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Thursday, 16 July 2009

Iraq union blocks China, UK oil firms

The trade union representing workers of Iraq's state-owned Southern Oil Company (SOC) threatened on Thursday to prevent exploitation of one of Iraq's biggest oil fields by energy giants BP and CNPC.

Baghdad last month accepted an offer from British energy firm BP and its Chinese counterpart CNPC to work in the giant Rumaila oil field in southern Iraq that has known reserves of 17.7 billion barrels.

"If those companies try to exploit the field, our first reaction will be to stage a sit-in and to strike," union president Ali Abbas told news agency AFP.

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In Kuwait, just like the other 200 countries of the world, we are facing the imminent issue of layoffs associated with the financial crisis. The number of Kuwaitis laid-off from the private sector is estimated to be around 4500 individuals. The government, parliament, and public are ironically deeply concerned for the fate of 0.45% of the population which will be decided in 3 weeks when the government unveils its rescue plan!

The current unemployment level in the US stands at 9.5% as of June, Eurozone at 9.5% as of May, and UK at 7.6% as of June. The unemployment figure in the US is up ≈70% yoy (from 5.6%), in the Eurozone ≈30% yoy (from 7.4%), and in the UK ≈45% yoy (from 5.2%). Comparing those numbers to the minuscule 0.45% jump in the Kuwaiti unemployment numbers, one realizes the political aspect of this issue.

The recommended solutions to this problem presented by Kuwaiti parliament members are outright outrageous! These members seem to have fallen for the cries of the coalition for the “Kuwaitis laid-off from the private sector” which melodramatically stated that divorce cases increased and laid-off Kuwaitis are being dragged to jail ALL because of the layoffs.

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DFSA withdraws licence from Libertas Capital

The Dubai Financial Services Authority (DFSA) withdrew the licence of Libertas Capital to carry on financial services activities in or from the Dubai International Financial Centre (DIFC).

Libertas has a period of 30 days in which to appeal the decision.

The licence withdrawal follows Libertas’ inability to meet the applicable regulatory capital requirements.

The DFSA took this action following the issuance of a Notice to Libertas, requesting it to show cause why the DFSA should not withdraw its licence.

Libertas was a Category 4 firm authorised to arrange credit or deal in investments and to advise on financial products or credit. Category 4 firms are not authorised to accept client money.END

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Peace threatens to break out at Porsche

Porsche’s family owners were poised to settle their feud over a rescue of the ailing German sports car maker with a compromise deal that would wipe out almost all its debt. The plan includes a sale of half the sports car business for as much as €4bn to Volkswagen, a €5bn capital raising and the sale of options that can be converted into VW shares. The Qatar Investment Authority and the two families, the Porsche and PiĆ«ch clans, could inject cash and assets to strengthen the balance sheet.

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Foreigners emerge net buyers in first half

Non-GCC investors were net buyers of shares in the UAE stock markets to the tune of Dh649 million during the first half of the year, data released by the Dubai Financial Market (DFM) and the Abu Dhabi Securities Exchange (ADX) revealed yesterday.

The ADX took the lion's share with non-GCC investors including Arabs and foreigners ending the second half as net buyers of shares worth Dh600m. DFM accounted for Dh49m for the same category.

"While non-GCC investors only owned four per cent of the value of ADX stocks, they accounted for 30 per cent of all trading, buying and selling shares worth nearly Dh16billion," ADX CEO Tom Healy said.

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Central Bank calls meet on Saudi exposure today

The UAE Central Bank has convened a key meeting today of banks affected by their exposure to the two Saudi conglomerates – Saad and Algosaibi – in order to take stock of the extent of the problem and to chalk out an action plan. About 25 UAE banks are exposed, banking sources said.

"We have already received a letter from the Central Bank to this end a few days ago," the corporate head of a medium-sized Dubai-based bank told Emirates Business. This is the second such meeting being convened by the Central Bank, the first being on June 11.

Central Bank Governor Sultan bin Nasser Al Suwaidi yesterday said banks will be required to disclose the amount of loans that they have made to the Saudi companies. "There will be total disclosure," he said. "The market wants to learn about the exposure of UAE banks and that's what we will do. They will definitely have to reflect this in their year-end results," Al Suwaidi said.

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U.A.E. May Buy Part of Dubai $10 Billion Bond Offer

Central Bank Governor Sultan bin Nasser al-Suwaidi said the United Arab Emirates may buy part of Dubai’s $10 billion bond offering after purchasing the first tranche in February.

“Maybe, if our board decides, we will buy part of them and, of course, start trading these bonds very soon,” he said in a Bloomberg Television interview today in Abu Dhabi.

Dubai has already spent at least half of the $10 billion raised from the sale of five-year bonds in February to the U.A.E. central bank. The sale was part of a $20 billion medium- term note program intended to help state-affiliated companies struggling to raise cash. The second tranche is expected to be sold before the end of the year.

