News Archives - Page 97 of 101

March 4, 2018

Iran Oil Investment likely to Jump: Expert

An expert in oil market says a huge investment tide is under way in Iran’s oil industry provided that financial interactions of the country and the world normalize.
Speaking to Shana, Mahdi Asali, a veteran expert in oil market and political energy economy, said if Iran’s international relations become normalized and stable, and the country’s financial interactions with international banks and centers recover, it shall expect a huge investment tide in its oil industry by foreign financiers.

The senior expert on energy economics emphasizes the need for global investment in Iran’s oil industry in line with the world’s state-of-the-art technologies, and said: “In the face of low oil prices, OPEC countries, especially Iran and other Persian Gulf littoral states, can better compete with non-OPEC producers in attracting the world’s capital and technologies.

The following is his responses to the three questions Shana asked on the current oil market status.

Shana: Bloomberg’s news service recently quoted sources as saying that Aramco, through one of its affiliates in the United States, has been examining the possibility of sending US crude to the Asian market in February. What is your assessment of Riyadh’s efforts to export shale oil to Asian countries?

Asali: “It can be said that the Saudis are preparing for the supply of Aramco shares in the world’s financial markets, and Saudi Aramco is gradually operating like other oil and gas companies, whose shares are traded on the market and its value depends on the professional management and profitability of these companies in the global oil markets. The difference here is that Aramco’s financial resources are likely to be higher than most of the world’s oil and gas companies, as its production and export of crude oil and its byproducts are higher. These measures could be inferred as part of a Saudi strategy to prepare Aramco for performing a stronger international role. On the other hand, it is a measure to safeguard the long-term interests of itself, and in general, Saudi Arabia.

In my opinion, Saudi Arabia cannot or, for unannounced reasons, does not want to increase its crude oil output, as it has continually reduced its crude oil storage in the last two years in onshore inventories. For this reason, it has taken this clever strategy to keep its customers in the developing markets of Asia, on the one hand, and ensure its presence in the American energy market, on the other.

Saudi Arabia’s presence in the US shale boom will provide Riyadh the necessary intelligence of the industry to ensure a better position in the Organization of Petroleum Exporting Countries (OPEC), in order to affect the crude oil market. For example, a heated topic regarding US shale oil is the discussion that at which price range the item’s production can highly increase to slash the prices. The presence of Aramco in the shale oil market will provide the Saudis with accurate, in-depth information about production, process, and dynamics of manufacturing technology and investment in the financial markets in the industry, which will provide Saudi Arabia with the benefits and risks of these investments, which can lead to more effective positions in the oil markets and OPEC. And as a result, it will help Riyadh to better manipulate OPEC decisions.

Shana: The lack of investment in oil producing countries is one of the major concerns of consumers in the future. Under the current circumstances, how necessary do you think OPEC capacity building would be?

Asali: According to the International Energy Agency, investment in the energy sector, including investment in the global oil and gas industry, has declined by an average of around 20% per year over the past three years due to low oil prices (as compared to the 2011-2014 period). Of course, the performance of OPEC countries has proved relatively better than that of non-OPEC countries, due to lower OPEC production costs than non-OPECs, which allows OPEC members, especially its Middle East members, to profit even at low prices. From this point of view, consumers’ concerns can be realized because they believe that with the growth of demand by Asian countries and the lack of capacity building, oil prices in the coming years will undergo another leap that will put pressure on some of these countries.

It should also be noted that, as a matter of fact, at low oil prices, OPEC countries, especially Iran and other Persian Gulf OPEC members, can better capture global investments in their oil and gas industries in competition with non-OPEC countries, and if this does not happen, at least for countries like Iraq and the countries in north Africa, it is because of high risks of investment in these countries springing from their political and social instability.

Speaking of Iran, it seems, if the international relations of the country are normalized and stabilized, and the financial interactions of the country with world financial centers recover, we can witness a leap in foreign investment in the oil and gas industry of the country, which is highly needed for the reconstruction and modernization of production and refining technologies in the country.

