Rigzone/6 November 2017
Artificial Intelligence (AI) offers “a great deal of promise” for upstream operations, according to the International Energy Agency’s (IEA) Digitalization & Energy report released Monday.
“AI could be used to analyze well performance, troubleshoot underperforming fields, suggest corrective actions and even deploy robots to carry out tasks,” the report states.
“It could also enhance reservoir modelling, and thus aid operations by rapidly detecting and correcting suboptimal production behavior,” the report added.
Coupling AI with sensors and sophisticated data management tools could also allow companies to operate and maximize production from thousands of unconventional tight oil and shale gas wells “with only a handful of engineers and technicians,” according to the report.
“Tight oil and shale gas production is likely to be especially suitable for the application of new digital technologies given the shorter-term nature of investment cycles (compared with conventional fields), which should favor the introduction and implementation of new technologies in a more continuous manner,” the report states.
“Widely shared inventories of equipment suppliers could also shorten procurement times and reduce costs, creating a more efficient ‘just-in-time’ supply chain across the unconventional oil and gas industry,” the report added.
The initial focus of digitalization in the upstream oil and gas industry won’t be AI though, according to the report, it is most likely to be on expanding and refining the range of existing digital applications already in use.
Some examples given by the IEA were the development of miniaturized and fibre optic sensors in the production system, which could be used to boost output or increase the overall recovery of oil and gas from a reservoir.
Other examples given were the use of automated drilling rigs and robots to inspect and repair subsea infrastructure and to monitor transmission pipelines and tanks.
Remaining technically recoverable oil and gas resources around the world are currently estimated to be around 1.4 trillion tons of oil equivalent, according to the IEA, but this could be increased by up to 75 billion toe, equal to over 10 years of current world oil and gas consumption, through the widespread use of existing and emerging digital technologies across the global resource base, the report states.
News Source: Rigzone
Read MoreRigzone/6 November 2017
(Bloomberg) — Saudi energy services company Arkad, which is building a nationwide pipeline network for oil giant Saudi Aramco, will expand outside the kingdom in a venture with ABB Ltd. that opens the doors to business in North Africa and the Gulf region.
Arkad signed a deal to acquire a majority stake in a new joint venture with ABB’s oil and gas engineering, procurement and construction unit, Managing Director Hani Abdelhadi said in an interview. The project will give closely held Arkad a foothold in Algeria, Kuwait and the United Arab Emirates, he said. Both Arkad and ABB declined to disclose the size of their respective stakes and the value of the transaction, which they target for completion in December.
“It has been our goal since the beginning to become an international company,” Abdelhadi said in Dubai. “Through an acquisition, it’s easier market access than trying to go and set up in each country.”
Arkad is expanding at a time when energy-services companies worldwide are struggling to cope with lower crude prices, which have driven oil and natural gas producers to slash investment. Crude is currently trading at about half its 2014 peak, and Schlumberger Ltd. and Baker Hughes, the two largest oil service companies, have blamed lackluster earnings on the reluctance of North American explorers to boost their spending. The oilfield services business was the worst hit in the three-year crude-market crash.
‘Growth Opportunity’
For Zurich-based ABB, a provider of power and automation technologies, the deal promises new opportunities in Saudi Arabia, where Arkad’s main customer is Saudi Aramco, the world’s biggest crude exporter. “We see this as a clear growth opportunity,” Per Erik Holsten, managing director of ABB’s global oil, gas and chemicals business, said by phone from Oslo. ABB “wasn’t getting enough scale” with its existing energy contracting operations, he said.
Arkad, based in the eastern Saudi city of Al Khobar, is currently building a gas pipeline system for Aramco that will span more than 1,100 kilometers (685 miles) from Saudi Arabia’s Eastern Province to Rabigh on the Red Sea. The network is part of the country’s Master Gas System that aims to supply gas as a replacement for the oil currently used to generate electricity, and also to send gas to petrochemical plants.
