egyptair news 14 feb 2015
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This is the most important daily news about civil aviation and airports .. Published by PUBLIC RELATIONS Of EGYPTAIR Holding Co.TRANSCRIPT
صشىيغشا رظ ى اىىفبء ىزنش اىذبى ىيزقبػذ ثبىششمخ اىقبثضخف جى أسشي سائغ ظذ اىيجخ اىقبثخ ىيؼبي ثبىششمخ اىقبثضخ
صال وصيخ اىذبى ىيزقبػذ ثبىششمخ 101ىصشىيغشا دفال ىزنش
ثذضىس اىغبس سبخ اىذف سئس 2014اىقبثضخ وقغبػبرهب خاله ػب
ذذ "سئس اىقبثخ اىؼبخ ىيقو اىجىي و" دس شذبره " صشىيغشا و
.سئس اىيجخ اىقبثخ ىيؼبي ثبىششمخ اىقبثضخ " خشجه
وقذ أػشة اىغبس سبخ اىذف ػ سؼبدره ثذضىس اىذفو اىزي جسذ ؼ
اىىفبء واىؼشفب ثبىجو ألثبء اىششمخ اىز ثزىىا اىىقذ واىجهذ ىشفؼخ
اىششمخ اىىعخ ووضؼهب ف صبف ششمبد اىغشا اىؼبىخ، وقب ثصبفذخ
جغ اىنش وذه شهبداد رقذش ونبفأح بىخ رقذشا ىجهىده خاله
وأمذ ىه أ صشىيغشا سظو ثبثهب فزىدب دائب أب . األػىا اىبضخ
أثبئهب
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)ربثغ(
سئس اىيجخ اىقبثخ ثبىششمخ اىقبثضخ " ذذ خشجه" بدخ أخشي رقذ
ثبىشنش ىجغ اىذضىس وػي سأسه اىغبس سبخ اىذف ػي سػبزه
اىنشخ ىهزا اىذفو ورقذ ثبىزهئخ ىيسبدح اىنش زب ىه اإلسززبع
ثبىشديخ اىجذذح دبره وأ ىفق اهلل اىؼبي اىذبى ف إسزنبه
.سشح اىجبح خبصخ وأ اىششمخ ػبشح ثبىنىادس اىجششخ اىزضح
قب ثزقذ اىذفو ػجذ اىؼظ صذق ػضى اىيجخ اىقبثخ وسزشبس اػال
سئس اىششمخ اىقبثضخ ىيغبساد واىالدخ اىجىخ واىششمخ اىقبثضخ ىصش
ىيغشا، مب أششف ػي رظ اىذفو اإلداسح اىؼبخ ىيؼالقبد اىؼبخ واإلداسح
اىؼبخ ىيذػبخ واإلػال ثبىششمخ اىقبثضخ ىصش ىيغشا
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وصش اىغشا ىـ »اىىادي«: سزؼذو إلجالء اىصش ىجب .. وزظش
رؼيبد اىخبسجخ
امذ اىغبس دسب مبه وصش اىغشا اىذ ف رصشخ خبص ىيىادي ، ثب
صش ىيغشا ػي ار االسزؼذاد الجالء اىصش ف ىجب ، ػذ صذوس
.رؼيبد وصاسح اىخبسجخ ثزىل
وأوضخ أه سجق ور اجالء اػذاد مجشح اىصش اىؼب اىبض ثبىزسق
. غ وصاسح اىخبسجخ ، ػ عشق رجؼه ثزىس
وقبه وصش اىغشا ، ثب صش ىيغشا رىقفذ ز فزشح ػ سدالرهب
ىيغبساد اىيجخ ثسجت االوضبع االخ هبك، ثشنو زؼبسض غ اال
واىسالخ اىجىخ ، وىن هبك ششمبد ىجخ رؼو غبساد ىجخ اى ثشج
. اىؼشة
و بدخ أخشي أوضخ اىىصش، ثب هبك رسق دائ غ وصاسح اىسبدخ ،
ىزشظ اىذشمخ اىسبدخ ، ف اىذ اىسبدخ اىصشخ، ورىل ثؼو اسؼبس
. خبصخ ورخفضبد ف اىشسى ىششمبد اىشبسرش االججخ واىصشخ
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اػال اىغىاسئ ثغبس اىقبهشح اثش اجؼبس دخب عبئشح صش
ىيغشا
أعلج سلطاث هطار القاهرة ، اليىم الجوعت ، حالت الطىاريء اثر
إبعاد دخاى ف طائرة حابعت لشركت هصر للطيراى قبل دقائق هي
إه أثاء ححرك الرحلت ) وقالج هصادر هالحيت بالوطار . إقالعها
الوخجهت إل أهسخردام ، فىجء قائد الطائرة بإبعاد دخاى في غرفت
القيادة وعل الفىر هرعج سياراث الوطافء إل هىقع الطائرة خىفا هي
بعد ايقاف هحركاث الطائرة وه " وأضافج الوصادر ( . حدود حريق
.... راكبا 60حن إسال ركابها البالغ عددهن 737هي طراز بىيج
www.libyaakhbar.com
اىخغىط اىسؼىدخ رشغو سدالد جبششح ث جذح واىؼال 26 فجشاش
اىجبسي
فجشاش 26رجذأ اىخغىط اىسؼىدخ اػزجبسا " ... اىسيخ"اىشبض
رشغو سدالرهب اىجبششح ث جذح واىؼال ف إعبس خغزهب 2015
االسزشارجخ ىخذخ دشمخ اىسفش اىزبخ ث خزيف بعق اىينخ
.ثبإلضبفخ إى رشجغ ودػ اىسبدخ اىذاخيخ
أوضخ رىل سبػذ ذش ػب اىخغىط اىسؼىدخ اىزفز ىيؼالقبد
اىؼبخ اىسذ ػجذاهلل األجهش ششا إى أ اىزشغو ػي هزا اىقغبع
سز ثىاقغ سديز أسجىػب
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ANA HOLDINGS Announces New CEO and
Chairman
ANA HOLDINGS )hereafter “ANA HD”( today announces
changes to its board. Shinya Katanozaka, Senior Executive
Vice President, will succeed Shinichiro Ito as President and
CEO from 1 Aprilwhile Mr. Ito will take over from Yoji Ohashi
as Chairman of ANA HD on the same date.
Mr. Katanozaka joined ANA in 1979, after graduating from
Tokyo University‟s Faculty of Law. He has held a wide range
of senior positions within the group, and was one of the key
architects of ANA‟s new holding company structure put in
place two years ago. He is aged 59.
In his 36 years at ANA, Mr. Katanozaka has led a number of
the company‟s major divisions, including corporate
planning, marketing & sales, products & services strategy,
Customer Satisfaction promotion and personnel.
Mr. Ito was appointed President and CEO of ANA in April
2009 and became President and CEO of ANA HD in 2013.
During his leadership of the group, ANA has become Japan‟s
biggest airline by passenger numbers and revenues and has
embarked on a major expansion of its international network.
