NEW YORK: Capping the price of Russian oil, an approach G7 members said Friday they want to pursue “urgently,” would be an unprecedented move and one which some analysts say could backfire.

Russian oil would be purchased at a discount from prevailing market prices, to limit Moscow’s profits as it prosecutes its war against Ukraine; but it would keep the price above the cost of production to ensure incentive for its export. The discounted rates, calculated separately for crude oil and refined petroleum products, could be regularly revised, according to a US Treasury official.

There have been international systems aimed at preventing a nation from exporting oil — such as those now targeting Iran and Venezuela — or at limiting trade, as in the UN “Oil-for-Food” program which, from 1995 to 2003, allowed Iraq to sell oil but only to pay for food, medicine and humanitarian needs. But there has never been an attempt to impose a differentiated price on a country.

G7 members (Britain, Canada, France, Germany, Italy, Japan and the United States) have already limited or suspended their Russian petroleum purchases. But for the plan to be effective, other countries will have to take part — particularly big countries like India and China, some of Russia’s most important clients. While the G7 plan offers the prospect of lower prices, “China and India are already getting cheaper — cheap enough — oil,” said Bill O’Grady of Confluence Investment. “Russia could say, ‘Look, we’re just going to sell this oil at this price. We’re not going to sell it to Europeans.’“ John Kilduff of Again Capital agreed. “I don’t think that the Chinese or the Indians or the Turkish will go on” with the G7 plan, he said, noting that those countries had not joined in Western sanctions punishing Russia for the Ukraine war. “I think the flows to those countries from Russia will continue.”

For the price cap to work, Russia will have to yield to the pressure and continue exporting to the participating countries. But Russia’s deputy prime minister Alexander Novak warned Thursday that Moscow would not sell petroleum products to countries capping their price, Russian news agencies reported. Global oil prices rose Friday. Kilduff attributed that at least partly to the G7 announcement. He said it had raised fears of a contraction in world supply and thus a damaging new surge in prices. If petroleum prices have declined from their peaks shortly after the Russian invasion in February, they remain historically high, and extremely volatile.

The European Union (with the exception of three members) is preparing not only to ban Russian petroleum imports as of December 5, but also to block European insurers from covering transport costs to non-EU destinations. “I do think that Washington is really uncomfortable” with those insurance restrictions, said O’Grady, adding that they would “really be a big deal.” Roughly 90 percent of maritime petroleum transport is insured by EU and British parties. “I think the administration’s afraid that if that (the insurance ban) gets put into place, that Russian supplies will really fall,” O’Grady said. The price-capping plan, initiated by the US and then endorsed by the G7, would exempt from the embargo the transport of cargoes sold at reduced price — limiting its impact.  

CAIRO: With 70 percent of the world’s desalination plants located in the Middle East, the sector needs innovation driven by entrepreneurial talent.

Nearly two-thirds of the region’s population live in areas lacking sufficient renewable water sources. Some countries in the Middle East rely on water desalination to produce up to 90 percent of drinking water.

Moreover, water desalination requires vast amounts of energy to complete the process, and the role of innovation is starting to increase in reducing the operational cost and environmental impact caused by water issues.

Abu Dhabi-based startup Manhat is already pitching in to decrease the environmental impact with its patented solar energy-based water desalination products.

• Abu Dhabi-based startup Manhat is already pitching in to decrease the environmental impact with its patented solar energy-based water desalination products.

• The company’s technology is based on placing sealed constructs on open water surfaces where water evaporates due to solar radiation.

The company’s technology is based on placing sealed constructs on open water surfaces where water evaporates due to solar radiation.

“Our technology mimics the natural water cycle with zero carbon footprint or brine rejection. The water can be immediately used to irrigate crops which will benefit coastal countries and mitigate the looming threat of rising sea levels due to climate change,” Saeed Alhassan, founder of Manhat, said in a statement.

Global desalination plants are expected to emit 218 million tons of carbon dioxide annually by 2040, which calls for the importance of government and private sector investments in solutions for the water industry.

In a report by the Clean Energy Business Council in the Middle East and North African region, several barriers arise for startups trying to enter the clean-tech industry.

The report indicates that governmental barriers play a huge role in shaping the ecosystem. Firstly, the region’s regulatory structure limits entrepreneurs’ ability to explore new opportunities in the sector.

In addition to complex administration and market barriers, the region needs a regulatory framework that will spur innovation and privatization of the sector.

Moreover, venture capital investments made into startups in the industry are also meager compared to other sectors like e-commerce and fintech.

The report calls out to venture capitalists to start recognizing the potential opportunities that regional startups might offer by building innovation hubs within universities.

Saudi Arabia is one of the countries in the region that has seen startups grow out of universities like water desalination company, QualSens.

QualSens was established at King Abdullah University of Science and Technology as it aims to monitor and enhance the water desalination process using its technology.

