Sunday, 12 March 2023

Saudi Aramco posts highest annual profit

Saudi Aramco announced on Sunday its full-year 2022 financial results, reporting a record net income of US$161.1 billion — its highest annual profits as a listed company. Aramco also declared a fourth quarter dividend of US$19.5 billion, to be paid in the first quarter of 2023.

Commenting on the results, Aramco President and CEO Amin H. Nasser said, “Aramco delivered record financial performance in 2022, as oil prices strengthened due to increased demand around the world.

“We also continued to focus on our long-term strategy, building both capacity and capability across the value chain with the aim of addressing energy security and sustainability.”

“Given that we anticipate oil and gas will remain essential for the foreseeable future, the risks of underinvestment in our industry are real — including contributing to higher energy prices.

“To leverage our unique advantages at scale and be part of the global solution, Aramco has embarked on the largest capital spending program in its history, and last year our capex rose by 18.0% to reach US$37.6 billion.”

“Our focus is not only on expanding oil, gas and chemicals production, but also investing in new lower-carbon technologies with potential to achieve additional emission reductions — in our own operations and for end users of our products,” he added.

Aramco’s net income grew to a record US$161.1 billion in 2022, from US$110.0 billion in 2021, an increase by 46.5%.

The increase in net income reflects stronger crude oil prices; higher volumes sold and improved margins for refined products. Q4 2022 net income is in line with analyst estimates, excluding certain non-cash items of around US$3.3 billion.

Free cash flow reached a record US$148.5 billion in 2022, as compared to US$107.5 billion in 2021. Aramco continues to emphasize a strong balance sheet and its gearing ratio at the end of 2022 was -7.9%, compared to 12.0% at the end of 2021.

Aramco declared a dividend of US$19.5 billion for the fourth quarter, to be paid in Q1 2023. This represents a 4.0% increase compared to the previous quarter, aligned with the company’s dividend policy aiming to deliver a sustainable and progressive dividend.

Additionally, the Board of Directors also recommended the distribution of bonus shares to eligible shareholders in the amount of one share for every 10 shares held, subject to required Extraordinary General Assembly and regulatory approvals.

Capital expenditure in 2022 was US$37.6 billion, an increase of 18.0% from 2021. Aramco expects 2023 capital expenditure to be approximately US$45.0 billion to US$55.0 billion including external investments, with capex increasing until around the middle of the decade.

Aramco also completed an energy infrastructure deal in February 2022 resulting in a consortium of investors, led by BlackRock Real Assets and Hassana Investment Company, acquiring a 49% stake in a newly formed subsidiary, Aramco Gas Pipelines Company (AGPC), for US$15.5 billion.

Saturday, 11 March 2023

US annoyed by China-brokered Iran-Saudi deal

An agreement struck by Iran and Saudi Arabia on Friday to re-establish relations has shifted concerns back to the state of the role of United State in the Middle East — especially since the deal was brokered by Washington’s main adversary, China.

Both Iran and Saudi Arabia announced they will resume diplomatic relations and open up embassies once again in their respective nations within two months, according to a joint statement.

Alex Vatanka, Director, Iran Program at the Middle East Institute, said the Iran-Saudi Arabia deal was an important agreement for the region but questioned whether it would put an end to any violence, including in war-torn Yemen.

“It remains to be seen if they can have a meaningful dialogue. Opening up embassies is not the same as having a meaningful dialogue,” Vatanka said. “There will be a steep journey ahead.”

Saudi Arabia, cut ties with Iran in 2016 after protesters stormed the nation’s embassy in Iran after the execution of a Shiite Muslim cleric along with the execution of other prisoners.

Both nations have also been on opposing sides of the deadly civil war in Yemen, with Saudi Arabia supporting Yemen’s government and Iran backing the opposition Houthis.

The news on Friday was a diplomatic and political success for Beijing, which also recently published a peace plan to end the war in Ukraine. 

China’s top diplomat Wang Yi quickly hailed the agreement as a victory on Friday and said his country would continue to address global issues, according to statements carried by several Chinese newspapers.

The agreement undercuts the posture of the US in the region. The US has downsized in Syria after withdrawing forces in 2021 from Afghanistan.

The deal also comes as Saudi Arabia is demanding certain security guarantees, a steady flow of arms shipments and assistance with its civilian nuclear program in order to normalize relations with Israel, a major US ally, the White House confirmed on Friday.

