Oil Updates – crude steady as supply outlook offsets strong dollar and China worries

RIYADH: Saudi utility giant ACWA Power has strengthened its portfolio by acquiring a $693 million stake in power generation and water desalination companies in Bahrain and Kuwait.

The company has secured holdings in four companies after buying the shares held by the regional subsidiary of French utility developer Engie.

The deal includes a 45 percent interest in both the Al-Ezzel and Al-Dur projects as well as a 30 percent holding in the Al-Hidd facility, all situated in Bahrain. 

It also sees ACWA Power acquire an 18 percent stake in Az Zour North in Kuwait.

The move falls in line with ACWA Power’s strategy to be at the forefront of the energy transition by delivering reliable and responsible power, desalinated water, and green hydrogen at low cost in Saudi Arabia and the wider Gulf Cooperation Council and attractive high-growth markets based on a de-risked and contracted business model.

“This acquisition represents a pivotal milestone for ACWA Power, reinforcing our position as global leader in water desalination. We consolidate our presence in Bahrain where we are already a reliable supplier of power and water, and we enter Kuwait, where we recently submitted a bid for a large power and desalination plant,” CEO of ACWA Power Marco Arcelli said. 

“Reinforcing our presence in each country will allow us to further develop our people there and localize our operations more, providing safe and reliable supplies to the local communities and industries,” he added.

ACWA Power will also acquire a portfolio of companies responsible for the operation and maintenance of the four assets, specifically Az Zour North O&M Co., with a 50 percent stake and complete ownership of Al-Ezzel O&M Co.

The deals cover operating capacities of 4.61 gigawatts of gas-fired power generation and 1.11 million cubic meters per day of water desalination facilities, as well as the related operations and maintenance companies in the two countries, according to a statement.

Chief Investment and Development Officer of ACWA Power Thomas Brostrom said: “By making its inaugural entry into the Kuwaiti market through the acquisition of a stake in the Az-Zour North Facility, ACWA Power has achieved a significant milestone in its strategic efforts to expand its presence within the regional energy and water desalination sector.”

The secured contracted revenue streams from the acquired assets align well with the firm’s broader strategy of tripling its assets under management to $250 billion by 2030.

HOUSTON/SINGAPORE: Oil prices edged up on Wednesday amid worries of oil supply disruptions in the US and Russia, and as markets awaited clarity on the Ukraine peace talks.

Brent crude futures were up 14 cents, or 0.2 percent, at $75.98 a barrel at 7:50 a.m. Saudi time, and possibly set for a third day of gains.

US West Texas Intermediate crude futures for March rose 16 cents, or 0.2 percent, to $72.01, up 1.8 percent from the close on Friday after not settling on Monday because of the Presidents’ Day public holiday. The March contract expires on Thursday and the more active April contract gained 14 cents, or 0.2 percent, to $71.97.

“The psychologically important $70 level appears to have held firm, aided by the Ukrainian drone attack on the Russian oil pumping station and fears that cold weather in the US may curtail supply,” said IG market analyst Tony Sycamore.

“On top of that there is some speculation that OPEC+ may decide to delay its planned supply increase in April,” he said, referring to the Organization of the Petroleum Exporting Countries and allies.

Russia said oil flows through the Caspian Pipeline Consortium, a major route for crude exports from Kazakhstan, were reduced by 30 percent to 40 percent on Tuesday after a Ukrainian drone attack on a pumping station. A 30 percent cut would equate to the loss of 380,000 barrels per day of supply to the market, according to Reuters calculations.

Meanwhile, cold weather threatened US oil supply, with the North Dakota Pipeline Authority estimating that production in the country’s No. 3 producing state would be down by as much as 150,000 bpd.

US President Donald Trump’s administration said on Tuesday it had agreed to hold more talks with Russia on ending the war in Ukraine. A deal could ease or help remove sanctions that have disrupted the flows of Russian oil shipments.

Analysts at Goldman Sachs said a potential Ukraine-Russia peace deal and associated easing in sanctions on Russia is unlikely to significantly raise Russia oil flows.

“We believe that Russia crude oil production is constrained by its OPEC+ 9 million barrels per day production target rather than current sanctions, which are affecting the destination but not the volume of oil exports,” they said in a report.

Israel and Hamas will also begin indirect negotiations on a second stage of the Gaza ceasefire deal, officials said on Tuesday.

However, Trump said on Tuesday he intends to impose auto tariffs “in the neighborhood of 25 percent” and similar duties on semiconductors and pharmaceutical imports.

Tariffs could raise prices for consumer products, weaken the economy and reduce demand for fuel.