[BRUSSELS] The European Union issued internet giants an ultimatum to remove illegal online terrorist content within an hour, or risk facing new EU-wide laws.

The European Commission on Thursday issued a set of recommendations for companies and EU nations that apply to all forms of illegal internet material, “from terrorist content, incitement to hatred and violence, child sexual abuse material, counterfeit products and copyright infringement.” “Considering that terrorist content is most harmful in the first hours of its appearance online, all companies should remove such content within one hour from its referral as a general rule,” the EU authority said.

The commission last year called upon social media companies, including Facebook Inc, Twitter Inc and Google owner Alphabet Inc, to develop a common set of tools to detect, block and remove terrorist propaganda and hate speech. Thursday’s recommendations aim to “further step up” the work already done by governments and push firms to “redouble their efforts to take illegal content off the web more quickly and efficiently.” One hour to take down terrorist content is too short, the Computer & Communications Industry Association, which speaks for companies like Google and Facebook, said in a statement that criticized the EU’s plans as harming the bloc’s technology economy.

“Such a tight time limit does not take due account of all actual constraints linked to content removal and will strongly incentivize hosting services providers to simply take down all reported content,” the group said in a statement.

“Online platforms are becoming people’s main gateway to information, so they have a responsibility to provide a secure environment for their users,” said Andrus Ansip, EU vice president for the digital single market. “We still need to react faster against terrorist propaganda and other illegal content which is a serious threat to our citizens’ security, safety and fundamental rights.” Digital rights group EDRi warned in a statement that the EU is seeking to avoid new rules and instead is “pushing ‘voluntary’ censorship to internet giants.” “Today’s recommendation institutionalizes a role for Facebook and Google in regulating the free speech of Europeans,” said Joe McNamee, the group’s executive director.

BLOOMBERG

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Fish stocks worldwide are under increasing stress due to raised levels of habitat degradation. State fisheries departments in many countries are undertaking habitat restoration projects to combat this phenomenon.

In conjunction, numerous offshore oil and gas installations, after many years of operation, are reaching the end of their productive lives, and the owners are required to decommission them in compliance with the rigorous decommissioning regulations that, as a base case, require removing everything from the seabed.

In the U.K. the international obligation on decommissioning is governed by the OSPAR Convention, which under the terms of Decision 98/3 prohibits leaving wholly or partly in situ the offshore installations. However, during their time in operation, which can last several decades, the submerged structures of these offshore installations have created effective and productive habitats for marine life, which would otherwise be destroyed once they were removed and taken out of service as requested by the rules.

Complete removal of offshore installations also has a significant impact on the decommissioning costs, which are estimated to be as high as tens of billions of dollars worldwide. The typical removal practice is to use a large crane vessel to lift the structure out of the water onto a barge after which it is then transported to a port, transferred ashore and scrapped.

This is a very expensive process that also poses significant safety and environmental challenges to operators and their contractors executing the decommissioning works.

In addition, the decommissioning activities are effectively subsidized by governments and local communities as the cost of removal is deemed to be a sunk cost, resulting in tax liability write-offs and reduced royalties to stakeholders.

The high cost is not the only issue when it comes to decommissioning old assets. Oil and gas operators’ reputations are at risk as certain cost-effective solutions may be perceived as shortcuts or attempts to pass liabilities onto taxpayers as well as causing environmental impacts that will affect future generations.

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[KUALA LUMPUR] Malaysian state energy firm Petroliam Nasional Berhad, or Petronas, pledged on Friday to ramp up its growth and spending plans this year following a sharp rise in profits, even as it cautioned about the sustainability of higher oil prices.

Petronas, like other oil majors, has taken a hit from lower oil prices, but sharp cost cuts – along with some recent stability in oil prices – helped the company boost profits and margins despite lower production.

Net profit for the fourth quarter ended December rose to 18.2 billion ringgit (S$6.14 billion) from 11.3 billion ringgit in the same quarter last year, while revenue rose 13.8 per cent to 61.8 billion ringgit.

The quarterly result helped push full-year profit up 91 per cent to 45.5 billion ringgit – marking a second year of profit growth for the sole manager of Malaysia’s oil and gas reserves following a two-year profit slump.

