ARAMCO PLAN | Page 2 TRADE WAR | Page 18 Accounts China’s trade show scale surplus with of challenge US soars in Q1 Sunday, April 15, 2018 Rajab 29, 1439 AH FOCUSECONOMICS REPORT: Page 20 Qatar’s public GULF TIMES debt recedes; expected to come down to BUSINESS 55.6% by 2020 Lifting of North Field moratorium to help boost Qatar growth, income: QNB atar’s decision to lift the North “The lifting of the moratorium might fl at as few new LNG projects (which Qatar is the world’s lowest cost ma- Field moratorium will help boost be motivated by the dynamics in the take fi ve to seven years to complete) jor producer of LNG, which could deter Qgrowth and national income global LNG market over the next dec- have been given the green light since the some entrants. Nonetheless, if prices when production comes on stream, ade. The decision was taken after ex- sharp decline of prices in 2014. continue to rise, it could increase the probably just after the World Cup in tensive studies to assess the North Field At the same time, according Bloomb- likelihood that producers can achieve 2022, QNB has said in an economic reservoir to better understand the fi eld’s erg New Energy Finance, global demand agreements for long-term sales con- commentary. production potential. A wave of new is expected to grow by a compound an- tracts at prices above the breakeven level In April last year, Qatar lifted a mora- LNG supply is expected up to 2020 but nual growth rate of about 5% over the for new projects, QNB noted. torium on the development of the North little confi rmed new projects beyond period 2023-30 as domestic production “Hence, now is a good time for Qatar Field, the world’s largest non-associat- then,” QNB said. in Europe and South East Asia declines, to step back into the market to deter new ed gas reservoir. The moratorium had According to QNB, global LNG mar- and the demand for clean energy in investments elsewhere given its com- been in place since 2005 and its removal kets are expected to be oversupplied economies such as China gathers pace. parative advantages,” QNB said. clears the way for an increase in produc- until 2022 with capacity utilisation ex- Nonetheless, there are a number of First, Qatar already has existing infra- tion and export of liquefi ed natural gas pected to be in the range of 81%-88% potential projects waiting on the side- structure and LNG facilities that could (LNG). on average between 2019 and 2022, but lines. According to BNEF, some 362mn help keep costs down. The total cost of In July 2017, Qatar announced a new become undersupplied thereafter. tpy additional capacity at the pre-FID new production is estimated to be $2-5 development from the North Field New LNG supply is expected up to (fi nal investment decision) stage has per mbtu, below the level at which other would produce 23mn tonnes per year 2020 mainly from the US and Austral- some chance of coming online before potential new projects are viable. (tpy) by 2024; an increase of 30% from ia, boosting global production by up to 2030. Japan LNG spot import prices Second, as the world’s largest pro- The file photo taken on February 6, 2017 shows a part of the Ras Laff an current total LNG production levels to 96.5mn tpy or about 30% compared to have risen from a low of $4 per million ducer, Qatar already has the reputation Industrial City, Qatar’s principal site for production of LNG and about 100mn tonnes per year, thus ce- the 2017 level. British thermal units (mbtu) in mid- for reliability and the relationships to gas-to-liquids. In July 2017, Qatar announced a new development from the menting Qatar’s position as the leading However, around 2024, the market is 2016 to an average of $10 for the fi rst agree long-term supply agreements North Field would produce 23mn tpy by 2024, an increase of 30% from LNG producer. expected to tighten with supply broadly three months of 2018. with importers. current LNG production levels to about 100mn tpy. Gulf Times 2 Sunday, April 15, 2018 BUSINESS Saudi tax change curbs oil-price upside for Aramco IPO investors IMF urges Bloomberg Saudi off icials have said they hope to prices, according to the information that was lowered from 85%, announced be revealed until the company London raise a record $100bn by listing the seen by Bloomberg. publicly last year. publishes its IPO prospectus. Tunisia to world’s largest oil producer, valuing the The new system has a marginal rate of Riyadh will have to explain in detail how Like Saudi Arabia’s new fiscal regime, company at about $2tn and dwarfing 20% of revenue