Mr. Ohashi, who became Chairman of ANA in April 2005 after
previously serving as the company‟s President and CEO, will
continue to act as a Corporate Counselor of ANA HD.
Mr. Katanozaka joined the board of ANA in 2009 when he
was named Senior Vice President,Marketing & Executive
Vice President of ANA HD
http://www.atn.aero
(Continue)
Sales, Customer SatisfactionPromotion, Products &
Services Strategy. Under his leadership, ANA
introduced the „Inspiration of JAPAN‟ brand and its
fully-flat seat in Business Class. The achievement
led ANA to be awarded Japan‟s first „5-Star airline‟
by SKYTRAX in 2013.
Prior to taking up this position, Mr. Katanozaka was
Senior Vice President for Personnel, during which
time he contributed to the strengthening of training
and human resource development in the group. In
April 2012, he was appointed as Senior Executive
Vice President, Corporate Planning. He played an
important role in executing the strategic transition
to a new holding company structure. In April 2013,
ANA Group moved to a holding company structure
and Mr. Katanozaka was appointed Senior
http://www.atn.aero
JFK airport baggage handlers strike despite
sacking threat
Contract workers at New York‟s John F Kennedy airport
took strike action on Thursday morning despite a recent
letter sent by their employer warning of possible
consequences including termination.
British Airways and United Airlines passengers arriving at
JFK were greeted by a picket line of striking baggage
handlers. Some people snapped photos and videos as
they passed.
The workers who were on strike are employed by Aviation
Safeguards, part of Command Security – a company that
provides baggage handlers and security guards to
various airlines at New York City‟s airports. About 100 of
those workers handle baggage for British Airways and
United Airlines at JFK.
The reason for Thursday‟s strike was the lack of union
representation, low wages and a hostile working
environment, say the workers. The strike also served to
prove a point, as Aviation Safeguards recently sent a
letter to its employees informing them of potential
consequences, including termination, for striking and
speaking out.
Holding signs that read “Stop Illegal Threats”, the
workers marched in circles and chanted: “Airport
workers under attack, what do we do? Stand up, fight
back.”
http://www.theguardian.com
(continue)“There have been no threats. There has been none of
that,” Craig P Coy, the CEO of Command Security, told
the Guardian. The letter was only intended to inform the
workers of what can happen to employees who strike,
under the Railway Labor Act, if the company chose to act,
he said. “We want to make sure the employees are aware
and not surprised by what the law is,” he said.
According to the strike‟s organizers, only about three of
the 27 Aviation Safeguards employees scheduled to work
on Thursday morning went to work. The majority of the 24
employees went on the strike – the remaining handful
opted to call in sick.
Aviation Safeguards challenged those numbers.
“I am not there but what I was told is that we had a few
people went out this morning but they are back to work
and most of the people out there do not work for us,” Coy
said a little after noon.
At that time about 50 people – some wearing Aviation
Safeguards winter coats – were still marching in circles
outside Terminal 7.
I am not saying there aren‟t any employees out there. I am
just saying that my experience has been that most of
them are not,” Coy said.
By late afternoon some of the protesters were spotted by
the Guardian wearing bright yellow vests on top of their
coats and working.
http://www.theguardian.com
(continue)While capturing the attention of arriving passengers, the
strike didn‟t seem to disrupt the airlines‟ services.
“Our flights are operating as normal. Aviation Safeguards
has assured us there will be no disruption to our
customers‟ service,” a British Airways spokesperson told
the Guardian.
„We should be paid a lot better‟
Pedro Gamboa Bermudez, 58, joined the picket line at
6am. Instead of working his seven hour shift from 4am to
11am, he marched outside demanding better working
conditions. Bermudez has been working for Aviation
Safeguards for four and half years as a baggage handler.
Most often he works for British Airways loading bags on
the conveyor belt so that they can be X-rayed by the TSA.
When he started working for Aviation Safeguards,
Bermudez was making $8 an hour. Thanks to a recent
ruling by Port Authority, he and about 12,000 other
contractors‟ employees now make $10.10 an hour. The
increase was a victory but not enough, protesters said.
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The workers need a living wage to make ends meet in
New York, said state senator James Sanders Jr, who
came out to provide his support to the strike.
“We really don‟t have a target price but we do know
because of the value of our work that we should be paid a
lot better for what we do,” said Bermudez. “We know that
the airlines, not only do they make millions, they make
http://www.theguardian.com
(continue)billions, billions of dollars. We don‟t get to see nothing.”
International Airlines Group, owner of British Airways, is
aiming for operating profit of €1.8bn – equivalent to
£1.41bn and US$2bn – in 2015, according to Reuters.
The protest is just the latest in a series organized by 32BJ
SEIU union, which hopes to represent the contractors‟
employees in the near future.
“Welcome again to John F Kennedy airport, the largest
sweatshop in NYC, where people work in poverty wages,
multiple jobs, don‟t have healthcare, have their rights
violated,” said Rob Hill, vice president of 32BJ. “What
this strike today is about, we got to teach a bully a
lesson. That bully is Aviation Safeguards, who hasn‟t
gotten a message that airport workers have woken up …
The airport workers aren‟t going to work without dignity
anymore.”
'We wear red, they wear blue': Delta contractors barely
braving the cold
Read more
The union‟s involvement in these strikes is a cause of
frustration to Aviation Safeguards.
In May 2014, 3,800 contractors‟ employees voted to be
represented by 32BJ, according to the Associated Press
and the Wall Street Journal. The union says that Aviation
Safeguards employees were part of the vote. Bermudez
remembers participating in the vote and so does Gian
Lopez, who is employed by Aviation Safeguards as
baggage handler for Delta.
http://www.theguardian.com
(continue)Coy insists that no vote by Aviation Safeguards
employees took place.
“There is no recognition of this union. They don‟t
represent the employees. If employees want to vote for
them, they should vote for them and follow the process.
We support the employees,” said Coy, pointing out that
the company provided healthcare, benefits and supported
the recent increase to $10.10.
Bermudez, striking for the first time, said the company
healthcare was too expensive. “I didn‟t enrol for the one
they offered me because if I enrol, I am not making
enough to pay for it and I would not have anything to
support myself,” he explained.
The John F Kennedy baggage workers employed by
Aviation Safeguards were joined by other employees
including security guards and baggage handlers from
LaGuardia, who came on their day off or after their shift.
Among them was Lopez. As he walked over, Lopez was
wearing a bright red and blue NY Giants hat and a brand
new Aviation Safeguards coat.
Lopez received the new coat from his supervisor after the
Guardian reported that his uniform was not weather-
appropriate.
“It‟s warmer,” Lopez said of the coat, smiling.
.
http://www.theguardian.com
Aviation and oil prices: potentially a negative for
airport capital expenditure. Time for PPPs?Coy insists that no vote by Aviation Safeguards
employees took place.
The price of a barrel of Brent Crude, the most popular
method of tracking oil prices, is today around USD56 a
barrel - and this follows a (brief?) rally. A year ago it was
trading above USD100.