Shana: What will be the fate of the OPEC and non-OPEC production cut agreement, and how much will an economized shale oil production threaten this deal?

Asali: OPEC and non-OPEC producers have renewed their agreement to maintain the current production ceiling and extend it until the end of 2018 and all parties of the agreement are apparently complying with it. Reports suggest restoration of the balance in the oil market and the lowering level of oil inventories to the average level of five years ago.

As long as Saudi Arabia is not able to increase its production or, for some reason, does not wish to ramp up its [crude oil] production, it tries to extend the OPEC and non-OPEC agreement so not to lose its market share to its OPEC and non-OPEC rivals and keep the prices at its desired levels. Recent market reviews suggest that the prices will reach the range of $70 per barrel.

But it should not be forgotten that in the current market, the unconventional shale oil has effectively eliminated the effectiveness of OPEC at high prices, and there is a consensus that if oil prices remain high for the time needed for investments in new shale oil production capacity building, the prices will decrease, so it is common sense that OPEC and its non-OPEC allies should prevent such an undesirable situation by ramping up production to prevent price increases which lead to hikes in shale oil glut in the market. It is for this very reason that, in recent days, Russian authorities, including Russian energy minister, have spoken about the need for the flexibility of OPEC and non-OPEC member states to reduce the level of OECD’s oil and gas inventories to the level of the last five years. It should not be forgotten that OPEC’s management of oil supply and the emphasis on compliance with production quotas would find meaning only when oil prices are declining, and in the context of a stable market and gradual price rise, an increase in the production of member states in relation to the quotas of concerted production, if not encouraged, will not be seriously prohibited. Therefore, in the coming months, we will probably see an increase in production from Russia, Kazakhstan and even those OPEC countries that are able to increase their output, such as Iraq. These conditions will be a good opportunity for our country to increase its oil production capacity, because it could add to its market share without negatively affecting prices.

Source:http://www.iran-bn.com/2018/03/02/iran-oil-investment-likely-to-jump-expert/

March 2, 2018

Saudi Arabia seeks new economy with $500 billion business zone with Jordan, Egypt

RIYADH – Saudi Arabia, seeking to free itself from dependence on oil exports, announced on Tuesday a $500 billion plan to build a business and industrial zone extending into Jordan and Egypt.

The 26,500 square km (10,230 square mile) zone, known as NEOM, to be powered entirely by renewable energy, will focus on industries including energy and water, biotechnology, food, advanced manufacturing and entertainment, Saudi Crown Prince Mohammed bin Salman said.

The announcement was the highlight at the opening of a three-day international business conference drawing over 3,500 people from 88 countries.

Prince Mohammed, in a rare public address, hailed it as an example of the innovative high tech future he has promised his highly conservative country.

Speaking on a panel, he said young Saudis and the promotion of moderate Islam were the key to his modernizing“dream” for his country, the world’s largest oil exporter. In a brief political comment, he said the country would eradicate extremism soon.

The stakes in the country’s rapid modernization were high.

“This is a double-edged sword. If they (young Saudis) work and go the right way, with all their force they will create another country, something completely different … and if they go the wrong direction it will be the destruction of this country,” he said.

Holding two phones – one a decade old and one a smart phone – Prince Mohammed said they represented the difference between what NEOM would be and any other such area.

“This project is not a place for any conventional investor … This is a place for dreamers who want to do something in the world,” he said.

Arranged by Saudi Arabia’s main sovereign wealth fund, the Public Investment Fund (PIF), the conference is labeled the Future Investment Initiative – an effort to present the kingdom as a leading global investment destination.

Saudi Arabia’s economy, though rich, has struggled to overcome low oil prices. Prince Mohammed has launched a series of economic and social reforms — such as allowing women to drive — to modernize the kingdom.

