June 2018 - Page 2 of 2

June 18, 2018

NEOM:Saudi Arabia’s Vision 2030

In the Kingdom of Saudi Arabia, the Crown Prince Mohammed bin Salman has been pushing for economic and cultural reforms with his plan called the ‘Vision 2030’ for Saudi Arabia.

On the 24th of October, the Crown Prince announced plans to build a brand new mega-city on the Red Sea coast. The announcement came at an international business conference in Riyadh, which drew over 3,500 people from 88 countries.

The Prince announced the city project, “NEOM” and with it the news that the mega-city will be operating completely independently from the current governmental framework and regulations of Saudi Arabia. NEOM is also said to have its own tax and labour laws and an autonomous judicial system.

The Crown Prince while talking about NEOM, held two cellular phones in his hand, one was a decade old and one was a smartphone from 2017, stating that “this represented the difference between what NEOM would be and any other such area in Saudi Arabia”

He also mentioned that the plans for this mega-city would not be passed without consulting big-ticket investors and experts at every step of this project’s development.

The announcement of this plan, took many foreign investors and traders by surprise, even though the Kingdom of Saudi Arabia has been announcing a series of major changes which are being made by the Crown Prince to get Saudi prepared for the post oil-economy.

In another twist, the mega-city project, NEOM is going to be powered completely by clean-energy, including solar and wind. The 32 year old Crown Prince announced that NEOM will “not have room for anything traditional.”

The mega-city project development is estimated to cost over $500 billion, and the ambitious project would include a bridge spanning the Red Sea, connecting the NEOM city to Egypt and the rest of Africa. The total covered area of NEOM is said to be over 29,5000 square kilometres. NEOM is set to stretch into not only Egypt, but also Jordan, as well.

Saudi Arabia’s border with Jordan touches the northern end of the Gulf of Aqaba, near the Israeli city of Eilat. It also sits opposite Egypt, across the Straits of Tiran.

The Kingdom of Saudi Arabia has stated on record that the project will be developed over the years with investments coming from both the treasury of Saudi Arabia, and foreign and local investors.

The mega-city development plan of NEOM, is said to be focused on nine major sectors, including clean energy, water sustainability, biotechnology, advanced manufacturing, entertainment, and food technology with Klaus Kleinfeld, former chairman and CEO of Siemens AG, leading the development.

A statement released by Saudi Arabia, stated “NEOM’s contribution to the kingdom’s GDP is projected to reach at least $100 billion by 2030, in addition to its per capita GDP – projected to become the highest in the world,”

Source:http://www.jordanbusinessmagazine.com/economy/saudi-arabia-plans-build-mega-city-jordan-egypt

June 14, 2018

Protecting European Companies in Iran

The European Union is taking steps to protect EU companies investing in Iran from renewed American sanctions on Tehran after US President Donald Trump decided to unilaterally withdraw from the Iran nuclear deal late last month.

The European Commission said it has adopted an update of the Blocking Statute and of the European Investment Bank’s External Lending Mandate. The move follows up on the informal Leaders’ Meeting in Sofia, as well as the commission’s announcements of May 18, reads an article published by Brussels-based weekly newspaper New Europe on Monday. Excerpts follow:

“These measures are meant to help protecting the interests of EU companies investing in Iran and to demonstrate the EU’s commitment to the Joint Comprehensive Plan of Action,” the commission said in a press release.

Since the original international sanctions were lifted in January 2016 after the deal on Iran’s nuclear program, Tehran has sought foreign investment to help the Islamic Republic raise its oil production to above 4 million barrels per day by upgrading its eroding infrastructure and help finance new projects in the oil and gas sector.

Iran ranks second in the world in natural gas reserves and fourth in proven crude oil reserves.

“Through the update of the Blocking Statute, the extraterritorial sanctions that the United States will reimpose on Iran are added to its scope, while the update of the EIB’s External Lending Mandate would make Iran eligible for investment activities by the EIB,” the European Commission said on June 6.

The commission noted that this enabling measure does not, however, commit EIB to actually support projects in Iran as it is up to the bank’s governing bodies to decide to take up such financing activities in line with relevant rules and procedures.

Following the adoption on June 6, the European Parliament and the Council will have two months to object to these measures before they enter into force. If no objection is raised, the updated acts will be published and will enter into force at the latest at the beginning of August, by the time the first batch of reimposed US sanctions will take effect, the commission said.

“The European Union is fully committed to the continued, full and effective implementation of the JCPOA, so long as Iran also respects its obligations. At the same time, the European Union is also committed to maintaining cooperation with the United States, who remains a key partner and ally,” the commission said.