Arkad expects to generate 2 billion riyals ($533 million) in sales this year. Abdelhadi declined to give estimates for 2017 income or projections for future sales and income. Arkad, established in 2011 as Saudi KAD, was re-named in February.
The joint venture, to be called Arkad-ABB SpA, will be based in Milan at the headquarters of ABB’s existing oil and gas EPC business. Abdelhadi and Holsten declined to identify any of the venture’s clients.
Arkad’s expansion aligns with Saudi Arabia’s Vision 2030 plan of diversifying the economy and creating jobs through small and medium-sized businesses at home and abroad, Abdelhadi said. “We would carry the Saudi flag out of the kingdom.”
News Source: Rigzone
Read MoreRigzone/6 November 2017
FOS Group, a new oilfield services company launched Monday in Aberdeen, is looking to create over 100 new jobs.
Combining the engineering knowledge of Apollo and the offshore construction expertise of AquaTerra Group Ltd, FOS Group states on its website that it delivers an ‘alternative’ engineering, procurement and construction solution for oil and gas companies operating in the North Sea and beyond.
“There is a truly authentic drive at FOS to help shape and build a more sustainable and responsible North Sea economy,” Jonathan White, FOS Group managing director, said in a company statement.
“FOS combines more than 20 years of experience from its founding organisations and our clients can immediately access over 100 multidiscipline onshore engineering and design personnel along with over 150 multiskilled offshore construction workers,” he added.
“We have the capacity to execute scopes across the whole project lifecycle including procurement and fabrication ensuring safe and appropriate installed solutions on, below and above deck,” he continued.
FOS Group is aiming to generate ‘substantial growth’ over the next 12 months, according to the company’s launch statement.
“The North Sea needs new solutions to enable sustainability whilst continuing to provide value for operators, supply chain, government and the local economy alike,” White said.
“FOS represents an exciting opportunity for our staff and clients and provides the market with a welcome alternative for successful project delivery in a mature basin,” he added.
News Source: Rigzone
Read MoreThe Straits Times/6 November 2017
BEIJING (BLOOMBERG) – China enacted sweeping changes to a business competition law to address fraud in the e-commerce industry, which is plagued by malfeasance ranging from fake positive reviews to merchants goosing sales numbers.
The National People’s Congress adopted revisions on Saturday (Nov 4) to the Anti-Unfair Competition Law intended to address online retailers, the official Xinhua News Agency reported.
The changes take effect on Jan 1, but were announced days before Alibaba Group Holding’s Nov 11 Singles’ Day bargain extravaganza, which dwarfs Black Friday in the US in terms of revenue.
The Chinese law initially took effect in 1993 as a way to protect consumers and businesses from unfair market practices. At that time, none of China’s biggest online companies – including Alibaba, Tencent Holdings, Baidu and JD.com – even existed.
As e-commerce developed and prospered, attendant problems grew with it.
These latest revisions stipulate that operators shouldn’t deceive consumers by faking sales or employing “click farms” to rack up positive product reviews – increasingly common practices that have drawn the ire of buyers.
And the rules encompass the entire breadth of Internet commerce, from online goods and movie ticketing to food delivery.
“You now cannot delete bad comments or employ people to leave good comments,” said Ms Christine Yiu, an intellectual property law expert and partner at Shanghai-based Bird & Bird.
“It’s a welcome change that echoes with the whole direction that China’s trying to move in, by strengthening old protections and discouraging infringement in the market.”
Another example of such fraud in China is e-commerce sites buying up movie tickets to artificially boost a film’s box-office rankings and to drum up popularity, Ms Yiu said.
The new legislation states that businesses should be self-policing when upholding market order. Among the punitive measures outlined, online merchants that fake sales or feedback can be fined as much as 2 million yuan (S$410,000) or lose their business licence, the state-run China Daily newspaper reported on Monday (Nov 6).
“The revision will better address new problems emerging in the market and protect the rights and interests of both business operators and consumers,” said National People’s Congress’s Standing Committee official Yang Heqing on Saturday, according to Xinhua.