“Petronas is now in stronger position to execute its long term growth agenda,” Chief Executive Wan Zulkiflee Wan Ariffin said. “Petronas will explore new business areas, including speciality chemicals and new energy.” Petronas will focus on the Asean region, the Indian subcontinent, the Middle East and the Americas for growth, he said, adding that the company will assess opportunities in solar energy.

The company, traditionally conservative with its outlook, said its performance in 2018 will be “satisfactory” subject to the sustainability of the oil price – which the CEO said remains to be seen.

It is budgeting for an oil price of US$52 per barrel in 2018.

Brent crude prices were trading at US$63.99 on Friday.

Wan Zulkiflee said industry wide costs are showing signs of increasing, driven by what he called “premature exuberance” over the oil price recovery.

“It is imperative we do not drop the austerity mindset, and continue to ensure we keep costs under control, increase efficiency and drive up value,” he said.

Petronas, a major contributor to Malaysia’s budget and one of the country’s biggest employers, embarked on a cost cutting drive after Wan Zulkiflee’s appointment as CEO in early 2015.

The company said in 2016 that it would reduce expenses by US$12 billion over a four-year period, and has cut thousands of jobs and its dividend payout to its sole shareholder, the Malaysian government.

Controllable costs for 2017 fell 6 per cent to 45.9 billion ringgit, Petronas said.

For 2018, the company said it planned capital expenditure of around 55 billion ringgit, higher than last year’s 44.5 billion ringgit.

It will also increase its dividend to the government this year to 19 billion ringgit, from 16 billion ringgit last year.

Total production volume – the sum of Malaysia’s oil and gas output and Petronas’ international output – fell 2 per cent to 2.32 million barrels of oil equivalent per day, while sales of liquefied natural gas (LNG) rose two percent to 30.7 million tonnes.

REUTERS

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(NYTIMES) – Saudi Arabia has long been the dominant force in oil, leaving the world at the mercy of its ambitions and interests. Now the kingdom must refresh its strategy to reflect a weaker hand – and in many ways, a different game.

The changing nature of the energy industry – the oil production boom in American shale fields, the persistence of lower crude prices, and the rise of natural gas – has transformed the geopolitical equation.

While Saudi Arabia is a major energy producer, it must compensate for its lost revenue. And the United States, China and Russia are all circling in hopes of gaining a financial advantage.

Russia, smarting from Western sanctions and lower oil prices, is moving to embrace Saudi Arabia for energy deals despite their rivalry in Syria, where the two countries support competing sides. China, with its domestic oil production in steep decline, seeks a stable flow not just of Saudi oil but of Saudi investment in its growing petrochemical and refinery industries.

And Washington is willing to overlook those flirtations in the hope that Saudi Arabia will continue to be a strategic bulwark against Iran.

The desires of all three superpowers fit neatly into Saudi Arabia’s strategy to find new investment partners as part of a broader push to diversify its oil-dependent economy, trim large budget deficits and secure the future of both the kingdom’s welfare state and its monarchy.

The keystone to the project is the proposed initial public stock offering of Saudi Aramco, the national oil company, a deal that could be worth hundreds of billions of dollars.

The changing geopolitical game was on full display in December when Saudi Arabia’s energy minister, Khalid al-Falih, braved the Russian arctic cold as President Vladimir Putin’s guest of honour at the opening of a giant natural-gas export terminal.

For Putin, it was an audacious embrace of a US ally as he moved to expand his nation’s energy riches despite the sanctions. For al-Falih, it was a chance to discuss future gas sales, attract investment in Saudi Aramco and coordinate efforts to prop up global oil prices.

“If we continue to work the way we do, we will turn from rivals to partners,” Putin told al-Falih at the public ceremony. The Saudi official readily agreed.

The ultimate success of the Saudi Aramco public offering and the entirety of the kingdom’s economic reform remain in question, and progress so far has been mixed. Nevertheless, US, Chinese and even Russian financiers are entwined in a complex dance around the initial public offering, promised later this year.

President Donald Trump has called for the IPO to be listed in New York. A Saudi listing now appears more likely, with additional trading in London or Hong Kong. Global financiers say they want a piece of the action wherever it occurs.

The interest in the IPO has given the kingdom greater leverage at a time when the Organisation of the Petroleum Exporting Countries, through which it has long wielded power, has lost clout.