Officials hope a privatization program, including selling 5 percent of oil giant Saudi Aramco, will raise $300 billion.

Saudi Electricity Co (5110.SE), the state-owned utility, said on Tuesday the government would consider selling a large stake in it to the SoftBank Vision Fund, the world’s biggest private equity fund.

Riyadh, meanwhile, is cutting red tape and removing barriers to investment. It said on Sunday it would let strategic foreign investors own more than 10 percent of listed Saudi companies.

NEOM could be a major focus.

Adjacent to the Red Sea and the Gulf of Aqaba and near maritime trade routes that use the Suez Canal, the zone will serve as a gateway to the proposed King Salman Bridge, which will link Egypt and Saudi Arabia, the PIF said.

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.

“NEOM is situated on one of the world’s most prominent economic arteries … Its strategic location will also facilitate the zone’s rapid emergence as a global hub that connects Asia, Europe and Africa,” PIF said.

There was no immediate comment on the plan from Jordan and Egypt, which are close allies of Saudi Arabia. Riyadh said it was already in contact with potential investors and would complete the project’s first phase by 2025.

Prince Mohammed appointed Klaus Kleinfeld, a former chief executive of Siemens AG and Alcoa Inc, to run the NEOM project.

HUGE RESOURCES
Saudi Arabia will need huge financial and technical resources to build NEOM on the scale it envisages. Past experience suggests this may be difficult.

Bureaucracy has slowed many Saudi development plans, and private investors are cautious about getting involved in state projects, partly because of an uncertain legal environment.

But the project underlines Prince Mohammed’s ambition to rescue the economy from severe damage caused by low oil prices. NEOM will reduce the volume of money leaking out of Saudi Arabia by expanding limited local investment options, the PIF said.

A key source of future investment funds for the PIF, which now has about $230 billion of assets under management, is the planned sale of a roughly 5 percent stake in Saudi Aramco, which could raise tens of billions of dollars.

PIF Managing Director Yasir al-Rumayyan told the conference that Saudi Arabia was still on track to conduct an initial public offering (IPO) of Aramco shares in 2018, but did not say on which stock markets the company would be listed.

Aramco CEO Amin Nasser told reporters that in addition to Riyadh, possible foreign listings in markets such as New York, London, Tokyo and Hong Kong had been looked at, and a decision still had to be made.

Source:https://www.reuters.com/article/us-saudi-economy/saudi-arabia-seeks-new-economy-with-500-billion-business-zone-with-jordan-egypt-idUSKBN1CS2PL

February 18, 2018

Lebanon Defends Right To Drill For Gas In Offshore Blocks

The Lebanese oil ministry will move forward in its much-anticipated oil and gas tender, despite the inclusion of disputed territories in some of the allotted blocks, a new report says.

Current explorations taking place in an offshore gas field are “by all accounts” part of Israel, according to the Israeli defense minister. Lebanese minister Cesar Abi Khalil, on the other hand, considers the statement to be an aggression against Beirut, since Lebanon has demarcated its maritime borders and reported them to the United Nations previously.

In December, the results of Lebanon’s first tender authorized Eni, Total, and Novatek to explore natural gas prospects in two offshore blocks.

Heated letters sent to the UN by Beirut and Jerusalem from 2010-2011 showed the two nations squabbling over the right to claim an 860 kilometer triangular area as part of their respective exclusive economic zones. The dispute is still active, but energy companies are accustomed to working around border disagreements, usually by agreeing to develop a contentious block without touching areas considered to be the most contentious.

Lebanon and neighboring Cyprus signed an agreement delineating their maritime boundaries in 2007, but it remains unratified.

U.K.-based Spectrum performed surveys on the area between 2006 and 2013. The 2D and 3D seismic tests, which covered over 70 percent of Lebanese coastal waters, said the seabed could hold anywhere between 12 to 25 trillion cubic feet of it being recoverable. Before drilling began last month, Lebanon had not achieved a single well in its seabed, so all analysis of potential reserves need to be taken with a grain of salt.