The practice of “brushing” – faking sales transactions to boost rankings or draw more traffic to a website – has plagued Chinese online commerce for years. Much of the criticism focused on Alibaba, the market leader, which has a complicated history with brushing operators and has been trying to stamp out such practices.
The Hangzhou-based company sued Shatui.com last year for allegedly linking merchants with people willing to falsify purchases and reviews to help boost sellers’ rankings. Along with the lawsuit, China’s biggest technology company warned that merchants found to be violating its policies can have their credit scores cut or businesses shut down.
With a billion listings on Alibaba’s Taobao website alone, standing out is critical for online sellers. The art of brushing comes down to tricking a site into believing a purchase has been made and then disguising the movement of money that makes it happen. The fake buyer is then paid by the brushing company.
Chinese companies aren’t alone in battling fabricators. Amazon is trying to quash fraudulent reviews, and Facebook is combating “fake news.” Yet China’s operators take things to the next level by crowdsourcing the tasks to thousands of people.
“We tried to keep the interests of vendors and customers in mind while revising the law because we need to keep fair market order while encouraging innovation in the cyberspace,” director Yang Hongcan of the Anti-Monopoly and Anti-Unfair Competition Enforcement Bureau of the State Administration for Industry and Commerce, said, according to China Daily.
The Straits Times/6 November 2017
SHANGHAI (BLOOMBERG) – China’s shadow banking sector, estimated by some analysts to be worth 122.8 trillion yuan (S$25.25 trillion), stopped growing in the first half of the year as issuance of wealth management products declined, according to Moody’s Investors Service.
For the first time since 2012, China’s gross domestic product grew faster than shadow banking assets in the six-month period, Moody’s said in a statement on Monday (Nov 6).
Following last month’s Communist Party Congress, further regulation will continue to rein in shadow banking and address some of the key systemic imbalances, Moody’s said.
While Moody’s assessment offers some evidence that China’s crackdown on shadow financing is starting to bite, the authorities continue to sound the alarm on high debt levels. In an article on the People’s Bank of China’s website late Saturday, Governor Zhou Xiaochuan pointed to latent risks that are “hidden, complex, sudden, contagious and hazardous.”
Government, household and corporate debt adds up to about 260 per cent of the economy, according to Bloomberg Intelligence.
Moody’s said that shadow banking assets accounted for 83 per cent of GDP on June 30, down from a peak of 87 per cent in 2016.
While Moody’s assessment offers some evidence that China’s crackdown on shadow financing is starting to bite, the authorities continue to sound the alarm on high debt levels. In an article on the People’s Bank of China’s website late Saturday, Governor Zhou Xiaochuan pointed to latent risks that are “hidden, complex, sudden, contagious and hazardous.”
Government, household and corporate debt adds up to about 260 per cent of the economy, according to Bloomberg Intelligence.
Moody’s said that shadow banking assets accounted for 83 per cent of GDP on June 30, down from a peak of 87 per cent in 2016.
News Source: The Straits Times
Read MoreThe Straits Times/6 November 2017
SINGAPORE – Two brokerages, OCBC Investment Research and RHB Research, are reviewing their rating and target price for DBS after the bank on Monday morning (Nov 6) announced a 25 per cent drop in third-quarter earnings from the previous year.
Excluding one-time items such as a S$21 million ANZ integration cost, DBS’s net profit stood at S$822 million, 23 per cent lower from the preceding period.
This was “below expectations”, said RHB analyst Leng Seng Choon in a note. He noted that the S$822 million core net profit represented 18 per cent of RHB’s earnings forecast for 2017, and 17 per cent of the consensus forecast.
DBS also raised specific allowances for credit and other losses to S$815 million, 87 per cent higher than the S$436 million it recorded a year ago.
The group said that it accelerated the recognition of residual weak cases as non-performing assets so as to remove uncertainty about its asset quality.
Apart from the substantial spike in allowances, overall results were fairly healthy and in line with expectations, said OCBC analyst Carmen Lee.
But RHB noted that while DBS’s total income rose 5 per cent from the previous quarter, its net interest margin narrowed quarter on quarter by one basis point to 1.73 per cent – unlike the widening recorded by its peers.