The falling oil price has already prompted the likes of BP,
Shell, Chevron, ConocoPhillips, Russia‟s Gazprom and
China‟s Cnooc to announce cuts in investment. It is
occasioned, in the main, by steadily rising supply from
non-OPEC countries, and especially from the US, and is,
in theory at least, good news for air travellers, if and
when airlines feel able to pass on any savings to their
customers (assuming they are able to, they may be
hedged at higher rates). Some airlines in Southeast Asia
and China have already reduced their fuel price
surcharge, at least.
But the other side of the industry coin is that some
countries may feel the squeeze on their big ticket airport
construction projects. Already, they are looking to trim
them back. At the very least, smaller construction
projects could be postponed or abandoned in many
countries, either because the revenues to support them
have been reduced or because of declining investment in
neighbouring oil facilities and consequential effects on
passenger traffic flows, as employees are laid off and
executive travel cut back.
http://centreforaviation.com
(continue)This could be the moment when the PPP, already gaining
in popularity as a method of ensuring critical airport
infrastructure is secured, makes a quantum leap - but the
private sector must have confidence in its counterparts in
the public arena.
Rising supply is the main cause of the oil price drop
The scale of the price reduction can be instantly ascertained
from the chart below, which is accurate to 02-Feb-2015.
Oil prices (USD/barrel) – most recent quarter: 02-Nov-
2014 to 02-Feb-2015
The biggest cause of the falling price is rising supply
from non-OPEC countries, particularly from the US and
Canada, and partly as an offshoot of burgeoning shale oil
and gas industries there. The International Energy
Agency (IEA) believes that US supply alone will raise total
non-OPEC production by a record 1.9 million barrels per
day in 2015. (OPEC is responsible for about 40% of the
world‟s oil supplies(.
http://centreforaviation.com
(continue)There is no guarantee that oil prices will remain in this zone
and the small but significant increase in the last week is
noted. Indeed, according to OPEC's Secretary-General
Abdulla al-Badri we have already hit bottom. Not only that; he
sees a real possibility that oil prices could dramatically
explode to upwards of USD200 per barrel in the future (a
figure that aviation analysts worried about incessantly during
2008/9 because at that level operating just about any airline is
unsustainable).
The Secretary General is not party to the belief that his
organisation will ride in and rescue the oil market by reversing
its previous commitment to holding steady on production.
Rather, he takes the view that the oil market is ‘self-correcting’
as oil companies have made deep cuts to their spending,
which will eventually lead on to lower production growth.
Furthermore, the oil rig count in the US is plunging, which is
regarded by some as an indicator of a bottoming in oil prices.
Then again, Citi's leading commodity research analyst
suggests that the price could go as low as "the USD20 range
for a while", reducing Citi's forecast for 2015 of an average
price of USD54, down from its previous USD63 forecast.
The simple fact: nobody knows. Not even OPEC.
The long term impact of short term low priced oil will be
today's under investment
http://centreforaviation.com
(continue)However, in the midst of all the cutting back as the industry works
through the current oversupply Secretary-General al-Badri also warns
that the industry is putting future oil supplies at risk by under-investing
today. The same may be true for airport investment.
Some oil industry analysts take the view that OPEC is a participant in
a game and that an equally likely outcome is that under-investment
has the potential at least to cause oil prices to rocket higher if demand
grows faster than future supplies. In other words, OPEC is happy to
endure short-term pain for the potential of a big long-term gain.
But assuming that, unlikely as it may seem, he is wrong, and that oil
prices continue to land south of USD75 for the foreseeable future. Or
that they continue to rally for a short time only then plunge below
USD50 again.
That will have a serious impact on the ability of many states to
balance their budgets. Treasuries do not respond well to instability,
notably when they are relying on the income from oil to underwrite
their budget.
As the chart below indicates at least 11 states need the oil price to be
above USD75/barrel in order to do so.
Marginal breakeven cost of production by country
http://centreforaviation.com
(continue)All but three of these are in the Middle East, West Asia or North Africa.
Furthermore, as this analysis by Deutsche Bank from Oct-2014
makes clear, that breakeven figure has been rising steadily over the
years.
Fiscal breakeven price (Brent crude USD bbl) 2006-2015f
Deficits are a bigger problem for some countries than others.
Owing to their considerable dollar reserves, the Saudis can
afford to overspend for a while at least, while Russia, too, has a
cushion. But countries like Nigeria that barely have any reserves
are in far greater trouble. Nigeria only has one quarter‟s worth of
assets to play with oil at USD83/barrel.
http://centreforaviation.com
(continue)Many of the high cost oil producers are due to be the
biggest airport investors
Indeed, in another survey undertaken by the BBC in the
UK, only the (non-OPEC) Kazakhstan could sustain oil
production at USD50/barrel, that mainly due to the 2014
shutdown of the Kashagan oil field and the payment of
“subsistence wages” to oil workers.
There are 115 countries producing oil, from 10.5 million
barrels per day (bpd) to just 2,000 in the case of Panama.
The real power, though, resides with the top 30
producers, those that extract more than half a million
barrels each day.
All 12 of the OPEC members are represented, with the
exception of Ecuador, which currently comes in at
number 31 on the list.
http://centreforaviation.com
(continue)The world‟s top 30 oil producing nations, over 500,000
barrels/day, including OPEC members
http://centreforaviation.com
(continue)Coincidentally, many of the countries are also the location of some of
the world’s largest airport construction projects, as shown in the
following table.
The world‟s largest airport projects in oil producing countries
http://centreforaviation.com
(continue)
This report deals mainly (but not exclusively) with those
countries where the state has overall responsibility for
airport construction and associated investment and where
oil revenues are a significant part of its income.
Non-oil dependent states could also experience turmoil in
their infrastructure - for example as the result of exposure of
neighbouring oil producing states to the situation that exists
momentarily, the Gulf being a good example.
There is a possibility that non-oil dependent states could
thrive as investment funds are redirected their way but there
are always other factors involved and such a possibility
requires further research and a separate report.
http://centreforaviation.com
(continue)The Middle East is the most likely region to suffer investment
setbacks
Diversified industries help protect UAE airport investments
Two of the largest airport construction projects anywhere are at
the existing Dubai International and under-construction Dubai
World Central airports in the United Arab Emirates (UAE),
totalling in excess of USD44 billion and with completion dates
varying from Q42015 to 2027 in the case of DWC. Dubai is
expected to become the world‟s largest hub for air transport by
around 2020, once DWC (aka Al Maktoum) comes fully on
stream. Dubai International overtook London Heathrow to the
title of world‟s busiest international airport in 2014 and is the
sixth busiest overall with 70.3 million passengers (+6.1%) in that
year.
The UAE‟s airports also include Abu Dhabi, an emirate that is
more oil dependent than is Dubai, but where economic
diversification has encouraged the country‟s non-oil and gas
GDP to outstrip that attributable to the energy sector to an extent
that non-oil and gas GDP now constitutes 64% of the UAE‟s total
GDP.