“The Saudis are compensating for their lost power in OPEC and they are showing pure geopolitical pragmatism in their new energy and foreign policy,” said Bill Richardson, a former energy secretary and ambassador to the United Nations. “But they are not just compensating for lost power. They are adding to their power in world politics.”

Saudi Arabia has had a central role in global energy since at least World War II. When the kingdom created a global glut of oil to gain market share in the mid-1980s, it sent prices into a tailspin that contributed to the bankruptcy of the Soviet Union at the same time that it was financing Afghan rebels fighting the Soviets.

The kingdom was such a crucial supplier of oil to the US that Washington went to war in the early 1990s in part to protect it from a possible Iraqi invasion. And when China needed energy supplies for its expanding economy in the early years of the new century, Saudi Arabia was there with an ambitious oil exploration programme to meet the demand.

But OPEC can no longer control oil prices alone. A flood of oil from American shale fields has enabled the United States to slash imports of OPEC oil and begin exporting to markets that were once dominated by Saudi crude.

The Saudis, led by Crown Prince Mohammed bin Salman, are seeking to link cuts in OPEC production over the past two years with cuts by Russia, another oil-exporting powerhouse, to buoy prices. Over the longer term, the Saudis want to import natural gas to replace domestic consumption of oil for electricity, freeing more crude for export.

At the same time, the country is expanding its investments in refineries and petrochemical plants around Asia and the United States to guarantee markets for its crude while making additional sales of higher-value gasoline, diesel and other refined products.

“Low oil prices have made the Saudi way of life unsustainable, so they have to find alternatives,” said Bruce Riedel, a former Middle East analyst for the Central Intelligence Agency and the author of “Kings and Presidents: Saudi Arabia and the United States Since F.D.R.”

“Any partner they can find that can help them do that, they are going to embrace enthusiastically.” The most surprising partner is Russia, which remains on the opposite side of the Syrian civil war and is also trying to build better relations with Iran, Saudi Arabia’s bitter regional rival.

In the fall of 2016, the crown prince’s father, King Salman, made the first official trip to Russia by a reigning Saudi monarch. Multiple cooperation agreements including military sales were reached, as well as a commitment by Russia’s largest petrochemicals company, Sibut, to build a plant in Saudi Arabia.

Kirill Dmitriev, chief executive of the state-run Russian Direct Investment Fund, recently expressed interest in the Saudi Aramco IPO, even suggesting that a group of Russian and Chinese investors could join in a bid.

Relationships between the Chinese and Saudi oil companies had already grown close in recent years. Saudi Aramco bought a 25 per cent stake in a refinery in Fujian province operated by the state-owned oil giant Sinopec, and the companies have joint refinery ventures in Saudi Arabia. China and Saudi Arabia also signed a preliminary agreement last summer to create a US$20 billion (S$26.3 billion) investment fund for infrastructure, energy and mining projects.

“We might as well work with them,” said Sadad Ibrahim al-Husseini, a former Saudi Aramco executive vice president. “They desperately need energy, and we have a heck of a lot of energy, so the pieces fit.”

Such deals also promote Saudi Aramco’s efforts to become a global refining powerhouse. That can only increase the value of the proposed initial public offering of the company, which already produces more crude than any other in the world.

Many international banks, including JPMorgan Chase, HSBC, Goldman Sachs, Citigroup, Morgan Stanley and Credit Suisse, have been seeking a role in the eventual deal.

“Every global investment bank should be interested in a lead role given the quality of the company and the fact that it would be the largest IPO in history,” said Osmar Abib, global head of oil and gas at Credit Suisse Securities.

The kingdom has valued the company at US$2 trillion, a number that investment bankers say would be realistic only if oil were worth US$100 a barrel, nearly US$40 more than the current price.

Many energy experts doubt that the stock offering will be completed because of persistent questions about the rule of law in Saudi Arabia, as well as the special privileges granted to Saudi royalty. They predict that members of the royal family will be reluctant to give up the confidentiality of their earnings from the company, which are now hidden from the public. International investors have also been shaken by the recent roundup of wealthy Saudis who were forced to pay for their freedom.