“We combined different approaches to building a smart sensor that detects and identifies the fouling developed in the system and helps the operator mitigate it. The objective is to decrease the energy demand required for the production of drinking water,” Luca Fortunato, Co-founder of QualSens, said in a statement.

Although startups are still far from impacting the water desalination sector in the Middle East, governments and large corporations are starting to recognize the importance of innovation for sustainable water production.

Paddy Padmanathan, the CEO of ACWA Power, one of the largest water desalination companies in the region, had said earlier that innovation and entrepreneurship would play a crucial role in addressing the looming water crisis.

RIYADH: Saudi Arabia will host the Future of Desalination International Conference from Sept. 11-13 in Riyadh to discuss opportunities for innovation and entrepreneurship in the desalination sector.

Many policymakers, developers, contractors, researchers and innovators will attend to discuss the sector’s future.

Since its beginning in 1932, the Kingdom has been a prominent world player in the water desalination industry globally.

• The current production of desalinated water in the Kingdom amounts to more than 7.9 million cubic meters per day, representing 55 percent of the Gulf region and 22.2 percent of the global desalination, according to a report.

• The scarcity of freshwater resources has made desalination crucial to achieving water self-sufficiency in the Kingdom, and the situation is critical as industry reports cite that water consumption is forecast to reach 12.3 million cmpd by 2040.

The current production of desalinated water in the Kingdom amounts to more than 7.9 million cubic meters per day, representing 55 percent of the Gulf region and 22.2 percent of the global desalination, according to a report released by the Saline Water Conversion Corp.

The scarcity of freshwater resources has made desalination crucial to achieving water self-sufficiency in the Kingdom, and the situation is critical as industry reports cite that water consumption is forecast to reach 12.3 million cmpd by 2040.

Saudi Arabia began the development of independent water and power projects in 2002 with the participation of the private sector through the build-own-operate and the build-own-operate-transfer models, according to the Saudi-US Business Council.

Some of the notable projects include the Shuqaiq plant, which has an output of 450,000 cmpd and supplies nearly 2 million people.

In 2015, the SWCC began operations at the $7.2 billion Ras Al-Khair desalination plant, adding more than 1 million cmpd to the national supply, the US-Saudi Business council reported. The project also includes a 2,400-megawatt power plant, making it the first of its kind built to such a scale.

Alkhobar plant, which began operations in September 2020, produces 210,000 cmpd water.

SWCC will also open six desalination plants by 2024 in various cities, including Al-Shuqaiq, Al-Shoaiba, Jubail and Alkhobar. Two of these plants will be operational by late 2022.

Each plant will have a power consumption of fewer than 1.7 kilowatts per cubic meter, reducing the water production cost from SR1.54 ($0.42) to SR1.3 per cubic meter.

“With production at such a minimum cost, it will increase the sector’s contribution to the national gross domestic product,” SWCC governor Abdullah Al-Abdul-Karim told Arab News.

In March 2022, Saudi ACWA Power became the world’s largest reverse osmosis desalination plant, according to a statement issued by the company.

Located in the Kingdom, Rabigh 3 IWP, the SR2.6 billion project started supplying as much as 600,000 cmpd for up to 1 million homes in Makkah and Jeddah.

“At the moment, we have a portfolio of 6.4 million cmpd, and the desalination plants are currently in construction and operation. So, ACWA Power, a Saudi company, is now on the top of the world as a desalination producer,” said Tariq Nada, vice president for water and technical services, ACWA Power.

The company is building a larger plant in Abu Dhabi, which is expected to become operational in the last quarter of 2022.

The RO plant, named Taweelah, will have a production capacity of 909,000 cmpd.

RIYADH: Saudi companies led the pack in the annual list of Forbes Top 100 Arab Family Businesses with 37 entries, followed by the UAE and Kuwait with 25 and eight entries, respectively.

According to the Forbes press release, these three countries constituted 75 percent of the top 20 in the list. In addition, all family businesses in the top 10 were diversified companies with operations in multiple sectors.

The Olayan family, which runs one of Saudi Arabia’s biggest conglomerates, was ranked the No. 1 Arab family business for the second year in a row.

Founded in 1947, the Olayan Group comprises more than 50 companies and affiliated businesses. Egypt’s Mansour Group and UAE’s Al-Futtaim Group were the other two groups that clinched the podium finish.

Olayan Financial Co.’s investments in the public sector make the largest portion of the group’s portfolio, as it owned 20.3 percent of the Saudi British Bank in July 2022.

• The release stated that of the top 100 family-run companies in 2022, eight were owned by Arab billionaires.

• Algeria-based Cevital Group’s founder Issad Rebrab had a net worth of $5.1 billion as of August 2022, making him the second richest Arab in the world.