Those airports are state-funded but do not appear to be at risk
yet, partly because of the diversification of revenue earning
activities in Abu Dhabi and the fact that only around 7% of the
Dubai emirate's revenues now emanate from oil and natural gas.
In any case those reserves are expected to run out in 20 years or
so and Dubai has therefore carved an economic future for itself
that is more related to trade, entrepôt activities, financial
services and tourism; all of which require investment in the final
part of the Dubai economic jigsaw, construction.
http://centreforaviation.com
(continue)Overall, the UAE is not considered to be at risk in this respect
just yet at least. But the effect of the oil price drop has been
more in evidence elsewhere in the region and notably in Kuwait
and Oman.
Kuwait's airport project could be broken into three parts, with
private investment possible
Like the UAE, Kuwait has amassed considerable foreign
currency reserves, which means that they could run deficits for
several years if necessary. But low oil prices does focus the
mind and influence decisons on government expentiure.
Kuwait is apparently already considering breaking up the USD4.8
billion Kuwait International Airport expansion project into three
parts and in Jan-2015 formed a committee to do just that.
Options include adding new terms for current major contractor
Kharafi National Engineering and Procurement, breaking the
work up into separate private contracts, using government
engineering resources for certain infrastructure elements or
excluding certain elements of infrastructure development to
reduce costs. The development plan as it exists before any
cutbacks will increase capacity to 25 million passengers per
annum by 2025 (from 13 million) and is expected to be completed
by 2020. The Kuwaitis are inherently nervous about this sort of
infrastructure; previous plans have been cancelled on several
occasions.
On 08-Feb-2015 fears were realised when the Ministry of Public
Works tender committee recommended rejecting all bids for the
development of new terminal and infrastructure modernisation at
the airport. A joint venture between Kharafi National and Turkey‟s
Limak Holding had submitted the lowest bid, of KWD1.4 billion
(USD4.8 billion) but it was reported to be 39% above projected
programme costs and failed to meet technical specifications.
http://centreforaviation.com
(continue)Kuwait is considered to be a Middle East leader in diversifying
earnings away from oil exports but that has proved to be difficult
since the first Gulf War in 1990-91(which in itself had an adverse
upward effect on oil prices and, thereby, aviation). Hence
petroleum still accounts for nearly half of GDP and 94% of export
revenues and government income.
Oman may also be looking at trimming some of its airport
projects
it has been working hard to improve its tourism product, which is
based on culture, history and nature
Having already reduced the parameters for regional airports,
which led to a trimmer Cap Ex already, in 2011, Oman may have
other options in mind. Situated on the south eastern coast of the
Arabian Peninsula, facing the Indian Ocean, Oman has modest
oil reserves, ranking at #25 in the global table and it holds a
similar rank for natural gas reserves. A relative regional
backwater until the last twenty years or so, Oman was awarded
the title of the most improved nation in the world in terms of
development during the preceding 40 years by the United
Nations Development Programme in 2010 and it has been
working hard to improve its tourism product, which is based on
culture, history and nature rather than the hedonistic pursuits
associated with some parts of the UAE.
That product, which is expected soon to be one of the country‟s
biggest foreign currency earners, requires airport investment,
which is being undertaken by the government, a privatisation
procedure involving what was then the BAA and the now defunct
ABB Equity Ventures having been abandoned in 2004, three
years after it began.
http://centreforaviation.com
(continue)There are five projects under way in Oman; the main two are at
Muscat, the capital, and Salalah. Overall, OMR3 billion (USD7.8
billion) is due to be invested in the Muscat airport over a 10-year
period and it is one of the largest projects to ever be undertaken
in Oman's history. The Salalah airport is expected to be fully
operational before the end of 2015.
Disruption to the oil supply took place between 2000 and 2007,
prompting a fall in production of over 25% though it has since
recovered. Clearly, despite the diversification into mass tourism
and other industries oil remains very important to the economy –
it continues to account for 46% of GDP - and to the transport
construction needed to sustain new industries such as tourism.
The Public Authority for Civil Aviation and Ministry of Transport
& Communication are exploring how to diversify participants in
the aviation sector and look at self sustaining concepts including
PPPs and other mechanisms to attract private participation in
aviation at all levels and particularly in developing commercial
sources of revenues. That process has most definitely
accelerated since the oil price dropped below USD 100 per barrel
and is supported by successful privatisations in the utilities
sector.
Saudi Arabia has deep pockets and can withstand lower prices
Another Middle East country where the falling oil price might
eventually have an adverse effect is Saudi Arabia.
The world has been anticipating that Saudi Arabia, the world's
largest oil exporter and OPEC's most influential member, would
support global oil prices by cutting back its own production, but
there is little sign it wants to do this. The reasons are thought to
be so that it might instil some „discipline‟ among fellow OPEC oil
producers, and perhaps to put the US's burgeoning shale oil and
gas industry under pressure.
http://centreforaviation.com
(continue)Saudi Arabia is thought to need oil prices to be at the very least
USD85 in the longer term, it has deep pockets with a reserve
fund of some USD700 billion, so it can withstand lower prices for
some time. If a period of lower prices were to force some higher
cost producers to shut down, then the country might hope to
pick up more market share in the longer run. But there is also
some recent history behind the unwillingness to cut production.
In the 1980s, the country did cut production significantly in a bid
to boost prices, but it had little effect and it also badly affected
the Saudi economy.
The amount of investment in Saudi planned and existing airport
projects currently totals around USD10 billion, which includes
the soon to be completed USD7.2 billion King Abdulaziz
International Airport currently being constructed 19km north of
Jeddah, and the expansion of terminals 3 and 4 at Riyadh King
Khaled International Airport. The projects are part of a broader
master plan to upgrade 37 airports in the country by 2020 and
the goal of becoming a major aviation gateway for both domestic
and international demand. New airports in Jazan, Abha and Arar
will be completed in 2015, under the General Authority of Civil
Aviation‟s )GACA) efforts to improve infrastructure for domestic
air travel.
Some of the other OPEC members in the region, such as Iran
and Iraq, with greater domestic budgetary demands because of
their large population sizes in relation to their oil revenues, have
less room for manoeuvre than others. Indeed, as the above chart
demonstrates, Iran needs the oil price to be around USD130 as a
minimum in order to balance its budget.
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(continue)Lower prices are bad timing for both Iran and Iraq
Iran has enjoyed some easing of sanctions
There has been some easing of sanctions in connection with
international concern over its nuclear policy and the government
must be anxious lest it allows the opportunity to improve both its
airline fleets and airport infrastructure to slip away. rThe only
really major airport project we are aware of currently is the one
to build a new terminal (and possibly another runway) at
Tehran‟s Imam Khomeini International Airport, although there are
plans for new airports at Ahwaz (ironically linked to the
discovery of a new oil field there( and Mash‟had.
In the latter case French and Chinese companies are involved in
the financing and at Tehran Aeroports de Lyon and China SCE
Property Holdings are reported jointly to be attracted to the
chance to bid to operate the Imam Khomeini airport.