In 2013, former energy minister Gebran Basil said reserves within Lebanese waters totaled 95.9 trillion cubic feet, emphasizing that reserves may be larger than previously expected. These figures were speculative, put out at a press conference to drum up excitement for the licensing round.

Source: https://oilprice.com/Latest-Energy-News/World-News/Lebanon-Defends-Right-To-Drill-For-Gas-In-Offshore-Blocks.html

February 18, 2018

The Oil Bubble Has Burst. What Now?

Those analysts who warned that oil prices can’t go on rising forever now have the chance to tell everyone else “I told you so.” Brent and WTI have fallen by 9 percent since the highs they hit in late January, with the international benchmark slumping to US$64.42 today in midday Asian trade, and West Texas Intermediate falling to US$60.61 a barrel.

The problem with bubbles is that they are so irresistibly shiny while they expand, but sooner or later every bubble pops. Sometimes the bang can be deafening, which is what happened four years ago. This time it was quite loud, too.

Energy analyst Tom Kloza from the Oil Price Information Service warned at the end of January that there is a “tremendous speculative bubble.” He warned that the price is due for a serious correction. Reuters’ John Kemp noted that bullish bets on Brent, WTI, and the four most popular oil product futures are at all-time highs, which also suggests a correction is pending.

Now, the correction is taking place. It may have started with the stock market slip on Monday, prompted by higher bond yields, but it continued with the Energy Information Administration reporting that the United States have breached the 10-million-bpd oil production threshold for the second time since last November—and apparently much earlier than most observers expected.

U.S. drillers produced 10.25 million barrels of oil daily last week, the EIA said in its weekly petroleum report, and prices slumped further as doubts about the global oversupply—which is still lingering—were reignited. But the weekly report was just additional kindling to EIA’s latest Short-Term Energy Outlook, which forecast that U.S. oil production will top 11 million bpd in 2019.

Source:https://oilprice.com/Energy/Oil-Prices/The-Oil-Bubble-Has-Burst-What-Now.html

February 18, 2018

Nearly Half Of All Public Buses Will Be Electric By 2025

Within the next seven years, nearly half of the buses used by municipal transit districts will be electric, with China playing a leading role.

That comes from a new study by Bloomberg New Energy Finance. The study predicts that last year’s sale of 386,000 electric buses will go up to 1.2 million by 2025. China will account for 99% of the world’s electric buses by that time.

“China will lead this market, due to strong domestic support and aggressive city-level targets,” wrote Aleksandra O’Donovan, an analyst for BNEF and author of the study.

Diesel-powered buses were the norm for several decades in municipal bus fleets and with private coach operators. Owners appreciated the performance of diesel engines, broad accessibility to fuel pumps, and the competitive cost of diesel fuel.

In recent years, municipal transit agency buses powered by compressed natural gas took away some of the market share that diesel buses had dominated for years. Fleet operators were impressed by the reductions in air pollution for compliance with federal, state, and local regulations offered by bringing compressed natural gas (CNG) buses into their fleets. Cost of operation became more reliable, with natural gas providing a stable fuel price. That helped CNG-powered buses see sales growth when the pump prices of diesel and gasoline shot up in 2008 through 2010.
Related: OPEC-Russia Deal Could Extend Until H1 2019

Electric buses may take away some of the market share from both diesel and CNG buses. While electrified buses are more expensive in upfront costs than diesel and CNG buses, the BNEF study found that all-electric buses can offer lower total cost of ownership through their vehicle lifecycles. The cost of fuel and maintenance expenses can be much lower. Electric buses are much easier to maintain and require less parts replacement than diesel- or natural gas-powered buses.

The BNEF study forecasts that expected declines in lithium battery prices will make electric buses more competitive with diesel buses by 2026.