On May 8, Trump announced the United States’ decision to withdraw from JCPOA and to reinstate the US sanctions that were in force before JCPOA’s implementation, subject to certain wind-down periods.

Security Interests

According to the New York Times, in a letter sent on June 4 to US Treasury Secretary Steven Mnuchin and Secretary of State Mike Pompeo, EU leaders cited “security interests” in requesting that companies in Europe be granted an exemption from renewed US sanctions against Iran.

“In their current state, US secondary sanctions could prevent the European Union from continuing meaningful sanctions relief to Iran,” said the letter, signed by the finance and foreign ministers of Britain, France, and Germany and EU foreign policy chief, Federica Mogherini. Without that sanctions relief, Iran has threatened to pull out of the deal. That “would further unsettle a region where additional conflicts would be disastrous”, the letter read, cited by NYT. The agreement was “the best means through which we can prevent a nuclear-armed Iran” and there are “no credible alternatives at this time”.

The EU has criticized Trump’s decision to pull out of the Iran deal and have tried to work with the US State Department to find a solution for the European companies working in Iran.

Total Withdrawal

French oil major Total announced in a press release on May 16 that it would not be in a position to continue Iran’s South Pars 11 (SP11) gas development project unless Total is granted a specific project waiver by the US authorities.

Total pointed to the fact that on July 4, 2017, together with the other partner Petrochina, it executed a contract related to the SP11 project in full compliance with United Nations resolutions and US, EU and French legislation applicable at the time.

SP11 is a gas development project dedicated to the supply of domestic gas to the domestic Iranian market.

Given the announcement of new US sanctions, Total said it will not be in a position to continue the SP11 project and would have to unwind all related operations before November 4 unless Total is granted a specific project waiver by the US authorities with the support of the French and European authorities. This project waiver should include protection of Total from any secondary sanction as per US legislation.

Total cannot afford to be exposed to any secondary sanctions as US banks are involved in more than 90% of Total’s financing operations, US shareholders represent more than 30% of Total’s shareholding and US assets represent more than $10 billion of capital employed.

Total, which confirmed that its actual spending to date with respect to the SP11 contract is less than €40 million in group share, urged the French and US authorities to examine the possibility of a project waiver.

Source:https://financialtribune.com/articles/economy-business-and-markets/87874/protecting-european-companies-in-iran

June 14, 2018

Iran Invites Sri Lanka for Economic Commission in August

Iran has called for a meeting of its joint economic commission with Sri Lanka to be held in Tehran in August.

“As per our own assessment, the May 2018 state visit by the Lankan delegation to Iran was very good and productive,” said Iran’s Ambassador to Sri Lanka Mohammad Zaeri Amirani in a meeting with Sri Lankan Industry and Commerce Minister Rishad Bathiudeen.

“Outcomes of the state visit led by President Maithripala Sirisena were good. Among the major outcomes were the many memoranda of understanding signed between the two countries in Tehran. These pack great benefits for Sri Lanka … During this visit, President Hassan Rouhani also stressed the need to continue with the bilateral Joint Commission for Economic Cooperation meeting series, as well as to start on the new MoUs,” Amirani was quoted by Sri Lankan newspaper Daily News as saying on Wednesday.

According to the Department of Commerce, bilateral trade between the two countries last year was at $188 million—an increase of 4.5% over 2016’s total of $180 million.

The balance of trade was in favor of Sri Lanka, as 94% of total trade ($177 million) were exports from Sri Lanka to Iran. Among the leading exports from Sri Lanka to Iran in 2017 were Ceylon tea (90%), desiccated coconut (3%), other vegetable mixtures (2%) and defatted coconuts (1%).

Total imports into Sri Lanka from Iran were only $ 11 million—the leading four imports being fish, wires and cables, grapes and plastic products.

Until 2013, Sri Lankan fuel imports from Iran were at a much higher rate ($1.4 billion in 2011, $660 million in 2012).

“The series of JCEC has been helpful in advancing our relations in many ways. Since the bulk of our exports is a single product (90% of exports in 2017 constituted tea), it is time to diversify our exports basket to Iran.”

Bathiudeen said the August meeting can help Sri Lanka in this regard.

Source:https://financialtribune.com/articles/economy-business-and-markets/88035/iran-invites-sri-lanka-for-economic-commission-in-august

June 5, 2018

Revealed: dates set for Dubai Summer Surprises 2018

Six-week retail extravaganza will offer discounts of 25-75% across shopping malls in Dubai

Dubai Summer Surprises (DSS), Dubai’s annual city-wide retail celebration, will return to the city from June 22 to August 4, it was announced on Wednesday.

Organised by the Dubai Festivals and Retail Establishment (DFRE), an agency of the Department of Tourism and Commerce Marketing (Dubai Tourism), the 21st edition of the event will feature a line-up of spectacular sales, retail experiences, and weekly performances.

