Investment Initiative. But while last year’s inaugural conference drew the global business elite, this year’s event has been marred by the pullout of more than two dozen high-level speakers.

Khashoggi, a critic of Saudi Arabia’s crown prince, vanished after he entered its consulate in Istanbul on Oct 2. After first denying any involvement in his disappearance, Riyadh on Saturday said Khashoggi died during a fight in the consulate. Later, a Saudi official attributed the death to a chokehold.

  • Saudi to sign deals worth $50 billion in oil, gas and infrastructure
  • Saudi Aramco to sign 15 deals worth more than $30 billion: state TV
  • Total to announce retail network in Saudi Arabia with Aramco: Total CEO

Turkey’s president said in parliament in Ankara on Tuesday that there was strong evidence the killing was savage and planned. He said he was not satisfied with Riyadh placing the blame on some of its intelligence agents.

Many foreign investors see a risk that the Khashoggi case, which drew global condemnation, could damage Riyadh’s ties with Western governments. Saudi Arabia’s stock index was down 1.7 percent in afternoon trading on persistent investor concern.

U.S. Treasury Secretary Steven Mnuchin and senior ministers from Britain and France pulled out of the event along with chief executives or chairmen of about a dozen big financial firms such as JP Morgan Chase and HSBC, and International Monetary Fund chief Christine Lagarde.


However, Saudi Arabia is set to sign deals worth more than $50 billion on the opening day in the oil, gas, industries and infrastructure sectors with firms such as Trafigura, Total, Hyundai, Norinco, Schlumberger, Halliburton and Baker Hughes.

Oil giant Saudi Aramco said it signed 15 memoranda of understandings worth $34 billion.

Total Chief Executive Patrick Pouyanné, a panelist on Tuesday, said the French oil and gas producer would announce a retail network in the kingdom with Saudi Aramco.

Russia sent a large delegation led by Direct Investment Fund head Kirill Dmitriev, who said Saudi Arabia’s economic transformation was “important for the world” and that partnerships between sovereign wealth funds was a “great opportunity”.

The managing director of the kingdom’s sovereign wealth fund, the main backer of the event, said the country was becoming more transparent and that the Saudi Public Investment Fund continued to develop new industries under economic reforms launched by Crown Prince Mohammed bin Salman.

Yasir al-Rumayyan said the fund has invested in 50 or 60 firms via SoftBank Group’s Vision Fund and would bring most of those businesses to the kingdom. PIF has committed to invest $45 billion in Vision Fund.

Many Western banks and other companies, fearful of losing business such as fees from arranging deals for Saudi Arabia’s $250 billion sovereign wealth fund, sent lower-level executives even as their top people stayed away.

Top executives of Asian firms have been hesitant to pull out, so the participation of Chinese and Japanese institutions may help Riyadh claim the three-day conference as a success.

For these reasons, the Western boycott may have little long-term impact on Saudi economic prospects.

Foreigners sold a net 4.01 billion riyals ($1.07 billion) of Saudi equities last week, by far the biggest pull-out of overseas money since the stock market opened to direct foreign investment in mid-2015.

The event is being held at the Ritz-Carlton in Riyadh, where scores of princes, businessmen and officials were detained in a crackdown on corruption soon after last year’s conference ended.

Authorities said the crackdown extracted over $100 billion from suspects in financial settlements. But that figure has not been verified, and details of the alleged crimes were never made public, fuelling investors’ concern about legal transparency.

Reporting by Andrew Torchia, Stephen Kalin, Marwa Rashad and Rania El Gamal; Writing by Ghaida Ghantous; Editing by Michael Georgy, Andrew Heavens, Richard Balmforth

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Exclusive: Airbus faces new jet delays at Hamburg plant

PARIS (Reuters) – For two years Airbus (AIR.PA) faced a shortage of engines and had to slow jet deliveries. Now engines are arriving fast – but snags at a Hamburg plant where Airbus assembles best-selling jets is having trouble absorbing them, industry sources said.

The internal snags have exacerbated delivery delays that leave Airbus with the challenge of delivering 76 single-aisle planes per month in the last quarter, according to consultants Flight Ascend, 9.6 percent more than its previous record.

Airbus is working flat out to maintain this year’s target of 800 total aircraft deliveries needed to meet financial goals and single-aisle assembly lines are its most important cash cow.

