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Gulf Business Review: July 2008 Dear reader,
Welcome to the monthly Gulf Business Review Newsletter, a deeply resume of what is happening in the Gulf Business specially related to energy in the month of May.
Dubai-headquartered Gulf Energy Maritime (GEM) - the Middle East’s largest independent commercial product tanker operator - has taken delivery of the second of 13 double-hulled tankers on order with Korea’s Hyundai Mipo Dockyard in less than three months.
If you would like to learn more about this newsletter or forthcoming events, or perhaps would like to suggest an event or article for inclusion in the next edition, please do not hesitate to contact me at projects@meconsult.co.uk
Kind regards,
David Arnold, Editor MEC International Ltd. Fax: 020 7591 4801 Email: projects@meconsult.co.uk
Saudi inflation predicted to average 11-12%Saudi Arabia’s inflation is likely to average 11-12 percent this year as the price of rice keeps food prices high.
Oman recoups some losses, UAE markets riseShares of Bank Muscat and Raysut Cement Co led Muscat’s main index to a higher close for the first time in four days, as the market partly recovered from a slide of more than 7 percent.
Dubai Islamic tops forecasts with 60% profit jumpDubai Islamic Bank topped analysts’ forecasts with a 59.7 percent rise in second-quarter net profit as demand for lending surged on economic growth in the Gulf Arab region. Net income in the three months to June 30 for the fourth-largest Gulf Arab Islamic lender by market value was 747.46 million dirhams ($203.5 million), according to a calculation by newswire Reuters based on the lender’s financial data.
Gulf oil wealth to exceed $600bDubai: Oil revenue of Gulf Cooperation Council (GCC) members is likely to cross $600 billion in 2008, prolonging the economic and investment boom in the region for the medium term, according to a report by Gulf Finance House.
Total government spending in the GCC is expected to reach $300 billion for this year while private sector projects currently underway bear a $2 trillion price tag.
New Dubai loans push borrowing to $32.5bnThe government of Dubai is raising a further $16.5 billion of loans for its commercial subsidiaries in the syndicated loan market and is turning to European and Asian lenders to counter a lack of liquidity among local banks, banking sources said.
UAE begins site surveys for first nuclear reactorsUAE energy experts have started the process of locating possible sites for the country’s first three nuclear power stations, the Gulf News reported on Wednesday.
Kuwait, Iran yet to resolve gas field issueKuwait and Iran have yet to resolve a maritime border dispute that is blocking the development of a gas field, but talks are ongoing, Kuwait’s foreign minister said on Tuesday.
Yemen’s oil revenues hit $2.6bn in 2008Yemen’s oil export revenues hit $2.6 billion in the first half of 2008, up from $1.2 billion for the same period in 2007, state news agency Saba reported on Saturday.
Gulf public spending rises 25% in ’08Gulf Arab governments will allocate about 25 percent more cash this year for public spending as their oil revenues cross $600 billion, Gulf Finance House said on Wednesday.
Oil nears $123 as US stocks fall London: Oil rebounded from lows to near $123 a barrel on Wednesday after US government data showed a drop in gasoline stocks last week, surprising analysts who had expected an increase.
The US Energy Information Administration said gasoline inventories fell by 3.5 million barrels compared with forecasts of a 200,000 barrel build, as US gasoline production dropped and imports fell.
OPEC President Says Not to Raise Oil Output The Organization of Petroleum Exporting Countries (OPEC) President Chakib Khelil said Tuesday the oil cartel will not increase its oil output even in the next winter.
UAE Energy Giant to Cut Oil Output for Maintenance The Abu Dhabi National Oil Company (ADNOC), the energy giant of the United Arab Emirates (UAE) , may cut its oil output by up to 200,000 barrels per day for maintenance of a gas processing plant in October and November, local news website thenational.ae reported on Monday.
Wood Group-CCC JV to Provide Operational Services for Middle East International energy services company, John Wood Group PLC and international engineering & construction company Consolidated Contractors Company (CCC), have announced the formation of Wood Group-CCC, a joint venture to provide operations & maintenance services for the oil & gas and petrochemical industries in Qatar, Kuwait, Saudi Arabia, Oman, UAE, Bahrain and Yemen.
UAE stocks recover after news of Dana’s gas dealDubai: With oil prices continuing to decline, global equities staged a rally that aided in the recovery of the UAE market yesterday. But it was also the news of Dana Gas starting to supply gas to Kurdistan from early August that pushed the market up.
Kuwait makes over $4 billion from oil in 3 months The state-owned Kuwait Petroleum Corp. says its profit in the first quarter of the current fiscal year shot up 74 percent to $4.15 billion (1.1 billion dinars), compared with the same period last year.
The company issued a statement Wednesday saying 79 percent of the profit was from operations and the rest from investments. The government firm controls the country’s oil sector including drilling, refining, shipping and petrochemical industries.
Kuwait’s fiscal year starts April 1. Oil is the economic mainstay for the tiny Gulf state with a population of over 3 million. It is a member of the Organization of Petroleum Exporting Countries.