Ahmed Al Khaja, CEO, DFRE, said: “Dubai Summer Surprises is one of the most popular events of the Retail Calendar and we are excited to announce this year’s dates.

“Together with our partners across the emirate, we are putting the final touches to a jam-packed, six-week schedule of sales, retail promotions and events that we know will make Dubai the ultimate summer destination.”

Highlights of this year’s event include a Opening Day 12 Hour Sale, a daily Deal of the Day offer, weekly Weekend Destination surprises and the Final Weekend Sale.

Dubai Summer Surprises will feature discounts of 25-75 percent throughout the six-week period. Top name global brands will be offering knockout discounts, the statement said.

DSS will kick start with a mega 12-hour sale on the opening day with participating retail outlets at Majid Al Futtaim malls in Dubai offering up to 90 percent discounts.

Deal of the Day will offer shoppers an “incredible” deal, starting on the June 23 and finishing on August 1 while the Weekend Destination initiative will see a different mall every week offering full weekend of additional surprises and entertainment.

DSS will culminate in a Final Weekend Sale, commencing on August 2 and finishing on August 4.

Source:http://www.arabianbusiness.com/retail/397885-revealed-dates-set-for-dubai-summer-surprises-2018

June 5, 2018

Mubadala said to be among bidders for UAE’s Amana Healthcare

Sources say the fund’s healthcare unit is in advanced talks about the acquisition

Abu Dhabi’s Mubadala Investment Co is among potential bidders for the UAE-based privately-held Amana Healthcare, people with knowledge of the matter said.

The fund’s healthcare unit is in advanced talks about the acquisition, the people said, asking not to be identified because the discussions are private. Amana, which operates in Abu Dhabi and Al Ain, has also drawn interest from other large healthcare providers and investors, some of the people said.

Bank of America Corp was hired to work on the sale that could value the business at about $400 million, people said in 2016. Amana hopes to close a deal by the end of the year, some of the people said. A representative for Amana didn’t immediately respond to requests for comment, while Mubadala declined to comment.

Demand for private health care in the Middle East has been increasing with mandatory health insurance for the expats who make up the majority of the population, luring international investors to look at opportunities.

Abu Dhabi’s NMC Health planned to bid for Saudi Arabian Airlines’ healthcare business, its founder said last June. Mediclinic International agreed to combine with Al Noor Hospitals Group.

Amana was founded in 2013 and provides services including long-term acute care, rehabilitation and respite care, according to its website. Gulf Capital, an Abu Dhabi-based alternative asset manager, made an undisclosed investment in the company in 2014.

Source;http://www.arabianbusiness.com/banking-finance/397996-mubadala-said-to-be-among-bidders-for-uaes-amana-healthcare

June 5, 2018

Dubai’s DAE inks $900m agreement to sell 16 aircraft

Dubai Aerospace Enterprise says three deals include sale of Boeing 737 and Airbus A320, A330, and A350 family aircraft

Dubai Aerospace Enterprise (DAE) Ltd announced on Wednesday that its leasing division DAE Capital has signed three agreements to sell 16 aircraft with a total market value of approximately $900 million.

The aircraft covered by these agreements include Boeing 737 and Airbus A320, A330, and A350 family aircraft, have an average age of two years and are currently on lease to 11 airlines in 11 countries, the company said in a statement.

Firoz Tarapore, CEO of DAE, said: “This divestment activity will help us optimize our portfolio composition and monetize some of our recent larger-scale investments. This transaction does not impact our total number of customers.

“Proceeds will be used to pay down debt and reinvested to support our ambitious growth plans. Proactively managing our portfolio through active trading is a critical component of our long-term portfolio strategy and it is important for us to remain relevant in all segments of the secondary market for aircraft sales.”

These agreements are expected to close in the second half of 2018, he added.

Last week, DAE announced that it had signed a landmark unsecured four-year revolving credit facility with an initial commitment of $480 million which could be increased to up to $800 million.

The facility included both conventional and Islamic tranches and will support the future financing needs of the business.

Source:http://www.arabianbusiness.com/transport/397881-dubais-dae-inks-900m-agreement-to-sell-16-aircraft

June 5, 2018

Exploration plan for oil and gas approved

The Ministry of Energy and Water (MoEW) has approved an exploration plan put together by the oil and gas consortium Total, Eni, and Novatek.

The consortium, which was granted the right to drill in blocks 4 and 9, had 60 days from the date it signed a contract with the State, to deliver the plan for each block. The Lebanese Petroleum Administration (LPA) had 60 days to study and amend it.