Mr Leng said that the brokerage will review its earnings forecasts, “neutral” call and S$20.65 target price after the analyst briefing later on Monday.
Ms Lee observed that the stock has done well and has gained some 12.7 per cent since she last upgraded it on Sept 14. “We expect some initial knee-jerk share price reaction to the higher-than-expected Q3 2017 allowances, especially in view of the recent good price outperformance,” she said.
Shares in DBS traded at S$22.77 as at 10.13am on Monday morning, down 20 Singapore cents or 0.87 per cent from its previous close.
News Source: The Straits Times
Read MoreThe Straits Times/6 November 2017
SINGAPORE (BLOOMBERG, REUTERS) – Qatar Airways agreed to acquire a stake in Cathay Pacific Airways, a deal that would help it gain a foothold in the world’s second-biggest aviation market.
The Middle Eastern carrier will buy 9.6 per cent of Cathay from Hong Kong-based Kingboard Chemical Holdings Ltd. and related companies for HK$5.16 billion (S$903 million), according to a filing to the city’s stock exchange on Monday (Nov 6). Cathay chief executive officer Rupert Hogg said he looks forward to a “continued constructive relationship”.
Shares of Cathay fell as much as 4.9 per cent to HK$12.56 on Monday, the biggest intraday drop in more than five months.
The purchase, the first-ever investment by a Middle Eastern airline in an East Asian carrier, when complete would make the Doha-based company the third-largest shareholder in Cathay and would also provide access to mainland China, a country is set to emerge as the world’s biggest aviation market within a decade.
The deal comes a few months after Qatar Airways dropped a plan to invest in American Airlines Group, which rebuffed the attempt. Those investment plans were met with suspicion by critics at a time when Qatar is embroiled in the region’s worst diplomatic crisis in years and is locked in an airspace rights dispute with three other Gulf states
“Geographically, the Middle Eastern carriers have been constrained from conquering Hong Kong and China,” said Mohshin Aziz, an analyst at Maybank Investment Bank Bhd in Kuala Lumpur. “They have a lot of capacity so they have to look elsewhere. If both airlines can work together, it will definitely be good for Cathay.”
The Middle Eastern airline has a 20 per cent stake in British Airways parent IAG. It also has 10 per cent of Latam Airlines Group, the biggest South American carrier, and plans to take a 49 per cent stake in minor Italian operator Meridiana.
China has been at the centre of many deals as global airlines seek a piece of the pie as international traffic from the country surges. Delta Air Lines bought a minority stake in China Eastern Airlines Corp. in 2015, while American Airlines purchase a minority stake in China Southern Airlines Co.
The International Air Transport Association predicts passengers will nearly double to 7.8 billion by 2036, and Asia Pacific will contribute more than half of the new additions.
Cathay is in the midst of the biggest corporate revamp in two decades to help revive earnings after getting squeezed between Middle Eastern carriers such as Emirates Airline and Etihad Airways on the premium end of travel, and low-cost and mainland Chinese rivals at the other. It has announced job cuts and was in talks with pilots over compensation as it reported its worst half-year loss in at least two decades in the six months through June.
A prior attempt to buy an American Air stake didn’t go well for Qatar Airways. The US company’s chief, Doug Parker said he wasn’t keen on having the Gulf carrier as a shareholder. While the airlines are partners in the Oneworld alliance, Qatar Airways’ move came as a surprise since American had publicly opposed the growth of Middle Eastern airlines in the US, saying they have benefited from US$50 billion in illegal aid.
Cathay Pacific is also part of the Oneworld alliance. Hong Kong conglomerate Swire Pacific, is the largest shareholder of Cathay with 45 per cent, followed by state-owned Air China Ltd with 29.99 per cent.
“Cathay Pacific is one of the strongest airlines in the world, respected throughout the industry and with massive potential future,” Qatar Airways Group chief executive Akbar Al Baker said in a statement on Monday. “This investment further supports Qatar Airways investment strategy.”