“They’re late; everyone is mad at them. They’ve been hiding behind the engine problems,” a senior aircraft buyer said, referring to the tendency of supply chains to focus on the most visible laggards without always tackling problems in waiting.

Other industry sources say Hamburg may not be the immediate source of the problem, but that this facility has felt the worst impact in Airbus’s global jigsaw of assembly plants because it is introducing a new version of A321 just as production is running faster than ever.

That illustrates a wider challenge as planemakers struggle to introduce new models and fix technical issues without pausing record output increases – a task some compare to taking the steepest hill in a cycle race at a sprint while fixing a tyre.

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Deliveries of the A321, a large single-aisle jet mainly made in Germany, spiked higher in May as delayed engines started coming in but slowed down again in September, Airbus data shows.

Now, Airbus is introducing a new A321neo ACF version, which offers more flexible cabins but requires complex configuration.

One of the sources said the Hamburg assembly plant was facing some problems with cabling the jets, stirring memories of cabling problems which plagued the A380 superjumbo a decade ago.

Airbus had no immediate comment.

The ramp-up has also increased quality problems, leading to more delays and a queue of undelivered jets, Reuters reported last month. [nL8N1WE3LF]


Despite disruption, Airbus has said it is confident it will meet single-aisle production goals of 60 a month spread across all its factories in mid-2019, up from around 55 now.

Sources say Airbus is also preparing to make capacity of 65 single-aisle jets a month available by the end of next year, though there has been no decision on whether to implement this.

Ultimately, Airbus aims to raise output as high as 70-73 to serve record travel demand and the company says planes offering premium seats like the A321neo ACF will help to drive this.

Still, delays at Hamburg are a headache for new sales chief Christian Scherer as airlines wait for deliveries.

For many airlines, the financial pain is acute since oil prices have bounced back to $80 dollars: exactly the market the A321neo and similar fuel-saving models were designed for.

“Airlines can deal with planes that are off-spec but not ones that are late. They have built a network plan which takes account of new aircraft in the fleet,” Ascend chief consultant Rob Morris said. Boeing has also had some delays.

Hamburg’s woes highlight the operational issues at stake as planemaking chief Guillaume Faury prepares to become chief executive in April. His two main industrial lieutenants, Tom Williams and Didier Evrard, retire at end-year.

Insiders say Faury, who has made production the “priority of priorities” for this quarter, will not be replaced as president of commercial jets but may appoint an operations leader.

Reporting by Tim Hepher. Editing by Jane Merriman

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Uber aims to go all-electric in London in 2025

LONDON (Reuters) – Uber plans for every car on its taxi app in London to be fully electric in 2025 and will add a clean air fee to each trip from early next year, its boss told reporters in the British capital city on Tuesday.

Chief Executive Dara Khosrowshahi, who pulled out of a Saudi conference after the murder of journalist Jamal Khashoggi, also said the firm would wait for answers about the incident before deciding how that might affect Saudi investment in a stock market flotation.

After reports that Uber was looking into acquiring British food courier Deliveroo, Khosrowshahi said the firm was very happy with its Uber Eats equivalent but is talking to many players around the world.

“Is something going to happen with Deliveroo? Who knows,” he said.

The rapidly-expanding firm is simultaneously trying to appease regulators in key markets such as London, with initiatives such as on environmentally-friendly vehicles, as well as expanding into new areas ahead of a flotation.

After a media report said the firm was seeking minority stakes in its self-driving car business Advanced Technologies Group, Khosrowshahi said:

“It’s going to be part of the family and how the capitalization looks like is something that we are ultimately open to but it is not an area of focus right now.”

In light of the Khashoggi affair, asked about how Uber might handle Saudi investment as part of its IPO, he said:

“First we want to get the facts and we will make that determination about how we go forward, how we raise money going forward, what our post-IPO board make-up is.”

“All of those are options and again we make conclusions based on all the facts,” he added.

Reporting by Costas Pitas; Editing by Alistair Smout

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Saudi Aramco to sign 15 deals worth more than $30 billion: state TV

DUBAI (Reuters) – Oil giant Saudi Aramco will sign 15 deals worth more than $30 billion, said Saudi state-owned TV Ekhbariya.