The plan sets out the main petroleum-related activities to be carried out by the consortium. These include the completion of geological and geophysical surveys of the blocks to improve the probability that they find oil and gas.

The plan also includes a roadmap to acquire all the necessary governmental permits and approvals. The consortium is, for example, required to conduct an environmental study of the locations of the wells, with the approval of the Ministry of Environment.

All involved ministries have formed committees to study permits and approvals.

The consortium is expected to sign several service contracts and prepare an overland logistics base for exploration and production works.

Source:http://www.businessnews.com.lb/cms/Story/StoryDetails.aspx?ItemID=6532

June 4, 2018

Will a shift in Opec and Russian output policy mean $56 Brent?

The global glut is gone and the oil market has balanced
Crude oil prices plunged by 7 per cent in 2 sessions as Saudi Arabia and Russia confirmed that they would release 1 million barrels a day in the wet barrel markets. Speculative froth in the oil futures markets vanished, to be replaced by a new trading calculus based on the realities of supply and demand – as well as the unknowable (and unquantifiable!) arc of geopolitics. A market that was in panic due to the loss of Venezuelan output and US President Donald Trump’s withdrawal from the JCPOA Iran nuclear deal has just concluded that there is no supply shortage and the shale wildcatters of the Permian Basin, Marcellus and the Bakken ensure that US output will continue to rise. The sharp rise in the US dollar against the euro, emerging market currencies and industrial commodities also suggests a deflationary chill whose ominous implications must be missed by the Powell FOMC as it positions for the seventh rate rise since December 2015.

The geopolitical risk premium that spiked after May 12 has compressed as oil traders realise that a catastrophic new war in the Levant is not imminent. Unlike Teddy Roosevelt, Trump waves a big stick while definitely not speaking softly and the art of the deal is embedded in this surreal White House, not Sun Tzu’s art of war. True, US sanctions will hit Iran oil exports but, like the loss of Venezuela output, this will be offset by higher production in other oil provinces. Once again, the nemesis of an oil bull run is higher out in the US and some non-Opec producers like Mexico, Columbia and Azerbaijan.

Saudi Arabia, despite the Aramco IPO and the most expansionary State Budget in the history of the Kingdom, has no wish to trigger a global recession that would reduce oil demand. Russia, sanctioned and demonised in Washington and the chancelleries of Europe for the annexation of Crimea, the military interventions in Ukraine and Syria, cyber-espionage in the US Presidential election, the attempted poisoning of FSB renegade spy Sergei Skripal, also desperately wants rapprochement between the Kremlin and the EU. Both Russia and Saudi Arabia have no interest in an oil shock that could trigger a US/Europe recession and wreck havoc in the emerging markets.

Thanks to the Saudi brokered Opec and Russian (Ropec?) oil deal in 2016, the global glut is gone and the crude oil market has balanced. Iraqi and US oil output will surge in the months ahead to offset tight global inventories. This means crude oil prices could well fall to $56-60 on Brent. At this price point, Saudi Arabia will not seek to restrain Opec output and US shale oil output would not be uneconomic. This price reflects fundamental macro realities, not hedge fund speculative mania.

After such a violent trend reversal on credible fundamental news (Saudi/Russian output curve eases to offset the loss of Iran/Venezuelan exports) means the world’s “paper oil” speculators, who trade 1.5 billion barrels a day or 15 times the crude stored in supertankers and onshore terminals, will go short oil. This will precipitate consistent selling. The Trump White House wants lower gasoline prices in the US the summer driving season that began on Memorial Day weekend and in an autumn whose endgame is a Congressional midterm election. Trump’s strong support for Saudi Arabia’s national security interests in the Arab world is also a factor behind Riyadh’s policy shift on supply cuts. After all, Tweeter-in-Chief attached Opec for “artificially” raising oil prices. It is no coincidence that a Saudi-Russian (Al Falih-Novak) plan to raise output was unveiled to the world at the St Petersburg economic conference, Putin’s Davos on the Neva. The fact that they did not wait for the next Opec-Russian summit in Vienna on June 22 demonstrates the priority Moscow and Riyadh place to their new shift in oil policy.

The 10 per cent fall in Deutsche Bank last week means the German mega bank is the next systemic risk in the financial markets. The Fed has branded Deutsche’s US subsidiary as troubled and its shares have fallen 42 per cent in 2018, more than even Italy’s battered banks. I will never forget that the collapse of Lehman Brothers coincided with a $100 plunge in the price of crude oil. Will the autumn of 2018 be a ghastly replay of the autumn of 2008, when the lights went out in global finance?

Source: https://www.khaleejtimes.com/business/markets/will-a-shift-in-opec-and-russian-output-policy-mean-56-brent