Both Cathay and Qatar Aiways collaborate together as members of the Oneworld alliance and “we look forward to a continued constructive relationship”, Cathay said in its statement.
Qatar Airways will buy about 378.2 million shares at HK$13.65 a piece in cash, a 3.4 per cent premium over Friday’s closing price of HK$13.20. The transaction will be completed later on Monday, Qatar Airways said in the statement.
“I don’t see Cathay being excited about this and I wouldn’t expect major changes even in the medium term,” said Will Horton, an analyst at CAPA Centre for Aviation in Hong Kong. “It has the flavour of a passive stake despite the optics appearing significant.”
Kingboard Chemical, a diversified group that is into the manufacture of laminates, glass yarn and copper foil, had built up the stake in Cathay Pacific through purchases from the stock market along with its associates.
News Source: The Straits Times
Read MoreThe Straits Times/6 November 2017
SINGAPORE (REUTERS) – Oil prices hit their highest levels since July 2015 early on Monday (Nov 6) as markets tightened, while Saudi Arabia’s crown prince cemented his power over the weekend through an anti-corruption crackdown that included high profile arrests.
Brent futures, the international benchmark for oil prices, hit US$62.44 per barrel early on Monday, their highest level since July 2015. Brent was at US$62.27 per barrel at 0230 GMT, up 20 cents, or 0.3 per cent from the last close and 40 per cent above June’s 2017 lows.
US West Texas Intermediate (WTI) crude hit US$56.00 per barrel in early trading, also the highest since July 2015, and was at US$55.79, up 15 cents, or 0.3 per cent from the last settlement. WTI is a third above its 2017 lows.
Crown Prince Mohammed bin Salman, also known as MBS, has tightened his grip on power through an anti-corruption purge by arresting royals, ministers and investors including prominent business billionaire Alwaleed bin Talal and the head of the National Guard, Prince Miteb bin Abdullah.
RBC Capital Markets said in a note that although the “purge represents a stunning political development in Saudi Arabia”, it expected “no immediate changes” in the oil policy of Saudi Arabia, which is the world’s biggest exporter of crude oil.
“MBS seems strongly committed to anchoring the Opec agreement deep into 2018 and moving ahead with the Aramco sale,” RBC said.
Bin Salman’s reforms include a plan to list parts of giant state-owned oil company Saudi Aramco next year, and a higher oil prices is seen as beneficial for the market capitalisation of the future listed company.
In oil fundamentals, traders said that there were ongoing signs of tightening market conditions.
US energy companies cut eight oil rigs last week, to 729, in the biggest reduction since May 2016.
The decline in US drilling activity comes as the Organisation of the Petroleum Exporting Countries (Opec) and a non-Opec group lead by Russia have pledged to hold back about 1.8 million barrels per day (bpd) in oil production to tighten markets.
The pact to withhold supplies runs to March 2018, but there is growing consensus to extend the deal.
While supplies are tightening, analysts say demand remains strong.
“Synchronous global economic growth and new supply disruptions are creating the most constructive oil price environment since… 2014,” Barclays bank said.
The British bank said it was raising its average Q4 Brent price forecast by US$6 per barrel to US$60 per barrel.
“The surprisingly strong macro backdrop and the accelerated inventory drawdown mean that these slightly higher price levels are likely to be sustained through Q1 of next year.
Barclays said it raised its full-year 2018 forecast by US$3 per barrel to US$55 per barrel.
News Source: The Straits Times
Read MoreThe Straits Times/2 November 2017
SINGAPORE – The High Court of Singapore has slapped heftier fines on two individuals for unauthorised share trading after an appeal by the Monetary Authority of Singapore (MAS).
Mr Wang Boon Heng saw his fine doubled to S$150,000 from S$75,000, while Ms Foo Jee Chin will now have to pay S$75,000, up from S$50,000. The earlier civil penalties were doled out in March this year by the State Courts.
MAS felt that the original fines “did not adequately reflect the severity of the breaches and a higher civil penalty was needed to deter such misconduct”, it said in a media release on Thursday (Nov 2).