Battery-powered buses also make a visible, massive presence on a city’s streets. Observers will read about the buses being electrified, which can stir up their interest and research even more. Electric buses convey a local government committed to making air quality improvements, finding savings in operating costs, and taking action to make the municipal transit agency look more innovative and committed to integrating new technology.

China’s new energy vehicle policies have been behind electric bus sales strength, and expectations that it will grow over the next decade. BYD Co., China’s largest seller of electric vehicles and backed by Warren Buffett’s Berkshire Hathaway, is well-positioned to take advantage of government incentives. Last year in China, BYD sold 128,000 new energy vehicles, which include all-electric and plug-in hybrid passenger and commercial vehicles. That went up from 100,183 in 2016.

Source:https://oilprice.com/Alternative-Energy/Renewable-Energy/Nearly-Half-Of-All-Public-Buses-Will-Be-Electric-By-2025.html

February 18, 2018

Iraq Seeks $100B Investments To Revive Oil, Transport Sectors

Iraq is looking to attract US$100 billion worth of foreign investment that would help it rebuild its oil refining and petrochemicals sectors and reconstruct crucial infrastructure after it repelled Islamic State out of its territory following a three-year war against the militants.

In December last year, Iraq declared the war with ISIS over and is now seeking foreign investments in major projects that would help it to revive its economy, which has also been hurt by low oil prices.

Ahead of a conference on Iraq’s reconstruction that will be held in Kuwait next week, Iraq’s National Investment Commission published a list of major strategic projects available for investment, with 157 different opportunities up for grabs.

A total of 18 investment opportunities are up on offer in the chemicals, petrochemicals, fertilizers, and refinery sectors.

Iraq—OPEC’s second-largest oil producer behind Saudi Arabia—will be looking to attract investment mostly in the downstream, planning the construction of new refineries with different capacities, including one at the Al-Faw Port with a 300,000-bpd capacity. The other refinery projects are a 150,000-bpd refinery in the Anbar province and a new Al-Nasiriy refinery in Thi Qar province with a production capacity of 150,000 bpd.

Iraq also plans oil storage facilities in the provinces Basra, Mosul, and Saladin.

According to the Kuwait Chamber of Commerce & Industry, Iraq will present at the conference next week feasibility studies for 60 key investment projects with total amount exceeding US$85 billion.

Railways, airports, and ports construction, reconstruction, and rehabilitation are also high on Iraq’s investment opportunities list, including berths for oil products exports and imports at the US$6-billion project for the Grand Port of Al Faw at Basra.

Iraq will probably find investments into the oil industry and agriculture easiest to attract because of its large crude oil reserves and available land and water, Mudhar Saleh, an economic advisor to Iraqi Prime Minister Haider al-Abadi, told Reuters.

Source:https://oilprice.com/Latest-Energy-News/World-News/Iraq-Seeks-100B-Investments-To-Revive-Oil-Transport-Sectors.html

February 18, 2018

Saudi Arabia’s private sector ends 2017 with strong growth

Increases in both output and new orders contributed to the growth

Saudi Arabia’s non-oil private sector ended 2017 with a sharp improvement in business conditions, according to the adjusted Emirates NBD Saudi Arabia Purchasing Manager’s Index.

The index – a composite gauge designed to give a single-figure snapshot of operating conditions in the non-oil private sector economy – fell fractionally to 57.3 during December, from 57.5. Overall, however, the latest figure showed that expansion remained steep and above 2017’s average.

Additionally, non-oil private sector companies in Saudi Arabia continued to report steep rates of expansion in output, with anecdotal evidence suggesting that domestic demands and an increase in orders from neighbouring countries has contributed to higher output requirements.

Inflows of new business to Saudi non-oil private sector firms were also found to have increased over the course of December. While the expansion was sharp, it remained below the historical average, according to Emirates NBD.