Mansour Group has also been in the spotlight for its humungous reach spanning 100 countries with over 60,000 employees and total revenues exceeding $7.5 billion.

Through its investment arm, ManCapital, Mansour Group has shares in global companies like Spotify, Uber, Airbnb, Meta, Twitter and others.

Other Saudi companies also made it to the top 10, with Al Muhaidib Group ranking fourth, Abdul Laitf Jameel in seventh and Rashed Abdul Rahman Al Rashed and Sons Group ranking 10th.

From a geographical standpoint, Qatar-based companies had seven entries, Egypt had six, Oman six, Bahrain had four, Jordan had two, Morocco had two and Algeria, Lebanon, and Yemen all had one entry each.

At the ninth position, Al Faisal Holding is the only newcomer to this year’s top 10 businesses, up from 11th place in 2021, the press note said. In May 2022, it launched a new subsidiary offering production services, Metaserra, a joint venture with Turkey’s Doludizgin.

Diversified business corporations dominated the ranking with 89 entries. For instance, Al Futtaim Group has built a legacy out of its operations in the automotive, finance, real estate, retail and healthcare sectors.

The group operates in over 20 countries with 35,000 employees and has significant shareholdings in Emirates Investment Bank, Commercial Bank of Dubai and the Dubai Insurance Co.

Abdullah Al Futtaim and his family also had a net worth of $2.5 billion in August 2022.

The release further stated that of the top 100 family-run companies in 2022, eight were owned by Arab billionaires. For instance, Algeria-based Cevital Group’s founder Issad Rebrab had a net worth of $5.1 billion as of August 2022, making him the second richest Arab in the world.

To construct this list, Forbes Middle East only considered private businesses or holding companies jointly owned or operated by Arab families. The conglomerates were ranked on their holding size and performance, business activity, age, legacy, and how diversified the business is in terms of geography and sector.

DUBAI: Saudi Arabia’s $620 billion sovereign wealth fund is expected to tap international debt markets for a debut green bonds issue as soon as next week, five sources familiar with the matter told Reuters.

The Public Investment Fund is at the center of Saudi Arabia’s ambitious reform plans being spearheaded by Crown Prince Mohammed bin Salman to wean the economy off oil.

The crown prince said in December that it would invest about $40 billion in the local economy this year, after spending about $22 billion last year.

Reuters reported in July last year that PIF was setting up a financing framework that would allow it to raise green bonds.

PIF in February announced a green finance framework that showed net proceeds from a debt sale would go toward eligible projects, including in renewable energy, clean transport and green buildings.

PIF has been monitoring the market for months to find a window to issue, three sources said, amid enduring volatility that has rattled markets for much of this year as central banks use aggressive tightening to try to tame decades-high inflation.

That window could come as soon as next week, depending on market conditions, or possibly in October, two of the sources said.

The deal is expected to raise billions of dollars, sources have said.

Fitch Ratings and Moody’s in February assigned PIF an ‘A’ and ‘A1’ credit rating, respectively.

The banks on the deal are expected to be ones that have lent to PIF, two sources said.

PIF started raising bank debt in 2018 with an $11 billion facility, followed in 2019 by a $10 billion loan which it then repaid in 2020.

Those loans were provided by what PIF has called its core banking group comprising Bank of America, BNP Paribas , Citi, Credit Agricole, HSBC, JPMorgan, Mizuho, MUFG, Standard Chartered and SMBC.

In March last year, the wealth fund raised $15 billion from 17 banks comprising most of the core banking group as well as Credit Suisse, Deutsche Bank, First Abu Dhabi Bank, Goldman Sachs, Intesa Sanpaolo , Morgan Stanley, Natixis and Societe Generale .

RIYADH: Saudi Arabia’s Public Investment Fund is reported to be the front-runner to buy a minority stake in Kuwaiti conglomerate Alshaya Group’s Starbucks Corp. franchise, according to Bloomberg.

The PIF is leading a consortium of investors competing for a stake in the business, people familiar with the matter were quoted as saying, asking to remain anonymous for information privacy.

This PIF-led consortium could reach an agreement in the coming weeks, the people added. 

Private equity firms may invest in the company’s debt alongside the PIF, one of the people said.

Alshaya has valued the business at $15 billion, but prospective buyers are expected to bid at closer to around $11 billion, according to Bloomberg News.

No final decision has been made and representatives of PIF and Alshaya declined to comment.

As it seeks local economic diversification away from oil, the PIF has been investing in companies across a wide range of industries.

The fund set up the Saudi Coffee Co. in May and said it would invest more than $300 million over the next 10 years to raise the Kingdom’s annual coffee production to 2,500 tons from 300 tons.

The Starbucks business would offer the PIF instant access to around 1,700 outlets in 14 markets that span some of the biggest emerging economies, from Saudi Arabia to Turkey, Bloomberg said.