Wang and Foo were further ordered to pay MAS S$21,000 for the legal costs and disbursements incurred by regulator for the appeal. This comes on top of S$58,636 in legal costs the duo were ordered to pay by the State Courts.
Wang carried out share trading for his own benefit in accounts opened in Foo’s name with DMG & Partners and UOB Kay Hian, between September and December 2007. This was deemed a breach of Securities and Futures Act section 201(b), which prohibits fraudulent share trading, because the broking firms did not authorise or give consent to Wang’s actions.
By allowing Wang to trade in her accounts without the broker firms’ authorisation or consent, Foo was also deemed to have intentionally deceived the broking firms.
Wang and Foo were further ordered to pay MAS S$21,000 for the legal costs and disbursements incurred by regulator for the appeal. This comes on top of S$58,636 in legal costs the duo were ordered to pay by the State Courts.
Wang carried out share trading for his own benefit in accounts opened in Foo’s name with DMG & Partners and UOB Kay Hian, between September and December 2007. This was deemed a breach of Securities and Futures Act section 201(b), which prohibits fraudulent share trading, because the broking firms did not authorise or give consent to Wang’s actions.
By allowing Wang to trade in her accounts without the broker firms’ authorisation or consent, Foo was also deemed to have intentionally deceived the broking firms.
News Source: The Straits Times
Read MoreThe Straits Times/2 November 2017
SINGAPORE – Factory activity continued to expand at a robust pace in October, rising for the 14th straight month to hit an eight-year high.
The data indicates that manufacturing – which makes up a fifth of the economy and has been its brightest spot this year – is still going strong on the back of broad expansion across most segments, economists said.
The purchasing managers’ index (PMI) – an early indicator of manufacturing activity – came in at 52.6 last month. This was up from 52 in September and also the highest reading since December 2009.
A reading of 50 and above indicates expansion.
The Singapore Institute of Purchasing and Materials Management (SIPMM), which compiles the PMI from a monthly poll of purchasing executives at about 150 industrial firms, said the data showed broad-based expansion across most sectors. Manufacturing employment also recorded its second straight month of growth.
The survey also showed PMI for the electronics sector came in at 53.3 last month – down slightly from 53.6 in September but still expansionary. This was the 15th straight month of growth in electronics.
The marginal dip in growth was attributed to a slower rate of expansion in most key indicators, said the SIPMM.
“Anecdotal evidence from the survey suggest that most electronics manufacturers were concerned about the impact of digital innovations on their businesses,” its report added.
DBS senior economist Irvin Seah said the continued uptick in overall manufacturing PMI “confirms that rally in manufacturing continues unabated”.
The easing in electronics PMI indicates that the sector is entering a seasonal lull, he added.
“The PMI is not seasonally adjusted, which means that typically towards the tail end of the year there will be some moderation in PMI indices,” said Mr Seah.
“Still, overall new orders and new export orders are holding up and this is a multi-year high from a level perspective, which continues to point to a strong performance in the coming months.”
The Ministry of Trade and Industry (MTI) expects manufacturing to have expanded 15.5 per cent in the third quarter, according to advance estimates, which mainly take into account data from the first two months of the quarter. But economists expect this figure to be revised upwards on the back of better-than-expected growth in the sector.
UOB economist Francis Tan said the data here bucked the regional trend – PMIs elsewhere in the region, including in Indonesia, Taiwan and South Korea remained in expansionary territory but edged lower in October.
China’s official manufacturing PMI for October also missed expectations, coming in at 51.6, down from 52.4 in September.
“(The regional slowdown) could be a seasonal effect, or a result of the electronics cycle peaking,” said Mr Tan.
Still, the overall outlook for manufacturing remains positive.
“For the whole year it’s been very much an electronics story in Singapore, but we’re now seeing growth broaden out to other manufacturing clusters even as electronics expansion moderates. The fact that manufacturing employment continued to grow is also a good sign,” he added.
News Source: The Straits Times
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