New export orders also expanded at the fastest rate since August, which extended the current sequence of growth to five months. Additionally, non-oil private sector companies continued to hire more staff in December, although at a slower rate than the series’ long-run average.

Average cost burdens in Saudi Arabia were found to have risen significantly during August, and increased demand for raw materials led to higher prices. Despite rising input costs, selling prices only rose at a fractional pace overall amid competitive pressures in the non-oil private sector.

Saudi Arabia’s private sector ends 2017 with strong growth
Increases in both output and new orders contributed to the growth

Inflows of new business to Saudi non-oil private sector firms were also found to have increased over the course of December.
Saudi Arabia’s non-oil private sector ended 2017 with a sharp improvement in business conditions, according to the adjusted Emirates NBD Saudi Arabia Purchasing Manager’s Index.

On a negative note, business confidence towards future growth prospects was found to have declined slight, even while remaining generally optimistic. An upturn in business conditions and increased marketing activity were expected to underpin output growth in the next year.

“The December PMI survey continued to show a strong rate of expansion in December, and the data suggests that non-oil growth accelerated in the final quarter of 2017, as well as for the year as a whole compared to 2016,” said Khatija Haque, head of MENA research at Emirates NBD.

“Nevertheless, we expect headline GDP growth to be close to zero in 2017 as substantial oil production cuts will offset the expansion in the non-oil sectors of the economy.

“We are more optimistic about growth prospects in 2018 however,” he added.

Source:http://www.arabianbusiness.com/politics-economics/386903-saudi-arabias-private-sector-ends-2017-with-strong-growth

February 18, 2018

Bahrain acquires Lenovo’s US headquarters

Acquisition is latest addition to Mumtalakat’s portfolio of office space in the US

Bahrain’s sovereign wealth fund, Mumtalakat, has acquired an office campus in North Carolina in the United States that houses Lenovo’s US headquarters, the company announced today.

The acquisition was made in partnership with Sentinel Real Estate Investment Corporation (Sentinel), Mumtalakat’s first joint venture with the New York based real estate investment management firm.

Mumtalakat has made a number of investments in US properties since 2014, including a $250 million in office space in Phoenix, Arizona, and Dallas, Texas, in partnership with Us-based Regent Properties.

The latest acquisition is fully leased to Lenovo, one of the largest PC makers in the world. Located in the Research Triangle Park, in Raleigh-Durham, a 7,000-acre (28 sq km) scientific research park, the campus provides strong cash flows, attractive yields and solid rent growth, Mumtalakat said in a statement.

“Real estate is a key component of our portfolio growth strategy, and the US real estate market is growing significantly. In fact, Raleigh-Durham is one of the fastest growing markets in the US,” said Mahmood H. Alkooheji, CEO of Mumtalakat.

“The area has shown strong employment growth, at twice the national average over the past year, setting a new peak in total employment. It also boasts a dynamic business climate and solid infrastructure with a growing economy, which makes it a very attractive market for us to invest in. With this transaction, the sector represents approximately 22% of our total portfolio companies.”

Mumtalakat’s real estate investment strategy will continue to focus on developed markets with a high demand for income generating assets including commercial offices, added Alkooheji.

Source: http://www.arabianbusiness.com/news/389390-bahrain-acquires-lenovos-us-headquarters

February 14, 2018

Khudairi signs Shell Lubricants distribution, Iraq

Manufacturer and Exporter of Scrap Grinder Machine

Khudairi Group has been appointed as the macro-distributor of Shell Lubricants in Iraq following a signing ceremony in Dubai.

The agreement will see Khudairi Group’s subsidiary, Al Khudairi Distribution Company, distribute Shell’s complete range of motor and industry lubricants in Iraq – including products aimed at heavy-duty transport, mining, power generation, general engineering and also consumer motoring.