“It’s going to be very hard for them to persuade anybody to buy a hunk of Aramco until they figure out how to be more transparent about the royals’ take and the actual value of the company,” said David L. Goldwyn, who was the State Department’s top energy official early in the Barack Obama administration.

Saudi oil executives say the issues of valuation and governance will be worked out in the end because the crown prince and his father view the public offering as central to remaking the economy with more foreign investment.

“There is no backtracking,” al-Husseini said. “The IPO commitment is driven by a central leadership, by people who are empowered to make decisions. It’s not a winding narrow road that comes to no conclusion.”

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Climate change is critical to future energy markets but its effect on Chevron Corp.’s oil and gas business will be minimal for decades to come, according to a company report.

With the prospect of tighter emission controls, carbon pricing and growth in renewable energy, some investors and activists are pushing companies to reveal the potential impact on their businesses. The risk for shareholders is that some projects become loss-making as the demand for oil and gas ebbs.

Exxon Mobil Corp. and Royal Dutch Shell Plc have produced similar reports. Among other findings, Chevron said oil and gas will comprise 48 percent of the world’s energy mix by 2040, even under the International Energy Agency’s most unfavorable scenario for the industry. Now it’s 54 percent.

“Multiple scenarios” each throw up the same result: Demand for oil and gas will remain strong for decades, said Mark Nelson, Chevron’s vice president for midstream, strategy and policy said in an interview.

The report, released on Thursday, “gives us confidence that we’re testing our business in a way that’s appropriate for our shareholders,given the context of many things that can change over time,” Nelson said.

READ: Exxon Sees Oil Demand Down 20% in 2040; Or Maybe It’ll Be Up

The San Ramon, California-based company said it continually assesses the risks that environmental and carbon-pricing policies pose to its business model and has concluded there’s little threat at the present time.

World energy demand will grow strongly under all scenarios, Chevron said. The company sees the risk of it having so-called stranded assets, or uneconomic resources, as “very slim” due to the quality and diversity of its assets, Nelson said.

The report is published just a month after Mike Wirth succeeded John Watson as chief executive officer. It follows a study published a year ago that Amy Myers Jaffe, an academic at the Council of Foreign Relations, said lacked the detail provided by some other companies.

Investors Hermes EOS and Wespath Investment Management withdrew a proposal at Chevron’s annual meeting this year requesting an annual assessment of climate change impacts to give the company more time to come up with a fresh disclosure policy.

Chevron’s youngest director questioned the future of an industry the world’s third-largest oil explorer helps lead in a tweet earlier this week.

Dambisa Moyo, an economist and author who joined Chevron’s board in October 2016, on Wednesday tweeted, “If #oil energy consumption is declining and #renewableenergy consumption is on the #rise, what does that mean for the future of the oil industry?”

Nelson said the fact that a board-member was asking such a question shows Chevron’s commitment to challenging its own modeling. “Those types of scenarios need to be tested as we look at our investments going forward,” he said.

The tweet later disappeared from Moyo’s feed.

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Decommissioning Asia Pacific’s offshore assets – nearly 2,600 platforms and 35,000 wells – could cost over $100 billion.

According to Wood Mackenzie’s latest analysis, decommissioning in Asia Pacific appears to be a mammoth task for which the various stakeholders are largely unprepared. Unclear government regulations coupled with a general lack of experience in the region could mean a steep learning curve with high initial costs and potential for mistakes.

Asia upstream analyst Jean-Baptiste Berchoteau, said, “With over 380 fields expecting to cease production in the next decade, the magnitude and cost of work can no longer be ignored. Through learning from global decommissioning projects, the industry can adopt and adapt practices best suited for Asia Pacific’s own set of challenges.”

Wood Mackenzie has identified four key levers to cut costs and decommission Asia Pacific on a budget:

1. Transferring knowledge between regulators, operators and service sector firms

To establish a functional regulatory framework, it would be more efficient to adopt guidelines and processes already in place elsewhere in the U.K. or the Gulf of Mexico, rather than reinventing the wheel. Operators, particularly those with extensive experience in offshore asset retirement, also have a key part to play in helping draft regulations. For instance, Chevron and Shell are already collaborating with Thai and Bruneian regulators respectively through knowledge transfer and pilot project initiatives.