for oil prices up to $70 the taxation system works for Aramco a number of commodity producers Saudi Arabia has overhauled the royalty rivals like Exxon Mobil Corp and Royal a barrel, 40% between $70 and $100, if it goes ahead with the IPO, initially take a larger share of the pie during raise energy system that taxes oil giant Aramco, Dutch Shell. and 50% when crude’s above $100. scheduled for 2018 but now likely boom times. The UK, for example, uses creating a new levy on revenue with Rising royalties would direct more of In another significant move, the delayed to 2019. a similar model in the North Sea oil and a marginal rate of 50% when crude Aramco’s revenue to the kingdom and government has widened the volume The information didn’t specify why the gas. Russia also varies tax rates with oil prices, age of rises above $100 a barrel, according limit the gains to investors from higher of crude covered by the royalty. The changes haven’t been announced or prices and the Australian government to financial information seen by oil prices after the IPO. levy previously applied to the “value of whether other alterations to the rules has in the past proposed price-linked Bloomberg News. Asked to comment on the figures, the crude oil and refined products sold as are planned. rates for iron ore producers. retirement The oil price-linked royalties were company said in a statement: “This exports.” Bloomberg first reported the plans for Saudi Arabia relies heavily on oil introduced last year and replaced a is inaccurate, Saudi Aramco does not Now it’s imposed on “crude oil and an oil price-linked royalty in 2017. At the for its finances. While Crown Prince 20% fixed levy on revenue that had comment on speculation regarding condensate production.” The diff erence time, both Aramco and the Ministry of Mohammed bin Salman has an Reuters served for decades. its financial performance and fiscal between production and exports is Finance declined to comment. Amin economic programme, dubbed Vision Tunis The change, made without any public regime.” about 3mn barrels a day, or roughly a Nasser, the chief executive off icer of 2030, intended to reduce dependence announcement, is significant for Since January 1, 2017, Aramco’s third of the company’s total output. Aramco, later confirmed a variable levy on hydrocarbons, the government the planned initial public off ering of royalties have been “calculated based On top of the royalty on revenue, was likely in an interview in January. still gets most of its revenue from he IMF urged Tunisia on Aramco. on a progressive scheme” linked to oil Aramco pays a 50% income tax, a rate He said that all the tax details wouldn’t petroleum. Friday to raise energy prices Tand the retirement age to help curb the budget defi cit and said any further public wage hikes would be diffi cult to sustain given weak growth. The North African country is in the throes of an economic cri- sis and under pressure from for- eign donors to cut a bloated public service and budget shortfall. Prime Minister Youssef Chahed Aramco accounts show said last week Tunisia needed consensus on reforms but could not wait indefi nitely and curbs to social benefi ts, subsidies and pub- lic enterprises would be launched without further delay. The powerful UGTT union pledged protests against the cuts. scale of huge challenge Last month, the International Monetary Fund approved payment of a $257mn tranche from its loan programme for Tunisia but urged it to pick up the pace of economic reform. “It is necessary to reduce unfair energy subsidies through increas- facing crown prince es in domestic energy prices,” the IMF said in statement on Friday at Boosting appeal to investors valuation of $1tn to $1.2tn. That would the end of a team visit to Tunisia. could mean less money for state; assume a long-term oil price of about valuation gap explains Riyadh’s $60 a barrel and use valuation methods ambition for higher oil prices similar to other major oil companies. The investors asked not to be named Bloomberg because their estimates weren’t offi - London cial. Morocco Saudi Arabia depends on Aramco to fi nance social and military spending, as he fi rst look at the fi nancial guts well as the lavish lifestyles of hundreds GDP growth of Saudi Aramco show a corpo- of princes. This places a heavy burden Trate cash gusher, pumping bil- on the company’s cash fl ow - in the lions in profi t every month and beating form of income tax and royalties. slows to every other big name in global busi- The importance of oil revenue to the ness.