Iraq is still in rebuilding mode
Iraq is trying to rebuild in a continuously fractious „post-war‟
environment in which religious and ethnic tensions predominate,
within the framework of the loss of some parts of the country to
the rebel organisation ISIS/ISIL, which has made the problem
worse by capturing oil wells and undercutting market prices by
selling at a significant discount - around USD30-60 a barrel. It is
estimated it is making about USD3 million a day through black
market sales, the proceeds of which are almost certainly not
going to be directed towards constructing new airports.
As long ago as May-2010, plans were unveiled for an expansion
of Baghdad International Airport, to double its capacity to 15
million passengers per year. The expansion, on this occasion to
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(continue)be funded by foreign investors, will include the construction of
three new terminals and the refurbishment of the existing three
terminals, which will each accommodate 2.5 million passengers
annually. General upgrade work began in May-2013 and so far
Terminal C has been refurbished. Together with the cost of the
terminals the total investment is USD2 billion.
Iraq's Government stated it intends to invest USD50 billion to
improve airport infrastructure
More recently, in May-2014, Iraq's Government stated it intends
to invest USD50 billion to improve airport infrastructure over an
unspecified period, including new terminal buildings, air traffic
control systems, safety and security measures, IT systems,
maintenance and operational facilities. New airports are also
under construction near Duhok and Karbala. Under the
circumstances it is going to be difficult for the government to
attract foreign investors so the availability and price of oil have
even greater significance here.
Falling prices are a double edged sword for Egypt
The fall in the oil price is regarded as a double edged sword in
Egypt, where it will cut Egypt's fuel subsidy bill by USD4.2 billion
but it could also hit the finances of oil-exporting Gulf allies who
have given Egypt billions of dollars in aid.
Gulf oil exporters have thrown their weight behind Abdel Fattah
al-Sisi, who orchestrated the overthrow of elected Islamist
president Mohamed Mursi in Jul-2013. Saudi Arabia and the UAE
consider Egypt a strategic ally in the fight against the Muslim
Brotherhood, which they see as a threat to their own ruling
orders.
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(continue)However, the sums provided to Egypt so far are relatively small
when compared with the Gulf's savings, so it is likely things
would probably have to get a lot worse before they cut aid.
he country will need extended largesse to continue unless it can
attract the private sector
Egypt has never more than partially embraced the privatisation
of its airports although there are or have been management
contracts at Marsa Alam, Alexandria and Cairo. Egypt has been
and is the recipient of loans from the World Bank (a Cairo
terminal) and Japan (Alexandria Borg el Arab airport) and the
country will need extended largesse to continue unless it can
attract the private sector, both domestic and international, to
projects which include an increase in overall airport capacity
from 30 million now to 60 million by 2050, an overhaul of the air
navigation system and the USD10.5 billion five-stage, 20-25 year
airport city project at Cairo.
That project is expected to generate direct employment for up to
30,000 workers and indirect employment for another 90,000.
(Note the estimated cost of that enterprise continues to fall, from
USD18 billion to USD15 billion to today‟s estimate of USD10.5
billion).
Russia is in urgent need of private sector support for airport
development
Moving away from the Middle East and North Africa it almost
goes without saying that the tumbling oil price has had a
dramatic effect on the fortunes of one of the world‟s largest oil
producers, Russia.
Rosneft, the partly state-owned oil giant, has already been bailed
out with cheap central bank cash to prevent it defaulting on its
debts.
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(continue)Russia loses USD2 billion in revenues for every dollar fall in the
oil price
Falling oil prices, coupled with western sanctions over Russia‟s
support for separatists in eastern Ukraine have hit the country
hard. Its economy depends on energy revenues; oil and gas
account for 70% of Russia's export incomes. Russia hiked its
interest rate dramatically to 17% in order to support the rouble,
demonstrating how heavily its economy depends on energy
revenues, with oil and gas accounting for 70% of export
incomes. Russia loses USD2 billion in revenues for every dollar
fall in the oil price, and the World Bank has warned that the
country‟s economy would shrink by at least 0.7% in 2015 if oil
prices do not recover. But, as with Saudi Arabia, Russia looks
unlikely to cut production to shore up prices.
he government has cut its growth forecast for 2015, predicting,
too, that the economy will sink into recession.
There has been a distinct trend towards private sector
participation in Russian airport development over a number of
years (see the related report:
http://centreforaviation.com/analysis/global-airport-finance-and-
privatisation-capa-review-2014-the-big-funds-dominate-
transactions-202694).
Even so, there are many projects around the country that require
a considerable input of public sector funds merely to renovate
runways and other infrastructure including areas such as Crimea
that have recently come under Russian control.
the cabinet calculated that close to USD10 billion would be
needed to improve infrastructure in and around the Moscow Air
Hub alone
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(continue)18 months ago the cabinet calculated that close to USD10 billion
would be needed to improve infrastructure in and around the
Moscow Air Hub alone; the funding to be found in the federal,
Moscow and Moscow region transportation budgets. Some of
this may come from the private sector as Sheremetyevo and
Vnukovo airports are to be merged and privatised but there is
still a huge public sector requirement to be catered for by
dwindling financial resources.
Kazakhstan has a much lower production price
Once a Soviet republic, Kazakhstan is one of the few countries
able to balance its budget with such a low oil price as mentioned
earlier.
There are numerous large scale airport projects in place and the
government investing approximately KZT99 billion (EUR473
million) between 2015 and 2017, involving reconstruction of
runways and passenger terminals, the modernisation of
Kyzylorda and Shymkent airports, as well as a new passenger
terminal building at Astana International Airport.
n Africa, Nigeria is a standout problem case
Energy sales account for 80% of Nigeria‟s revenue - and airport
privatisation process has stalled
In Africa, the biggest potential casualty by far is Nigeria. As with
Iraq and Iran, Nigeria has greater domestic budgetary demands
because of a large population size (at 151 million, it is the most
populous country in Africa, accounting for 18% of the continent's
inhabitants) in relation to oil revenues.
Nigeria is Africa's biggest oil producer and ranks at #13 on the
global production list. It has achieved growth in the rest of its
economy but despite this it remains heavily oil-dependent.
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(continue)Energy sales account for up to 80% of all government revenue
and more than 90% of the country‟s exports.
Against this background Nigeria has been attempting to privatise
its airports for many years, with some small successes such as
Lagos International Airport‟s T2, which has been operated under
a PPP for several years now. Privatisation is consistently called
for, including by FAAN, the Federal Airports Authority, but the
process is painfully slow in a country strangled by excessive
bureaucracy and other drawbacks. In 2014 the government
publicly rejected plans to privatise FAAN because of security
reasons, citing the way in which the US government and its
agencies had taken a stronger hold on their airports since „9/11.‟
There remains an underlying desire to privatise airports on a 15
to 20-year concession scheme but the political will is weak.
Meanwhile, there is some USD1.7 billion of investment into
airports including Lagos, Abuja (the capital) and Port Harcourt,
mainly on new terminals.