2. Choosing optimal commercial and contracting strategy

Sound project management and pragmatic contracting strategies are critical to avoid cost blowouts. While the majors have the necessary skills in-house, Berchoteau expects other players to use project management companies to help execute the project on a strict timeline and within budget.

The three most common contracting strategies – lump sum, unit cost and day rate – are suited to different levels of risk. The well plug and abandonment phase is usually the riskiest as live hydrocarbons are involved, and there is poor availability of data on well conditions. As such, unit cost contracts, where the contractor performs well plug and abandonment or facility removal at a fixed cost per unit that includes a margin, appear better suited for projects in Asia Pacific.

3. Adopting innovative technologies to cut cost

Innovative approaches have been taken recently to conventional decommissioning with the potential for significant cost savings. For instance, Petronas implemented the rig-to-reef solution on two platforms at the Dana and D-30 fields in Block SK-305 offshore Malaysia in 2017. Rig-to-reef consists of using the decontaminated platform structures to create an artificial reef at a designated location. In addition to being significantly cheaper, rig-to-reef provides an ecofriendly solution for sustaining habitats for marine life. The technique is particularly attractive at water depths of 10 to 30 meters, where reef structures and associated marine life are the most prolific.

4. Achieving economies of scale

On average, well plug and abandonment accounts for half of the decommissioning costs so any cost reduction in this category will have a significant impact – about 30 to 50 percent cost reductions have already been observed in the Gulf of Mexico and the U.K. on rig daily rate or unit rate contracts. For areas with a large number of ageing wells and platforms, batch decommissioning offers huge cost-saving opportunities. This approach could be extended further across blocks with different operators, with participants jointly contracting for a larger piece of work, thus reducing per unit costs.

“While the decommissioning situation in Asia Pacific might look grim at the moment, we note that Chevron is taking a proactive approach in the Gulf of Thailand, and we expect the major to set a benchmark for large scale decommissioning costs in the region,” concludes Berchoteau.

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U.S. Bancorp agreed to pay about $600 million to settle U.S. allegations that it failed to guard against money laundering, under a deal announced Thursday in New York.

Prosecutors said the Minneapolis-based bank failed to report suspicious activities of a longtime customer, Scott Tucker, who was using the bank to launder proceeds of a fraudulent payday lending scam. Tucker was convicted of fraud and sentenced in January to almost 17 years in prison.

Authorities also said U.S. Bancorp ignored repeated warnings from internal managers and external regulators about the inadequacy of its anti-money laundering program, and that it excluded critical information on thousands of reports about currency transfers it handled.

The banking industry has been lobbying the Trump administration to reduce compliance requirements under the Bank Secrecy Act, which governs anti-money-laundering protections. Last year, the American Bankers Association called parts of the regulations “outdated and ill-suited for identifying and preventing 21st century criminal activity and terrorist financing” and called for their streamlining or elimination.

Under the terms of the deal with U.S. Bancorp, the government agreed to defer prosecution for two years. The bank agreed to pay a $528 million penalty, including $75 million it paid the Office of the Comptroller of the Currency. It also agreed to pay an additional $70 million to the U.S. Treasury, and $15 million to the Federal Reserve Board, according to the government. As part of its deal, the bank will acknowledge its wrongdoing.

The government will dismiss the charges if the bank abides by its promises, including reforming its anti-money-laundering program.

U.S. Bancorp’s Statement

In a prepared statement, the bank’s chief executive, Andy Cecere, said: “We regret and have accepted responsibility for the past deficiencies” in the anti-money-laundering program. The bank reserved $608 million from fourth-quarter results to cover the cost of the fine, which represents about a third of its fourth-quarter earnings. After failing 0.4 percent on Thursday, shares gained 1.1 percent to $55.71 at 12:14 p.m. on Friday.

Tucker was accused of using Indian tribes to act as sham owners of his payday lending businesses to circumvent usury laws through their legal sovereignty. His company charged interest rates of as much as 700 percent, and Tucker hauled in more than $2 billion in revenue, several hundred million of it in profit.

Tucker was one of U.S. Bancorp’s most profitable customers in the Kansas-area market where his companies were based, generating millions in fees for the bank, according to the government. His transactions began to generate suspicion internally, but executives hesitated to act. A bank investigator wrote a memo calling Tucker “quite a slippery individual” and said he “really does hide behind a bunch of shell companies.”