Aziz Khudairi, chairman and CEO of the Khudairi Group, said: “The partnership with Shell is testament to our long standing commitment to excellence. We are confident that Shell’s technology will allow us to continue delivering premium products with high quality service to our Iraqi consumers.”

Amr Adel, GM for Shell Middle East, added: “The decision to partner with Khudairi Group will ensure further growth of the company’s premium lubricants brand in Iraq.”

The agreement with Shell is the latest in a series of deals signed by the Khudairi Group the last six months that have seen it sign both a franchise agreement with Hertz Equipment Rental Corporation (HERC) and a distribution agreement for Terex’s Genie-branded aerial work platforms in Iraq.

The HERC franchise expanded the group’s rental offering to include one of the largest light to medium equipment fleets in the country across, energy, construction and industrial customers.

The Khudairi family began trading vehicles and equipment in 1963 when it became the first dealer in Iraq for General Motors and Volvo, Subhi Khudairi (senior) established the Al Nadir Trading Company.

Today, the group is led by Aziz Khudairi and his two sons, Subhi Khudairi and Mohammed Khudairi, and employs over 250 full-time employees across its offices in Baghdad, Basra, Erbil, Sulaymaniyah, Amman, Dubai and Houston. It is also the dealer for John Deere and Sany construction equipment.

Source:http://www.constructionweekonline.com/article-37855-khudairi-signs-shell-lubricants-distribution-iraq/

February 14, 2018

Rulexx Lubricants looks to export markets for growth

Volatility in raw material prices and aggressive price competition in the UAE market are forcing local lubricant manufacturers such as Rulexx Lubricants & Grease Industries to look to export markets for growth.

Currently, Rulexx exports 80% of its products from the UAE to markets such as Pakistan and Afghanistan. The manufacturer is seeking further expansion across the Middle East, in Saudi Arabia, Iraq, Jordan, Lebanon, Egypt and Kuwait.

Rulexx’s product portfolio includes automotive oils, gear oils, transmission fluids, hydraulic oils, marine oils, turbine oils, industrial lubricants, motor oils, auto coolants, brake fluids, and greases.

The company’s production facility is situated in the Al Jurf industrial area in Ajman and houses its office, labour accommodation, R&D department and warehouse.

The plant’s storage capacity for base oil is 3 million litres, distributed in 6 storage tanks, each with a maximum capacity of 500,000 litres. Its filling capacity per shift is up to 45,000 litres, equivalent to the total capacity of two fuel tankers.

“We operate five filling machines for small packaging formats, ranging from 500ml to 10l, as well as large quantities, which include 20l, 25l and 200-l drums. We have machines dedicated to filling plastic and metal cans. The facility is equipped to fill up to six different packaging formats at the same time,” says Mohammed Abdallah, export sales manager, Rulexx Lubricants & Grease Industries.

Abdallah points out that intense price competition in the UAE market along with unreasonable payment terms are making it increasingly difficult for manufacturers to offer attractive prices while maintaining high quality standards.

“There are more than 100 factories in the UAE blending lubricants only for the local market. A large number of them do not confirm to American Petroleum Institute (API) or other standards associated with high-quality lubricants, which gives them the advantage of offering low prices that we cannot match,” he says.

Payment terms is another deterrent to doing business in the UAE, according to Abdallah. Six-month credit terms with the possibility of further delay are common in the UAE market, which does not make if feasible for a company that wants to maintain its cash flow. Rulexx maintains its sizeable market share and cash flow in the UAE by dealing only with reputed large enterprises which usually settle payments in 3–4 months.

“Almost all raw material suppliers demand cash payments. Carton and plastic suppliers may give us credit facilities from time to time, but that’s roughly 20% of our costs. No supplier will give us credit for the two major raw materials, base oil and additives. When 80% of our costs are settled in cash payments, we cannot afford to give credit to the market,” says Abdallah.

Source:http://www.constructionweekonline.com/article-48177-rulexx-lubricants-looks-to-export-markets-for-growth/