In Asia, Malaysia is a major regional centre for oil and gas
Southeast Asia has only two countries in the top 30 oil
producing nations – Indonesia (23) and Malaysia (29).
Despite Malaysia‟s fairly low ranking globally, its oil reserves are
the fourth highest in Asia Pacific after China, India, and Vietnam.
669 million barrels were produced in 2014, a reduction of 4%
over the previous year. The country is strong in the production of
liquefied natural gas, being the world‟s second largest exporter
and production has risen over the past two decades to serve the
growing domestic demand and export contracts. Nearly all of
Malaysia‟s oil comes from offshore fields. Declines in production
at Malaysia‟s major producing oil fields in the past decade have
led government efforts to encourage investment in enhanced oil
recovery and development of smaller and marginal fields, as well
as deepwater fields.
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(continue)The oil and gas industry is very significant here. As a result of
rising regional and domestic demand for crude oil and oil
products, Malaysia plans to become a regional oil trading and
storage hub by increasing the country‟s refining and storage
capacity.
Most of Malaysia‟s main airports have a degree of protection
from the machinations of the oil industry where investment is
concerned, as they are privatised by way of a stock market
flotation over 15 years ago, the first in Asia. But any loss of oil
revenues must impact on investor sentiment in general.
For the moment most of the investment dollar is going into Kuala
Lumpur International Airport (KLIA) where KLIA2, the new
„budget‟ terminal, opened in May-2014 at a price well over budget
of USD1.3 billion. It has since been subject to scrutiny on the
grounds of safety concerning ground stability issues.
Nearby Brunei is more dependent on oil
The tiny state of less than half a million people is the 48th largest
producer globally making it the fifth ranked in the world by gross
domestic product per capita at purchasing power parity and the
fifth-richest nation out of 182, based on its petroleum and natural
gas fields, according to Forbes. The IMF has estimated that
Brunei is one of two countries (the other being Libya) with a
public debt at 0% of the national GDP.
With that level of prosperity a fall in the oil price over even a
protracted period should not impose too greatly on the delivery
of transport infrastructure but in any event Brunei has already
completed the necessary development for the foreseeable future
with the transformation of what it calls „a landmark airport
terminal‟ and the doubling of capacity from 1.5 million to three
million ppa.
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(continue)The modernisation projects, which included new roads, cost
BND130 million (Brunei dollars) or USD95.7 million and were
completed in Nov-2014. Just in time, perhaps.
The US – Now a major oil producer, but with collapsing
infrastructure
One of the key determinants of the oil price momentarily of
course is the United States, the world‟s third largest producer,
owing to the extra supplies emanating from new sources in
different parts of the country, and especially in North Dakota. The
growth of oil production in North America, and particularly in the
US, has been staggering. US production levels are at their
highest in almost 30 years. This growth in America‟s energy
production, where gas and oil is being extracted from shale
formations using hydraulic fracturing or „fracking,‟ has been one
of the main drivers of lower oil prices, essentially severing the
linkage between geopolitical turmoil in the Middle East, and oil
price and equities.
This additional supply could, of course, end up undermining
itself. A point must be reached when the consistently tumbling
price ensures that production is no longer viable here, either. On
the other hand though, even though many US shale oil
producers have far higher costs than conventional rivals, many
need to carry on pumping to generate at least some revenue
stream to pay off debts and other costs - a sort of Catch-22.
The reasons why airport privatisation has failed to gain any sort
of substantial ground in the US has been well documented many
times previously. (For a brief synopsis see the related report:
http://centreforaviation.com
(continue)http:// centreforaviation.com/analysis/global-airport-finance-and-
privatisation-capa-review-2014-the-big-funds-dominate-
transactions-202694).
But in the meantime, US airports need to complete at least
USD71.3 billion worth of essential infrastructure projects before
2017 and the value of the projects we know of is in the same
order though much of this is accounted for by multi-year „master
plan‟ led developments at the largest hubs )Chicago, Los
Angeles and New York alone account for some over USD15
billion).
The nation is accused by some of its representative
organisations of falling progressively behind due to the lack of
funds being invested into developing gateways. They also allege
the US‟ global competitiveness and economic/job growth are
imperilled by collapsing transportation infrastructure.
Essential funding for runways (repairs and new where required)
usually comes from the FAA, but for other parts of the airport it
must be found from local (municipal/county) resources, from
bond issues and sometimes from the airlines where they manage
terminals.
As things stand it is difficult to envisage a further worsening of
infrastructure renewal activity as a direct result of the falling oil
price, even if the US is a primary cause of it. America‟s
commercial income is enormously diversified after all. Indeed,
that downward price variation is a major determinant of the
improved fortunes of the country‟s airlines )American for
example projects a USD5 billion saving in 2015), indirectly giving
a boost to the airports.
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(continue)Canada‟s east may benefit from the oil price but the west - and
its airports - won‟t
A similar situation exists in Canada, the world‟s fifth largest
producer. Oil extraction and refining is, with logging, one of
Canada‟s main industries and responsible for about 8% of GDP.
Canada‟s oilfields are mainly in Alberta, including the five major
but not yet fully exploited oil sands reserves, where production
is estimated by analysts to be profitable at a price of USD30 to
USD40 per barrel. Reserves are also found in Saskatchewan and
Newfoundland to a lesser degree. The enhanced production
there has, together with that in the US, been one of the biggest
factors in the falling price globally. A „similar situation‟ also
because most of the airports are still mainly within the public
sector even if they are no longer administered by Transport
Canada, courtesy of not-for-profit stakeholder managed entities.
We are aware of approximately USD8 billion worth of airport
construction projects across the country, of which US1.7 billion
is allocated to a new runway and terminal expansion at Calgary
Airport in Alberta; the city now also becoming one of Canada‟s
leading finance centres, possibly soon to rival Toronto.
Canada‟s economy will probably weaken in 2015 as the slump in
oil prices cuts exports and investment
As with the US, Canada has a much diversified industrial base,
but crude oil remains the country‟s largest export and a report by
Bloomberg in late Dec-2014 predicted that Canada‟s economy
will probably weaken in 2015 as the slump in oil prices cuts
exports and investment. GDP growth is expected to fall to below
2% in 1H2015. A reduction in drilling has already led to a decline
in support services for mining, oil and gas companies in Alberta
and Saskatchewan.
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(continue)In infrastructure terms, including airports, the effects are most
likely to be felt in the west and central areas, while the eastern
part of the country and particularly Ontario and Quebec should
experience a beneficial impact from the falling oil price.
Latin American oil producing nations will soon feel the squeeze
In Central and Latin America, Brazil, Venezuela and Mexico are,
respectively, the 12th, 9th, and 10th biggest oil producers globally.
Brazil is a major oil consumer, but also a net exporter
According to the Brazilian state-owned Petrobras, the oil and
natural gas sector‟s contribution to Brazilian GDP increased
from 3% in 2000 to 13% in 2014.