Accounts Closed

The bank closed his accounts in the names of tribal companies but allowed Tucker to remain a customer for two additional years, and never filed a suspicious activity report to authorities. The bank didn’t end its relationship with Tucker until it received a subpoena from federal prosecutors in 2013.

In this case, U.S. Bancorp was accused by regulators of failing to maintain protections against money launderers. The bank didn’t evaluate its customers properly and kept its compliance staff too small, according to the OCC settlement. It capped the number of reports employees were expected to file when they spotted suspicious transactions. That resulted in a lot of potentially illicit activity getting through unnoticed, according to the government.

U.S. Bancorp also let customers and non-customers alike execute Western Union wire transfers for hundreds of millions of dollars without significant monitoring — even as a significant portion of them went to designated high-risk destinations such as Nigeria, Pakistan, Afghanistan and Lebanon, according to court papers.

When an anti-money laundering executive raised concerns about transaction monitoring with the bank’s chief compliance officer in December 2012, he was chastised for documenting the issue an an email.

The penalties are among the most severe faced by a U.S. bank. Previously, Citigroup Inc. had to pay more than $300 million in a series of settlements with the Justice Department and regulators to resolve an investigation into its former Banamex USA unit and wider problems with Citigroup’s compliance with money-laundering laws. Just as in the U.S. Bancorp probe, the OCC initially found fault with the company years earlier and followed up with a fine last month when the agency found Citigroup didn’t do enough to fix its money-laundering safeguards.

The biggest case was a $1.9 billion deal with HSBC Holdings Plc in 2012 to resolve widespread failures that allowed billions in drug-cartel money to be laundered, in addition to the violation of multiple economic sanctions in several other countries.

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Dubai: Slow credit growth driven by weak credit demand in UAE in 2017 is expected linger on this year, economists and analysts have said.

UAE Central Bank Data on credit growth released in December showed weak credit demand in 2017. Gross loans fell 0.9 per cent month-on-month in December, resulting in an annual growth of just 1.7 per cent.

“The monthly fall in total loans in December appears to be a seasonal effect, with similar trends seen in the previous three years. Lower GRE [government-related entities] borrowing [-6.4 per cent] month-on-month was largely behind the overall drop in December 2017, suggesting a notable repayment of debt,” said Monica Malik, chief economist at Abu Dhabi Commercial Bank (ADCB).

Overall data continues to highlight the weak credit demand environment in 2017, with loan growth decelerating from 6 per cent at end 2016.

“We see a number of factors driving this, including: i) a higher oil price supporting government revenue; ii) ongoing restructuring and still cautious spending plans by corporates [private and GRE-related]; and (iii) soft consumer sentiment with continuing labour market weakness,” said Malik.

Gross GRE loans were down 7 per cent year-on-year in December 2017, implying deleveraging in the sector, after expanding by 9.3 per cent in 2016, and the driving of credit growth. Other forms of funding, including the bond market and international export credit agencies, are also being utilised to support the UAE’s investment programme.

The UAE Central Bank’s credit sentiment survey from the December 2017 quarter showed a marginal increase in business loans, mainly attributable to the strengthening in demand in Dubai. On the other hand, demand for personal loans in aggregate was flat, with most respondents reporting no change.

In terms of outlook, demand for both personal and business lending was expected to increase only on modest scales.

Deposits and liquidity

Central Bank data shows system-wide deposits rose by 4.1 per cent in 2017. Total banking sector deposits fell by 0.3 per cent month-on-month in December, led by a 14 per cent (Dh34.6 billion) drop in government deposits, though this was after solid increases over the previous few months.

On a yearly basis, total deposits were up 4.1 per cent year-on-year, substantially above the pace of credit expansion.

The main drivers of deposit growth in 2017 were the government sector (up 13.5 per cent ) and GREs (up 14 per cent). Private sector deposits rose by a more contained 2.1 per cent.

Consequently, net government and GRE deposits in the banking system rose markedly in 2017, also supported by deleveraging by GREs.

Non-resident deposits fell 3.7 per cent year-on-year in December, resulting in their share of total banking sector deposits moderating to 11.8 per cent, down from 12.7 per cent at the end of 2016.

Overall liquidity in the banking system is expected to remain comfortable in 2018.