Speaking to reporters, National Security Council spokesperson John Kirby said the US was informed about the Saudi Arabia-Iran talks but played no role in them. Kirby welcomed the normalization of relations between the two countries should it ease violence in the Middle East.

“To the degree that it could deescalate tensions, all that’s to the good side of the ledger,” Kirby said, adding the US is not stepping back from its role in the Middle East.

Vatanka, from the Middle East Institute, said both Iran and Saudi Arabia have been seeking to ease tensions for the past couple of years. 

While he was surprised by China’s role as a mediator, Vatanka said the deal does not constitute a major loss for Washington in the long-term.

“It symbolically makes the United States look like it’s not able to be a key player,” he said. “But it’s not going to be a Chinese-dominated Middle East.”

China is a large buyer of Saudi oil and maintains close relations with Iran. 

The US has had strained relations with Iran for decades and a similar normalization agreement would have been next to impossible for Washington to mediate.

Some experts have cautioned that China is beginning a new era of diplomatic engagement in the Middle East, where it before mostly had economic ties.

Jonathan Panikoff, Director, Scowcroft Middle East Security Initiative in the Middle East Programs for The Atlantic Council, warned of an emergence of China’s political role in the region.

“It should be a warning to US policymakers, Leave the Middle East and abandon ties with sometimes frustrating, even barbarous, but long-standing allies, and you’ll simply be leaving a vacuum for China to fill,” Panikoff wrote in a Friday analysis.

Middle East politics has become more strained for the US as Israel clashes with Palestinians seeking a free state in Israeli-occupied Gaza and the West Bank. The ongoing civil war in Syria, violence in Yemen, heightened tensions over Iranian support for Russia and a scrapped nuclear deal with Tehran have added to complications.

President Biden traveled to Saudi Arabia last summer amid high gas prices in the US and was seen fist-bumping Crown Prince Mohammed bin Salman, who has been criticized for overseeing human rights abuses and for the killing of the US-based journalist Jamal Khashoggi. A few months after the visit, the White House was angered when the Saudi-led oil alliance OPEC+ slashed oil production output.

 

 

Israeli Grudge: Saudi-Iran deal destroys defense wall against Iran

A credible military threat against Iran coupled with a tough Western diplomatic stance is the best way to weaken the impact of the resumption of diplomatic relations between Tehran and Riyadh, a senior Israeli official told reporters over the weekend.

The official spoke in response to the Iranian-Saudi Arabian deal reached to reestablish relations after years of hostility that had threatened stability and security in the Gulf and helped fuel conflicts in the Middle East from Yemen to Syria.

Israeli politicians immediately expressed concern as the move appeared to throw a monkey wrench in one of Netanyahu’s new government’s chief policy initiatives – to normalize ties with Saudi Arabia.

Israel has presumed that the necessity of creating a Gulf alliance between Israel and its Arab partners against Iran would help provide an incentive for the establishment of diplomatic ties between Saudi Arabia and the Jewish state.

Former Prime Ministers Yair Lapid and Naftali Bennett immediately warned of its implications for Israel’s strategy against Iran as they used the moment to attack Prime Minister Benjamin Netanyahu, who was in Italy when news of the deal broke.

The rapprochement signals the collapse of the regional defense wall that we started building against Iran, Lapid said, adding that it reflects the complete and dangerous failure of the Israeli government’s foreign policy.

 “This is what happens when one deals with legal insanity all day instead of doing one’s job against Iran and strengthening relations with the United States,” Lapid said.

The senior Israeli official, however, blamed the governments of Lapid and Bennett for the Iranian-Saudi rapprochement, noting that talks toward the agreement had begun already last year when they were in power.

Negotiations for this deal started about a year ago, with a round of at least five meetings, including the arrival of senior Saudi officials in Iran” and Iranian visits to Saudi Arabia in return, the official said.

It’s possible that at the time the Saudis felt that the Israeli stand on Iran was not strong enough, the official speculated.

The Saudis felt that the West’s position towards Iran was weak, particularly in the aftermath of Tehran’s armed drone attack against Saudi oil fields coupled with talks to revive the 2015 Joint Comprehensive Plan of Action, the Israeli official explained.