Brazil is also the tenth largest consumer of oil products but is a
net exporter of oil since 2011. Extraction and distribution is
shared amongst 50 companies but Petrobras, previously the
monopoly organisation, is the only global oil producer, with
output of more than two million barrels of oil equivalent per day.
In addition to the reserves being worked now the offshore Tupi
oil field, discovered by Petrobras in 2007, is believed to hold
between five and eight billion barrels of recoverable light oil and
neighbouring fields may even contain more, which all in all could
result in Brazil becoming one of the largest producers of oil in
the world.
This is important because another factor in the mix is that Brazil
still imports some light oil from the Middle East, because several
refineries, built in the 1960s and 1970s, are not suited to process
the heavy oil in Brazilian reserves, discovered decades later. (A
similar scenario exists in Britain –see below - with regard to the
oil quality).
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(continue)Brazil has the world's second largest known oil shale resources
On top of all that, Brazil has the world's second largest known oil
shale resources (the Irati shale and lacustrine deposits) and has
second largest shale oil production after Estonia.
Taking all this evidence into account Brazil would be prone to an
immediate adverse effect from the oil price drop were it not for
the fact that it is only a minor exporter of crude because of
internal consumption. As a result, the effect of the falling oil
price on Brazil so far is mixed.
But the longer term consensus appears to be that the oil-price
bonanza is over for Latin America generally, and that its oil-
producing nations will soon feel the squeeze. Political stability in
the region, heavily dependent on the export of commodities, will
also suffer from these price swings.
How would that impact on Brazilian airport construction? While
some responsibility has been removed from state operator
Infraero in the case of the partially privatised airports in Sao
Paulo, Rio de Janeiro, Brasilia, Belo Horizonte and Natal, that
organisation is still responsible for driving forward construction
activities and meeting deadlines as majority shareholder.
Furthermore, Brazil has a massive regional airport expansion
programme in place covering the construction or refurbishment
of 270 airports nationwide and little of that will attract private
financing. In Dec-2014, the Brazilian Development Bank (BNDES)
projected a 49.5% increase in airport investments between 2015
and 2018 compared with the preceding three-year period, to
BRL16 billion (USD6.2 billion).
With talk of mass protests again over the construction of 2016
Olympic Games facilities while health and education investment
suffers, something has to give and the airport programme must
be in the frame.
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(continue)The position is worse in Venezuela
Venezuela has plans for c. USD700 million of airport investment
presently. Venezuela has a similar multi-regional airport
modernisation scheme to that of Brazil, albeit on a much smaller
scale, and provided for mainly by the public sector. In Venezuela
„privatisation‟ in the airport sector at least has usually meant
transferring control from central government to local states,
although a 20-year operation and expansion contract was put
into place at Margarita International Airport in 2004, involving
Flughafen Zurich and a local associate. However, it was quickly
declared void.
Venezuela‟s economy was severely affected by the economic
crisis. The country failed to diversify its oil-dependent economy
(40% of its fiscal receipts and 90% of foreign exchange) and
thanks to economic mismanagement it was already finding it
difficult to pay its way even before the oil price started falling.
Inflation is running at about 60% and the economy is teetering on
the brink of recession.
The need for spending cuts is clear, but the government faces
difficult choices. Removing the subsidies on petrol prices that
cost the government USD12.5 billion a year is not on the agenda.
A petrol price rise in 1989 saw widespread riots that left
hundreds dead.
Venezuela has a public debt of around 50% of GDP and a budget
deficit of 16%, which puts it in a very vulnerable position. Again,
airport investment would seem to be a candidate for the chop.
ew Mexico City airport safe(ish) but surface transport links could
be at risk
Finally, Mexico, where the largest airport project in the region,
and one of the largest in the world, is almost under way at
Mexico City following years of vacillation.
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(continue)There is some concern in Mexico – the world‟s 10th largest oil
producer - about the falling oil price and its impact on
infrastructure. Moreover, although Mexico‟s fiscal situation is
stronger than Venezuela‟s, it is undergoing a wave of protests
and discontent (over, for example, the killing of 43 students and
a scandal involving the president and his first lady) that could
easily develop into widespread turmoil. Although democratic
order itself is not under threat, the government‟s capacity to
bring about reforms and maintain order will be severely impaired
in the coming year.
In the midst of this dissatisfaction the country has been forced to
adjust its budget for 2015 to account for new price assumptions,
although the old price assumption of USD82 per barrel of oil was
considered conservative by regional standards.
government representatives revealed that two surface transport
projects including a rail line have been cancelled because of the
oil price decline
In a webinar on 04-Feb-2015 government representatives
revealed that two surface transport projects including a rail line
have been cancelled because of the oil price decline. At the same
time they saw no reasons – yet – why the new USD9.1 billion
Mexico City airport project should be modified. The airport is to
be financed 58% from public funds and 42% from the private
sector. But it should be noted that – strangely - surface transport
links to and from the airport have not yet been agreed upon as
the airport, 30 km outside the city, comes under a different
jurisdiction. The existing airport is in Mexico City and therefore
governed by the city council, while the new one is in the State of
Mexico‟s jurisdiction.
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(continue)Given the penchant in Mexico to promote bus travel over rail
travel )including the „high speed‟ variety( it would be of little
surprise if surface transport schemes to connect with the new
airport were axed or at least postponed. The airport itself will
surely avoid the axe and even „trimming‟ but private sector firms
(and there are many in Mexico, including the ASUR, GAP and
OMA multi-airport operators, two of which are listed on various
stock exchanges as well as OHL, which is represented at Toluca
Airport near Mexico City) may not be as inclined as they might
have previously been to commit to it.
There are some Latin American countries that will probably
benefit from the oil price drop as they are mostly net importers
by some margin. They include Argentina, Bolivia, Chile and Peru.
They will see their industrial production costs decrease and
disposable consumer income go up. The benefits for Argentina,
however, will be limited, as it is also a relatively large oil
producer and does not import much. And its ambitious plans to
develop the Vaca Muerta shale field are now at risk, as the break-
even price of producing there is above the current oil price.
There is limited airport investment in Argentina (c. USD500
million) and Bolivia (c. USD300 million), but considerably more in
Peru (USD1.7 billion, mainly at Lima‟s Jorge Chavez International
Airport while work will commence on the USD658 million
Chincero Cusco airport concession in 2Q2015.
Investment in Chile is dominated by the USD700 million
management and development contract for the concession of
Santiago de Chile Arturo Merino Benítez International Airport,
which was recently won by the Nuevo Pudahuel consortium
consisting of Aéroports de Paris (45%), VINCI Airports (40%) and
Astaldi (15%).
http://centreforaviation.com
(continue)Airports servicing the North Sea oil fields are most at risk of
reduced investment in Europe
This survey ends with a brief consideration of the effects in
Europe. As the Top 30 Oil Producing Nations table reveals,
Europe is represented by Norway (#15) and the UK #20) although
the remainder of the European Union as a whole is placed at #14
(Norway is not a member of the EU).