NoozzVIEW; Oil market chases own tail Oil market speculators who pushed up prices in the futures markets have had their fingers badly burned. In the past ten days prices have dropped more than $20 a barrel to around $125 and industry watchers are predicting that the trend will continue. OPEC president Chakib Khelil has said that the price could fall to $70-$80 in the longer term, and has urged producer nations not to cut production to prop up price levels which many commentators believe remain unnaturally high. The arguments for continuing falls are many and various. One is that the US hurricane season has not – yet – disrupted or damaged oil installations in the southern US. Another is that concerns about a US-Israel-Iran conflict have marginally eased. A third is that stagnant energy demand in struggling western economies have forced prices to be revised downwards. Of course, all these factors can change, and change quickly, as can the crucial dollar exchange rate, currently making a modest recovery. The only certain prediction is that the oil price will continue to fluctuate in the months to come. That is unlikely to cause much concern in the Middle East, where economic planning is generally predicated on extremely conservative price forecasts. At least the past days have proved that prices can come down as well as go up. Many leading players have cause to wish ardently that they continue to do so. They include governments facing consumer unrest, as well as companies whose bottom lines have been savaged by energy costs. Derek Brown is a former Middle East correspondent for The Guardian, and is currently a freelance analyst and commentator
Saudi bank says inflation in Dubai and Abu Dhabi hit 20% in 2007 Dubai: Inflation in Dubai and Abu Dhabi probably accelerated to 20 per cent last year, almost double official figures that failed to account for the spending of foreign residents, Samba Financial Group said on Wednesday.
Inflation in the UAE, the second-largest Arab economy, hit an at-least 20-year high of 11.1 per cent, with consumer prices in Dubai and Abu Dhabi rising 11.3 per cent and 11.7 per cent, respectively, Ministry of Economy data showed in June.
Al Khaliji looks to spread wings in UAE with BLC Bank assets DOHA: Al Khaliji may complete the acquisition of $300mn worth of UAE assets of BLC Bank either through a cash deal or buying a proportionate stake in the parent Paris-based Lebanese lender.
Qatar per capita to top $100,000 in 2009 DOHA: Qatar is all set to rub shoulders with Luxembourg with its per capita income slated to top $100,000 by next year, according to Gulf Finance House (GFH).
FTSE looking to launch Gulf regional stock index by year-end Index compiler FTSE expects to create a regional index for the Gulf by the end of the year, helping broad international investment in the region’s stock markets, a senior manager told Reuters yesterday.
Bahrain says inflation steady at 3.1 pct in June Bahrain says inflation steady at 3.1 pct in June Reuters Annual inflation in Bahrain was steady at 3.1 percent in June, while month-on-month consumer prices rose 0.95 percent on higher housing costs, government data showed on Tuesday. Rising global food prices and soaring rents have spurred price rises across the Gulf, the world’s top oil-exporting region, where economies are booming on a more than six-fold rise in oil prices since 2002. Price rises in Bahrain, the smallest Gulf economy, are the slowest in the region. Annual inflation has crossed 10 percent in Saudi Arabia, Qatar, the United Arab Emirates, Oman and Kuwait this year. "The annual inflation rate amounted to 3.1 percent," the Central Informatics Organization (CIO) said in a statement, without giving details of how it calculated the rate. The CIO said in January it had revised the consumer price index and was using 2006 as the base year. It has yet to release new weightings for previous years. Annual inflation "amounted to 3.1 percent for the first five months of the current year", it added. The month-on-month rise in inflation -- the highest this year -- was due to a 1.5 percent in housing and utility costs, the data showed. Bahrain’s consumer price index rose to 106.5 points on June 30 compared with 105.5 points at the end of May. "The housing, water, electricity, gas and other fuels group has seen a rise in prices due to the rising price of home maintenance material prices," the CIO said. Food prices eased for a second month in Bahrain in June, falling 6 percent from May, the data showed. Like most of its Gulf neighbours, Bahrain pegs its currency to the weak dollar, driving up import costs. Analysts polled by Reuters in May said they expect Bahrain inflation to average 6.1 percent this year. In response to rising prices, Bahrain said in June it would spend $1.3 billion a year on subsidies for food and fuel to offset the impact of inflation on its population. Bahrain’s central bank has also raised the reserve requirement for banks by two percentage points to 7 percent in January to prevent lower borrowing costs from stoking inflation further. Bahraini money supply, an indicator of future inflation, grew at its slowest pace in eight months in May, but still surged 32.2 percent. Gulf countries will invest about $200b to boost energy output. Gulf Cooperation Council countries will be investing $160 billion-$200 billion to develop 14-20 energy projects, according to reports from the energy sector. Dr Abdullah Al Amiri, chairman of the Emirates Energy Award, told Gulf News that this amount would be invested "in the next 10-12 years to meet the increase in the Gulf energy consumption."
Sovereign funds’ assets may reach $8tn by 2013 Sovereign wealth funds, which own about $3tn in assets, may almost triple their investments in the next five years as oil and gas prices surge, State Street Corp has said.
Sovereign wealth funds (SWFs) may invest an additional $5tn in the next five years, State Street said yesterday in a report titled ‘The Growing Role of Sovereign Wealth Funds’.
Kingdom’s inflation expected to ease in 2009 JEDDAH: Saudi Arabia’s inflation fell slightly in May but is likely to average 11-12 percent this year and is expected to ease to around 10 percent in 2009. With government spending brisk, and the prospect of an early US interest rate hike receding, domestic liquidity growth is likely to remain pronounced, according to Samba Financial Group’s monthly monitor for August which was released yesterday.
GCC to Develop Civilian Nuclear Energy RIYADH, 11 December 2006 — The six-member Gulf Cooperation Council (GCC) yesterday announced plans to seek nuclear energy technology for peaceful purposes while repeating its demand to make the Middle East a zone free of weapons of mass destruction. “The states of the Gulf region have a right to possess nuclear energy technology for peaceful purposes,” the final communiqué issued after the GCC summit said.
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