Western countries have toughened their positions against Iran, but it’s still not strong enough, the official said.

An Israeli official told Iran International that Tehran’s agreement with Riyadh was not a surprise and that Israel did not believe the deal impacted its pursuit of normalizing ties with Riyadh.

Bennett, however, called the news of the renewed Iran-Saudi alliance a serious and dangerous development for Israel and a political victory for Iran.

“This delivers a fatal blow to efforts to build a regional coalition against Iran,” said Bennett.

He charged that it was a mark of the resounding failure of the Netanyahu government and stems from a combination of political neglect with the country’s general weakness and internal conflict.

“Countries in the world and the region are watching Israel in turmoil over the dysfunctional government that is engaged in systematic self-destruction,” Bennett said, adding in this case one of those countries chose a side.

Every day of this government’s “existence endangers the State of Israel,” Bennett stated.

“We need a broad national emergency government, which will work to repair the damage,” Bennett added.

Former defense minister Benny Gantz said Netanyahu had abandoned the security of Israel and its citizens. “The enormous security challenges facing the country are increasing, and the prime minister and his cabinet are busy with a coup d’état.”

Knesset Foreign Affairs and Defense Committee Chairman Yuli Edelstein said the alliance was “bad for Israel and the entire free world.”

Iranian expert Danny (Dennis) Citrinowicz from the Institute of National Security Studies at Tel Aviv University tweeted that the new alliance was a message to Israel that its dream of a regional alliance was not feasible and never had been.

It underscored the point that most of the countries in the region view dialogue as the best way to deal with Iran, leaving Israel as the sole country that is focused on a military option.

Analyst and former MK Ksenia Svetlova of Mitvim – The Israeli Regional Institute for Regional Foreign Policies noted on Twitter that “Saudi Arabia is normalizing relations. No, not with Israel but rather with Iran”, while it has rebuked Israel publicly for its treatment of the Palestinians.

“Only two months ago, Netanyahu promised to bring peace with Saudi Arabia. We seem to be moving in the opposite direction,” she wrote.

The Wall Street Journal in an editorial published Friday blamed the Biden administration for the Iranian-Saudi deal and the fact that Saudi Arabia has yet to join the Abraham Accords, which is the vehicle by which Israel has already normalized ties with four Arab countries.

Who is Ali Shamkhani?

Since 2013, Rear Admiral Ali Shamkhani has served as secretary of the Supreme National Security Council (SNSC), Iran’s top policymaking body. Shamkhani’s position has become more important in recent years as Iran’s incumbent president is more limited than his predecessor in matters of foreign policy.

The recent execution of one of Shamkhani’s former deputies, Alireza Akbari, criticism from some power centers in Tehran, and his longevity in this post have raised speculation that he could soon vacate his seat.

Such a change would be an important signpost of how the Iranian establishment is posturing itself against the backdrop of continued revolutionary sentiment among significant segments of the population.

Shamkhani has long been a political chameleon — with stints in reformist, pragmatic, and conservative presidential administrations. He is the only member of the Iranian establishment to have served in the top brass of both Iran’s regular Army (Artesh) and the Islamic Revolutionary Guard Corps (IRGC). Likewise, Shamkhani has been arguably the most senior ethnic Arab to have risen in the Iranian system since 1979.

He is the second-longest serving SNSC secretary since Iran’s previous president, Hassan Rouhani, first ascended to the job in 1989. Rouhani’s tenure spanned over 15 years, whereas Shamkhani is nearing a decade in office. Their terms bookended Ali Larijani, who was only secretary for around two years, and Saeed Jalili, who held the post for approximately six years. Unlike his predecessors, Shamkhani, who commanded both the Artesh and IRGC navies, has considerable military experience. Rouhani had some command responsibilities during the Iran-Iraq War, including as head of Iran’s National Air Defense Command.

Shamkhani, in contrast, has been a career military man. The military roles of Larijani and Jalili were not as senior — Larijani was a parliamentary deputy in the IRGC and Jalili a member of the Basij paramilitary militia — with the former a one-time culture minister and head of Islamic Republic of Iran Broadcasting (IRIB) and the latter a deputy foreign minister before becoming secretary.