The United Kingdom is a substantial oil producer, but is now a
net importer
The UK has a wide and diverse range of businesses but while
some, such as textiles and heavy engineering have declined
enormously, oil production should not be underestimated. Oil
reserves were valued at an estimated GBP250 billion in 2007 and
it is estimated there is still 30-40 years of production left (around
24 billion barrels). But those reserves have been declining so
that while from the late 1970s to the early 2000s the UK was a
major exporter of oil and gas it is now a net importer.
Even so, the oil and gas industries in the UK generate turnover in
excess of GBP35 billion per annum (USD53.6 billion) and the
industry is the country‟s largest industrial investor. 98% of
petroleum is produced from offshore fields, mostly in the North
Sea. Typically, a barrel of North Sea crude oil will yield 3% Liquid
Petroleum Gas, 25% diesel, 20% kerosene (jet fuel/heating oil),
12% fuel oil (heavy residue for power generation) and just 37%
petrol, despite the common belief amongst British drivers that
most of it ends up in motor vehicles.
The most likely effect of the falling oil price will be on those
airports that service these industries. They lie along the East
Coast, from Aberdeen in Scotland down to Norwich in East
http://centreforaviation.com
(continue)Anglia. (The recently closed Manston Airport in Kent might also
have serviced these industries, along with Southend Airport and
the proposed Thames Estuary Airport but they are all south of
where the main action is).
Some of these East Coast airports are already having a hard time
of it, notably Durham Tees Valley, where passenger traffic
declined appreciably again in 2014 from what was already a new
low of 159,500, and which is really only sustainable through a
regular connection with Amsterdam. Also Humberside, which
handles less than 250,000 passengers a year.
It is Aberdeen Airport investment that is likely to be the worst
affected however. Around 90% of the UK's oil and gas production
and reserves are in the geographic waters around Scotland. The
oil and gas sector makes an important contribution to the
Scottish economy and was a big factor in the independence
debate in 2014. In 2012-13, the output from the Scottish
geographic share of the UK oil and gas sector accounted for
GBP18.4 billion, 13% of Scottish GDP.
BP has already said it is to cut capital investment by USD6 billion
(GBP4 billion(, on anticipation of a “new reality” in which the oil
price slump is likely to last for several years, varying from
USD45-USD60 a barrel and certainly much less than USD100 a
barrel. BP is but one of the major oil companies that have
collectively pledged to slash more than USD46 billion from their
planned capital spending budgets.
Aberdeen, which BP promotes as “the energy capital of Europe,”
is the headquarters for its North Sea upstream business,
covering offshore operations, terminals and pipelines in both the
UK and Norway, employing nearly 4,000 people.
BP reported a USD969 million loss for 4Q2014after taking a
USD3.6 billion charge, mostly to reflect the impact of the lower
oil price environment.
http://centreforaviation.com
(continue)Statoil seeks to shield its big new North Sea field, offering
protection to airports on the Norwegian coast
Aberdeen and the two main Norwegian coastal cities of
Stavanger and Bergen are, like it or not, closely connected by the
oil industry. While international companies such as BP are
represented there, the big beast of Norwegian oil production is
Statoil, headquartered in Stavanger. Statoil, present in 36
countries, is the world's eleventh largest oil and gas company
and the twenty-sixth largest company, regardless of industry, by
profit in the world. The company has about 23,000 employees.
The government (state) is the largest shareholder with 67% as
the company‟s name indicates, with the remainder public stock.
It has 60% of the total production on the Norwegian Shelf.
As this report is written Statoil declared it was braced for a long
period of depressed crude prices and set out plans to slash
costs and cut investment. It will cut capital expenditure by a
tenth this year, reducing exploration, spending on its US shale
prospects, and modification of mature fields.
But it is moving ahead with projects already sanctioned and will
soon unveil plans for the Johan Sverdrup oil field, which could
cost about USD30 billion to develop fully. Johan Sverdrup is
located on the Utsira Height in the North Sea, 140 kilometres
west of Stavanger. The Plan for Development and Operation is
expected to be discussed by the Storting (Norwegian Parliament)
during its spring 2015 session. Production start-up is scheduled
for end 2019 and it is a 50-year project.
Reading between the lines Statoil would appear to be more likely
to make cuts outside of its biggest projects around Norway and
this will offer some protection to the considerable investment
http://centreforaviation.com
(continue)being made by the state-owned airport operator Avinor (the
world‟s 9th biggest by revenues – USD1.6 billion in 2013) in the
Bergen and Stavanger airports; also at Oslo, the capital. Bergen
and Stavanger airports, together with Trondheim in the centre of
the country and also on the coast, are considered so important
to Avinor that they comprise three corporate divisions in their
own right, along with the fourth, Oslo. The other 42 airports make
up the fifth division. Expenditure at Bergen currently totals
USD693 million on a new terminal to open in 2017 while USD2.2
billion is allocated also to a new terminal (2) at Oslo.
Avinor intends to invest NOK37 billion (EUR4.9 billion/USD5.5
billion) in the 2014-2023 period
In all Avinor intends to invest NOK37 billion (EUR4.9
billion/USD5.5 billion) in the 2014-2023 period - the largest
investment made by the company since Oslo Airport was
constructed.
he only certainty is volatility. Private funding for airports is more
likely now
There can be no certainty about the direction the oil price will
take; if it will quickly rebound or whether there will be a long
period of depressed prices which make production barely
sustainable in many countries. What is clear is that most of the
biggest producers - the BPs and Statoils for example - believe
the latter alternative is more likely. On balance, that will be more
beneficial than disadvantageous to airlines and their customers
and generate more travel, which has a positive impact on
airports.
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(continue)It is equally clear that the big investments in airport
infrastructure in many countries are often dependent on a flow of
funds from what have, hitherto, been profitable state investments
in oil production or where private producers have undertaken the
extraction and paid for the privilege through taxes and royalties.
Some of these airport investments do now seen to be at risk and
even where infrastructure spending is modest some projects
will, at least, be suspended.
this set of circumstances may be the push in the direction of
airport privatisation
Ironically, this set of circumstances may be the push in the
direction of airport privatisation, or further push where it already
exists, that is required in some countries. Variations on the word
„private‟ appear 23 times in this report but the acronym PPP
(public-private-partnership) surprisingly only twice; in respect of
Nigeria and Oman.
But as CAPA revealed in the related report
http://centreforaviation.com/analysis/ppps-could-reinvigorate-us-
airport-privatisation-191920 airport PPPs are becoming
increasingly popular globally and especially so where there is a
„pipeline‟ of opportunities for potential private sector
investors/operators rather than just random individual ones.
In many of the countries in this report - for example Oman, Saudi
Arabia, Egypt, Iran and Iraq (political developments permitting),
Russia (ditto), Nigeria, the US etc – that is the case.
There is no doubt there are opportunities to be exploited that will
reduce the burden on challenged states - but the private sector
will only come to the rescue if it is sure the public one can also
play its part; in this new paradigm of ultra low oil prices that may
become a more palatable option.
http://centreforaviation.com
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