© Reuters
Investing.com – At a time when unconfirmed reports of the UAE’s willingness to exit the OPEC+ alliance are emerging again, news has come of a new deal between DB World and Hassana Investment Company. This is not the first time there have been reports of the UAE’s willingness to exit the OPEC+ alliance of oil exporting countries, in light of the oil country’s willingness to ramp up its oil production.
Out of the world of OPEC
According to a report by Reuters, the UAE faces a challenging year in 2023 as the Gulf country wants to pump more oil and strengthen its position as a top destination for foreign investment.
A major uproar could arise when Dubai hosts the COP28 climate conference in November, according to the report, possibly prompting President Mohamed bin Zayed Al Nahyan to reconsider one of his country’s oldest alliances. The UAE has been a key member of the Organization of the Petroleum Exporting Countries for 55 of the 62 years of the organization’s existence.
But OPEC’s current policy is far from beneficial to the UAE as the country is only allowed to pump 3 million bpd, far below its 4 million bpd capacity, according to Reuters.
The agency says UAE output falls short of the 5 million barrels daily production target the Abu Dhabi National Oil Company recently unveiled through 2027 from 2030.
Are the Emiratis really angry!?
The UAE has angered OPEC restrictions before, in 2020 and 2021, but the de facto leader of the Saudi oil cartel has been trying to appease the Emiratis.
OPEC’s current cuts should offset the risks of a drop in oil prices as the US and Europe enter recessions, which is a victory for the Kingdom and the organization over Washington and its desire to ramp up production .
previous resignations
Reuters believed the UAE could tip the scales by stepping down, as Qatar did in 2019. So the UAE will get revenue from its ability to pump out whatever it wants. While also benefiting a warm, hazy light in the eyes of the United States and its allies, this would help secure Abu Dhabi and Dubai’s berths as prime Gulf destinations for the western capital and corporate headquarters.
Officially, OPEC believes that oil demand will continue to grow until 2035.
But ADNOC’s accelerated oil production program is probably more in line with a different view, favored by the International Energy Agency, that oil demand peaks much earlier.
If the UAE uses the COP28 conference to make it more visible, it could drive the UAE away from OPEC, according to a Reuters report.
Big deal
Away from news and speculation. “DB World” and “Hasanah Investment Company”, the investment manager of the General Organization for Social Insurance in the Kingdom of Saudi Arabia, announced an investment of approximately 2.4 billion (9 billion riyals) in three of the major “DB World” assets in the UAE country.
The company said this investment will represent the second tranche of the sale of a minority stake in the group’s shares in Jebel Ali Port, Jebel Ali Free Zone and National Industries Park, following the successful closing of the first tranche in June 2022.
Hasana will invest approximately $2.4 billion in a new joint venture with DB World, which will achieve an economic interest in a stake representing approximately 10.2% of the three UAE businesses. The total investment value of these assets are expected to reach about $23 billion.
Three entities
Together, the three entities form an ecosystem of world-class integrated logistics and supply chain services for more than 9,000 businesses worldwide, serving more than 3.5 billion global consumers. The three businesses generated preliminary revenues of 1, $9 billion in 2021.
Following the close of the second tranche transaction on 19 December 2022, the business of the three businesses will remain fully integrated into the dbworld group, with day-to-day operations, resellers, service providers and employees unaffected.
Saad bin Abdul Mohsen Al-Fadhli, CEO of Hasana Investment Company, said, “Through this investment, we look forward to strengthening the investment portfolio with infrastructure assets with a high level of global performance and a rich history of many years This investment will be an extension of Hasana’s strategy to invest in critical infrastructure assets in the region with long-term sustainable returns.
The company’s business is expected to continue to grow in the future due to a combination of favorable demographic factors, growing economies of the region and large investments in it, as well as our expectations of a boom in trade between developing countries of development in Asia and Africa.
Hasana relies in its management of the institution’s investment activities on a long-term strategy that is constantly reviewed and updated, through which we seek to maximize the institution’s investment returns within an acceptable level of risk.
OPEC does not politicize its decisions
Saudi Energy Minister Prince Abdulaziz bin Salman said OPEC+ alliance members are keeping politics out of the decision-making process and their assessments and expectations. And our expectations on market conditions, and we focus only on market fundamentals.”
He added that OPEC+’s decision to cut production, under heavy criticism, proved to be the right decision to support market and industry stability, and oil prices, which approached an all-time high of $147 a barrel in March after the Russo-Ukrainian crisis, they gave up most of their gains in one year 2022.
But the group agreed on Dec. 4 to stick to October’s plan to cut output by two million barrels a day from November until 2023, and the Saudi energy minister said: “The politicization of statistics and expectations without objectivity often backfires and leads to a loss of credibility”. He added, “OPEC Plus has no choice but to remain proactive in the face of the many situations causing uncertainty in the market.”