Saudi Arabia plans to sign deals worth more than $50 billion in the oil, gas, industries and infrastructure sectors at an investment conference in Riyadh on Tuesday, a source familiar with the matter told Reuters earlier.

Reporting by Dubai newsroom; Editing by Susan Fenton

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Total to announce retail network in Saudi Arabia with Aramco: Total CEO

RIYADH (Reuters) – French oil and gas producer Total MTOTF.PA is set to announce a retail network in Saudi Arabia with Saudi Aramco, Total’s chief executive said on Tuesday.

Patrick Pouyanne was a speaking at an investment conference in Riyadh.

Total said in April it was interested in Saudi Arabia’s petrol station market and had signed a memorandum of understanding with state energy giant Saudi Aramco to look at options.

Reporting by Rania El Gamal, writing by Davide Barbuscia; Editing by Susan Fenton

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Saudi Aramco CEO says bankers have not raised concerns about funding costs on SABIC deal

RIYADH (Reuters) – The chief executive of oil giant Saudi Aramco said on Tuesday that bankers had not expressed any concerns about a recent rise in Saudi funding costs ahead of the company’s potential acquisition of a stake in petrochemical firm Saudi Basic Industries Corp (SABIC) 2010.SE.

The cost of insuring against a Saudi sovereign default over the next five years touched 100 basis points last week for the first time since June, in a sign of how deeply the killing of journalist Jamal Khashoggi has damaged sentiment toward the kingdom.

Asked whether bankers raised any concerns about the death of Khashoggi and worries over higher funding costs for the deal, Aramco CEO Amin Nasser said: “None whatsoever.”

“Aramco is well positioned financially,” Nasser said on the sidelines of an investment conference in Riyadh.

Aramco hired JP Morgan and Morgan Stanley to advise on a potential acquisition of a 70 percent stake in Saudi Arabia’s SABIC, sources told Reuters in July.

Separately, Nasser also said it would take Aramco three months to reach maximum oil production capacity of 12 million barrels per day, if needed.

Reporting by Rania El Gamal, writing by Hadeel Al Sayegh and Davide Barbuscia; Editing by Susan Fenton

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Saudi’s PIF invested in 50-60 firms via SoftBank fund: director

RIYADH (Reuters) – The Public Investment Fund, Saudi Arabia’s sovereign wealth fund, has invested in 50 or 60 companies via SoftBank Group’s (9984.T) Vision Fund and will bring most of those firms to the kingdom, managing director Yasir al-Rumayyan said on Tuesday.

The state fund has agreed to invest $45 billion in the giant tech fund led by SoftBank and the pair are also working with other parties on a number of large-scale, multi-billion dollar projects relating to the solar industry.

Rumayyan was speaking at the Future Investment Initiative (FII) conference at which SoftBank’s Chief Executive Masayoshi Son canceled a speaking engagement, the Wall Street Journal reported on Tuesday, citing a spokesperson for the conference.

A SoftBank spokeswoman did not immediately respond to a Reuters request for comment.

Son, who was a visible presence at last year’s conference, is the latest high-profile figure to pull out of this year’s event amid mounting pressure on Riyadh over the death of journalist Jamal Khashoggi. The U.S. resident and Washington Post columnist critical of Riyadh’s policies disappeared on Oct. 2 after entering the Saudi consulate in Istanbul.

PIF, which has more than $250 billion in assets and is the main backer of the conference, is a key vehicle of the kingdom’s plan to diversify its economy away a reliance on oil revenue.

Rumayyan also added that electric vehicles were gaining market share and PIF wanted to localize the industry in Saudi Arabia. PIF last month said it had agreed to invest more than $1 billion in Silicon Valley-based electric vehicle maker Lucid Motors.

The PIF has almost 10 percent of its assets held internationally and has a target to raise that to 50 percent by 2030, Rumayyan told the conference.

“In 2030 we would like to be 50 percent international and 50 percent domestic,” he said.

The returns PIF was getting from its technology investments were hard to get in other sectors, he said.

He also said Uber [UBER.UL] was creating a lot of jobs in the kingdom and praised the disruptive nature of Uber and Magic Leap, both companies PIF has invested in.

Uber’s CEO, Dara Khosrowshahi, pulled out of FII because of growing outrage over the disappearance of Khashoggi.

Writing by Tom Arnold; Editing by Andrew Heavens

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