Middle East Business News Review – 28 August
Emirates National Oil Co (Enoc) announced on Tuesday it is joining hands with Saudi fuel retailer Aldrees to build at least 40 service stations in the kingdom. The Dubai-government owned retailer is facing losses at home and hopes to reverse them by expanding abroad.
Most of the Enoc’s trouble comes from the fact that it sells fuel at the petrol pumps well below the price paid for on international markets. Convenience stores and car washes at Enoc forecourts in the United Arab Emirates (UAE) help alleviate its financial burden.
However, the UAE market is not big enough to offset fuel sales losses which Enoc has said would exceed $730 million in 2011. As a result, Enoc has formed a 50:50 joint venture with Aldrees Petroleum, which enjoys healthy sales margins thanks to plentiful cheap supplies from Saudi Aramco, to increase its revenues abroad.
The UAE is on track to expand its crude oil production capacity to 3 million barrels per day (bpd) by the end of the year, two industry sources said on Tuesday.
Abu Dhabi increased its production capacity from 2.7 million bpd to around 2.8 million bpd earlier this year and expects to add another 200,000 bpd of capacity over the next few months.
In July the OPEC country’s production was ramped up close to its maximum capacity of 2.8 million bpd, the source added. The bulk of the capacity increase this year will come from the Zakum oil fields, said a second industry source, adding that production at the Murban-Bab field had also increased in 2012 without giving any details.
Israel is one of the world’s top arms exporters and is also one of the biggest arms buyers, a report released by the Congressional Research Service (CRS) at the Library of Congress said on Tuesday.
According to findings entitled Conventional Arms Transfers to Developing Nations, 2004-2011, compiled by the CRS which works exclusively for the Congress, Israel signed arms transfer agreements worth $12.9 billion in 2004-11, putting it in eighth place among the world’s eleven biggest arms suppliers (behind the US, Russia, France, the UK, Germany, China, and Italy).
In 2011, Israel’s arms transfer agreements nations totaled $400 million. Arms deliveries totaled $10.6 billion in 2004-11, including $1.8 billion in 2011. (Arms deliveries in any given year are often the results of agreements signed in previous years).
Sudan’s currency hit historic lows against the dollar on the key black market amid fading hopes of oil export fees from South Sudan, dealers said on Tuesday.
The Sudanese pound has been in freefall since South Sudan took away three-quarters of oil production when it became independent a year ago, worsening an economic crisis in Sudan.
As well as being a major source of revenue for Sudan, oil also provided dollars needed for imports. A scarcity of hard currency drove up annual inflation to 41.6% in July, more than double the level a year ago.
British oil firm Cairn Energy said on Tuesday it has bought a further position to hunt for oil and gas off the coast of Morocco in a $60 million deal that would also grant a 50% stake in a licence shared with smaller explorers like San Leon Energy, Serica Energy and Longreach Oil and Gas.
The partners plan to drill there in the second half of next year, Cairn statement added.
The Edinburgh-based company also said it was seeking further exploration ground in Spain, adding that it had made a bid to gain exposure to exploration in Cyprus, and was planning to try to win a position off the coast of Lebanon.
A special court in Dubai on Tuesday formally approved the US$2.2bn restructuring of shipbuilding unit Drydocks World, thereby making the complex debt deal effective.
Creditors holding more than 97.8% of the debt had agreed to the deal at a meeting held in July. The firm had said it would seek sanction of the approvals from the Dubai World Tribunal at a hearing on 28 August.
Drydocks, a unit of conglomerate Dubai World, approached the special tribunal in April to force recalcitrant creditors to sign up to its debt restructuring plan.
Jumeirah Group said on Tuesday it “remains fully committed to the US market” despite the sale of its only New York hotel Essex House Hotel, which will be rebranded as the first JW Marriott in Manhattan.
Jumeirah parent company, Dubai Investment Group (DIG), bought the Essex House in 2005 for $423.9m, according to real estate research and information company Real Capital Analytics.
The 509-room Art Deco hotel at 160 Central Park South was sold to Strategic Hotels & Resorts for around $375m. A DIG spokesperson told reporters the time had been right to sell the hotel.
Bahrain’s national carrier Gulf Air, struggling to recover from the effects of local political unrest, achieved a 6 percent rise in revenue in the six months through June on the back of an increase in passenger numbers.
The airline said in an emailed statement on Tuesday it had carried 13% more passengers in the first half compared with a year before, though it gave no net figures for passenger numbers or for revenue and profit.
The airline also said it had made savings in its cost base of 6.8 million dinars ($18 million) in the period but again gave no net figure.
The Qatar 2022 World Cup organising committee said on Tuesday it has nothing to fear from an investigation into the bidding process that led to its surprise victory in December 2010.
Michael J Garcia, the chairman of the investigatory chamber of the FIFA Ethics Committee, confirmed earlier this week that he would examine the bidding contests for the 2018 and 2022 World Cups.
Qatar overcame bids by the US and South Korea to win the right to host the 2022 World Cup. It will be the first time the tournament has even been hosted in the Middle East.
World oil consumers are poised to tap into emergency oil inventories as soon as early September after the International Energy Agency (IEA) dropped its resistance to a US-led plan, a source and an oil journal said on Friday.
Just one week after its chief said there was no discussion of possible emergency action, the IEA is now thought to have agreed to the idea, the industry journal Petroleum Economist reported on Friday, citing unnamed sources. The release could be as large or larger than last year’s 60 million barrel injection.