Shamkhani has also managed to survive and thrive across the political spectrum. He was defense minister under the reformist President Mohammad Khatami and SNSC secretary under Rouhani, a pragmatist, continuing in this role under the incumbent, President Ebrahim Raisi, a more conservative figure. Supreme Leader Ayatollah Ali Khamenei purged the Iranian system in recent years — extending even to the likes of Larijani, whom the Guardian Council barred from running in the June 2021 presidential election despite being a regime mainstay.

Yet more recently, figures like Shamkhani, who may have more credibility among reformist elements of the Iranian political elite, have been indispensable as Tehran deploys a series of pressure valves to preserve the Islamic Revolution amid protests.

Last year, the government enlisted Shamkhani for such an assignment, asking representatives of the founding families of the Islamic Republic (the Khomeinis and the Rafsanjanis) to speak out publicly to placate the Iranian people. If they did, Shamkhani promised reforms would follow. But both clans reportedly refused those specific conditions. He also recently met with marginalized reformist figures like Ali Shakuri Rad, a former lawmaker.

Shamkhani likewise has been an advocate for change within the system, to divide and conquer those protesting, forming an unusual coalition with Speaker of Parliament Mohammad Bagher Ghalibaf and Vice President for Economic Affairs Mohsen Rezaei, Amwaj Media has reported.

Such efforts coincide with the increased visibility of reformists and pragmatists in Tehran since the onset of the protests in September. Former President Khatami, once the subject of a media ban, has become more vocal in warning that the Islamic Revolution is in danger and advocated for not overhauling the constitution but merely returning to the spirit and even the text.

The remarks resembled similar calls for reform he made while in office, which failed then because of the Iranian deep state presided over by the supreme leader. After being lambasted in his last days in office by Khamenei, Rouhani has also resurfaced a few weeks ago, telling reporters on the 44th anniversary of the Islamic Revolution, “We should not allow a power-hungry minority to push the majority aside,” and warning that this “would be the end of the revolution.”

However, there has been no evidence that Khamenei is listening to Shamkhani. In fact, it appears he is moving in the opposite direction, doubling down and deflecting. His elevation of Ahmad-Reza Radan — a notorious hardliner — as the new commander of Iran’s national police indicates as much. There is also evidence some in the Iranian system are laying the groundwork to make Shamkhani the fall guy amid the demonstrations.

It would not be unusual for Khamenei to reshuffle the government amid significant challenges to the system. For instance, he shifted Hossein Taeb, then commander of the Basij, to head a newly empowered IRGC Intelligence Organization in 2009, when mass demonstrations took hold after the disputed reelection of Mahmoud Ahmadinejad to the presidency.

Likewise, on foreign policy, Shamkhani is the rare official in the Raisi presidency who is a leftover from the Rouhani administration. The dynamics of the SNSC have changed since the Rouhani era, when the then-chief of staff of Iran’s Armed Forces, Hassan Firouzabadi,  defended Rouhani’s nuclear diplomacy with the P5+1 (the five permanent United Nations Security Council members, the United States, Russia, China, France, and the United Kingdom, along with Germany).

Fast forward to 2023, his successor, Mohammad Bagheri, has emerged as a leading critic of the Joint Comprehensive Plan of Action (JCPOA) in the SNSC. Shamkhani has evolved as well. In 2014, he argued to international media that Tehran and Washington can behave in a way that they do not use their energy against each other [in the region]. A nuclear agreement can be very crucial in this regard. Everything will depend on the honesty of the Americans in the talks; by 2019, he expressed regret about the JCPOA.

However, Shamkhani has also hedged, counseling against a complete pivot away from the West to align with China and Russia. Indeed, this outlook is increasingly a minority view on the SNSC. This ideological nimbleness may explain why Khamenei has, so far, been resistant to replacing him.

Friday, 10 March 2023

China brokers agreement between Iran and Saudi Arabia

After four days of talks in Beijing, both Tehran and Riyadh agreed to reestablish relations and open up embassies in their respective countries following seven years of hostilities.

The three countries — Iran, Saudi Arabia and China — issued a joint statement on Friday that the two Middle Eastern nations had agreed to resume diplomatic relations between them and re-open their embassies and missions within a period not exceeding two months.

“The three countries expressed their keenness to exert all efforts towards enhancing regional and international peace and security,” they added, according to a copy of the statement tweeted out by the Saudi Ministry of Foreign Affairs.