The gross loan-to-deposit (L-to-D) ratio moderated to 97.1 per cent in December, down from 99.4 per cent at the end of 2016, with deposit growth outpacing credit growth.

The easing of banking sector liquidity conditions is also reflected in the narrowing in spreads between UAE and US interbank rates.

“We expect liquidity to remain comfortable in 2018 on the back of a higher oil price, further international debt issuance and a contained acceleration in credit growth. We see further traction building in the UAE’s investment programme in 2018, which should support a gradual pick-up in credit growth, though potential headwinds remain,” said Thirumalai Nagesh, an economist with ADCB.

With the consumption backdrop is expected to remain soft in 2017, especially in the first half of this year with the introduction of VAT, analysts expect retail demand for credit to slow down.

“The government’s borrowing requirements could moderate as a result of higher oil and non-oil [including VAT] revenue. Indeed, we see the UAE realising a balanced fiscal position in 2018 with higher government revenue despite a pick-up in government spending,” Malik said.

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Paris: The world’s leading oil companies published a bumper crop in profits last year as rising crude prices helped turn their fortunes around, but they remain cautious and are unlikely to rush out on a new spending spree just yet.

In a flourish of earnings reports over the past week, the picture painted by majors ranging from ExxonMobil and Chevron to BP, Royal Dutch Shell and Total has been a very rosy one.

French giant Total saw its bottom line jump by more than a third, Shell’s net profit tripled, ExxonMobil’s fourth-quarter earnings rose nearly five-fold, Norway’s Statoil swung back into the black and BP’s profits soared.

In fact, “2017 was one of the strongest years in BP’s recent history,” the British group’s chief executive Bob Dudley told his annual earnings news conference.

Key to this success was the steady rise in crude prices in recent months, driven by a landmark deal between oil-producing countries both inside and outside the Opec cartel to reduce the worldwide glut in supply by throttling output.

Correspondingly, after falling from $115 (Dh422) per barrel in 2014 to under $35 at the start of 2016, oil prices have been rising, from an average $44 in 2016 to $54 in 2017 to nearly $70 this month.

Flush with their newfound profits, the oil majors have raised dividends and announced share buy-back programmes, eager to make it up to their shareholders who have become restive after having to do with meagre payouts for years.

But it’s still a far shot from the heady days of old.

Companies have learnt to live with low oil prices, slashing costs and investment to become leaner and fitter, and said they have little intention of abandoning that regime any time soon.

Cutting cost

Shell’s CEO Ben van Beurden said he now always works on the assumption that oil prices would remain “lower forever”.

“We’re sticking to the cost-cutting programmes, despite the rise in crude prices,” said Total chief executive Patrick Pouyanne.

Such prudence is evident in the only modest uptick in investment in upstream exploration and production activities.

Globally, these investments rose by four per cent to $389 billion last year and should increase by a modest two-to-six per cent again this year, according to estimates published by IFP Energies Nouvelles this week.

By comparison, the amount totalled $683 billion in 2014.

Developments vary from region to region, and the anticipated growth this year is driven almost entirely by independent companies and US shale firms, whose overheads are much lower.

The majors, for their part, expect to cut investment in exploration and production by 16 per cent this year.

“There’s been a sigh of relief across the boardrooms of the global oil and gas companies as higher prices have boosted results significantly,” said David Elmes, energy specialist at the Warwick Business School.

“But there’s also a hesitancy and uncertainty about the longer term which is tempering any return to full speed ahead,” he said.

Companies are holding back because oil prices look set to remain volatile and vulnerable to fluctuation.

Demand for oil from energy-hungry economies, such as China and India, is expected to remain robust. But the market’s much-needed rebalancing could be jeopardised by increased production by US shale companies.

“I’m certain that US independents will again invest a lot to profit from a price of $60 per barrel and ramp up shale production, so the market is going to remain volatile,” said Total’s Pouyanne.

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• “It is a fact that there is a decline in oil and gas (but) there is still a growing demand… we have to deliver that and the question is how to do that?” Statoil CEO Eldar Saetre told CNBC on Wednesday.
• The Norwegian oil firm said Wednesday it expected to invest around 15 to 20 percent of its total capital expenditure in so-called new energy solutions by 2030.