Saudi Arabia and Iran also expressed their appreciation and gratitude to China for hosting the successful talks, as well as to Iraq and Oman for hosting previous efforts.

Riyadh severed diplomatic ties with Tehran in 2016, after protesters stormed the Saudi Embassy in Iran in response to Saudi Arabia’s execution of a prominent Shiite cleric.

The two Middle Eastern powers have frequently been at odds with one another, backing opposite sides in the region’s conflicts, including the long drawn-out Yemeni and Syrian civil wars.

The announcement was a major diplomatic and political win for China, whose top diplomat, Wang Yi, hailed it as a victory and said Beijing, would continue to address global issues.

Jonathan Fulton, a nonresident senior fellow for Middle East Programs at the Atlantic Council, said the deal may lead to something positive or it may fizzle.

"It’s too early to proclaim it anything other than a good first step," Fulton wrote in an analysis. "It is, however, significant as China’s first major foray into regional diplomacy. Beijing has been signaling since at least last January that it is willing to promote a non-US centered vision of the Middle East, and this is a sign of things to come."

The US role in the Middle East remains under question as some nations in the region see Washington slowly pulling out after the 2021 withdrawal from Afghanistan and downsizing in Syria.

Also, tensions with Iran have soared and relations with Saudi Arabia are frosty after the killing of US-based journalist Jamal Khashoggi in 2018.

The White House dismissed those concerns as National Security Council spokesperson John Kirby told reporters the US is not stepping back from its role in the region.

Meanwhile, US President Biden welcomed the easing of tensions in the Middle East.

Alex Vatanka, the director of the Iran Program at the Middle East Institute, pumped the brakes on China's victory lap, telling The Hill the agreement might not be a major loss for Washington in the long term.

“It symbolically makes the United States look like it’s not able to be a key player,” he said. “But it’s not going to be a Chinese-dominated Middle East.” 

 

Thursday, 9 March 2023

Saudi Arabia strives to develop relations with Russia

Saudi Arabian Foreign Minister Prince Faisal bin Farhan said that the Kingdom strived to strengthen and develop relations with Russia at all levels.

The foreign minister made the remarks during a session of talks with his Russian counterpart Sergey Lavrov in Moscow on Thursday. “I look forward to today’s discussions contributing to unifying visions and supporting bilateral relations. There is always something new in the relations between our two friendly countries, which we seek to strengthen and develop at all levels,” he said.

The visit of the Saudi foreign minister to Moscow comes after his visit to Ukraine on Sunday for the first time since the establishment of diplomatic relations between the two countries 30 years ago. The minister said that he discussed with Lavrov the challenges affecting the world, and they also exchanged views on international crises.

Prince Faisal praised the existing coordination in various fields between the two countries with regard to developing joint relations and coordination to face international challenges.

On his part, Lavrov welcomed Saudi Arabia’s increased interest in actively participating not only in the resolution of regional issues but also issues at the international level. The Russian minister said he sees the importance of permanent and mutual coordination between the two countries at the level of ministries and government agencies and in the areas of trade, economy, and investments between Riyadh and Moscow.

"We always agree on the necessary steps to develop cooperation between Russia and Saudi Arabia," Lavrov added.

Iranian presence in neighboring countries in oil and gas exploration

Director of Exploration of National Iranian Oil Company (NIOC) stated that currently Iran has oil and gas exploration relations with four neighboring countries. Transferring exploration technologies to neighboring countries is creating value and generating income for Iran.

Making the remarks in a press conference, Mehdi Fakour said that exploration has a special status in the oil industry, stressing that exploration maps the country's energy future.

The transfer of exploration technologies to neighboring countries can create value and generate income, the official further reiterated.

Pointing out that there is no local exploration management in the countries around Iran, the director of the exploration of the National Iranian Oil Company said this is a prominent position for the Iranian Ministry of Oil to present itself to the neighboring countries and Eurasian countries, and they are also willing to cooperate with Iran.

Emphasizing that this important issue has not been possible in the past years, Fakour clarified, “We now have exploratory relations with four neighboring countries.”

He pointed to the holding of meetings with Oman and said, “We had meetings with the minister of Oman and they accepted all the proposals for exploration cooperation to form a joint team and advance the agreements.”

The official also named Tajikistan, Russia, and Iraq as the three other neighboring countries cooperating with Iran in the field of exploration.