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UAE’s Crecent Petroleum seeks arbitration in Iran gas dispute

Crescent Petroleum, the Sharjah-based oil and gas company, will take its dispute with Iran’s national oil company to international arbitration after it said the Islamic republic failed to fulfil its side of a contract for gas imports.

Eight years ago, the privately held company signed a 25-year agreement with the National Iranian Oil Company (NIOC) for supplies of 600 million cubic feet a day of Iranian gas that were supposed to start in 2005.

But no gas has been delivered through Crescent’s undersea pipeline, which has been sitting empty for more than three years.

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Adnoc awards Dh34bn gas plant contracts

Abu Dhabi National Oil Company (Adnoc) said last night it had awarded contracts totalling Dh34 billion (US$9.23bn) for the emirate’s centrepiece offshore gas development.

Its subsidiary, Abu Dhabi Gas Industries (Gasco), awarded the contracts to build gas processing facilities in Habshan and Ruwais in Al Gharbia. The plant will process gas produced offshore by Abu Dhabi Marine Operating Company and is the major link in a scheme to boost Abu Dhabi’s gas supply by up to one billion cubic feet per day.

The gas will be used to fuel power stations and will be injected into onshore oil wells to increase production.

Gasco awarded a Dh17.3bn contract to a consortium of Tecnimont, an Italian firm, and Japan Gas Corporation to construct the gas plant at Habshan that will have the capacity to process up to two billion cubic feet per day.

It also awarded a Dh6.2bn contract to Hyundai Heavy Engineering of South Korea to construct support facilities and utilities.END

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Geithner allays Gulf fears

Timothy Geithner, the US Treasury secretary, held a series of closed-door meetings Wednesday with top UAE officials and sought to dispel concerns that the US and its dollar have become a hazardous destination for Gulf investments.

“It will remain the policy of the United States to remain committed to a strong dollar,” Mr Geithner said in an interview yesterday with Al Arabiya television. The dollar, he said, “will remain the principal reserve currency”.

Mr Geithner is the first senior US official to visit the UAE since President Barack Obama took office. Officials stressed that the purpose of his visit was primarily diplomatic, aimed at opening a dialogue between Abu Dhabi and Washington on a more equal footing than the one that characterised relations during the Bush administration.

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Top Lawmakers Endorse UAE-U.S. Nuclear Trade Deal

U.S. lawmakers introduced resolutions this week that would explicitly endorse a pending civilian nuclear cooperation agreement with the United Arab Emirates, Environment and Energy Daily reported (see GSN, July 9).

The deal signed during the Bush administration would grant the Gulf nation access to U.S. civilian nuclear materials and technology in exchange for its pledge not to produce its own reactor fuel or weapon-usable nuclear material. To annul the agreement, Congress must pass rejection legislation within 90 days of receiving the deal from the Obama administration. The pact would enter effect around Oct. 17 without congressional action, but the Atomic Energy Act requires lawmakers to consider approval resolutions.

The United Arab Emirates is considering bids from contractors from France, Russia and elsewhere to build its first nuclear power reactor; Abu Dhabi could award the deal in the fall. The nation intends to construct more than 10 nuclear power reactors in the next two decades.

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Big global rally July 15th (Re-post)

People getting overexcited about global equities’ performance yesterday.

A few thoughts:

Rallies were ”induced” supposedly by Meredith Whitney’s bullish call on Goldman Sachs. Anyone who read her report would know she is pessimistic on banks. Goldman was the only bright point she saw, and that’s due to their trading prowess.

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Qatar Tel set to increase $1.5 bln loan

Qatar Telecommunications Co (Qtel) is launching syndication of its $1.5 billion loan in order to increase the facility amount, banking sources close to the deal said.

Existing lenders to the company, plus a small number of other banks, are being invited to commit either $50 million or $25 million to the deal, the sources said. One of them added that upfront fees of 110 basis points (bps) and 90 bps are on offer, respectively.

Qtel announced in March it had signed the forward start agreement on a revolving credit facility maturing in November, extending the credit by two years.

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Saudi's Maaden to develop new gold mines

Maaden, Saudi Arabia's largest mining firm by market value, said on Wednesday it would develop new mines and explore others to compensate for declining gold output.

"Maaden is actively engaged in developing new gold mines, which will compensate for the gradual loss of production in the existing mines," Maaden said in comments emailed to the news agency Reuters.

"Ongoing exploration is expected to extend the current mines' life and add to the total reserve of gold in the years to come."

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Hesitant hedge funds tiptoe back

This time last year, the region was awash with hedge fund money betting on potential currency revaluations. But as the global financial crisis deepened, the attentions of these opportunistic investors became less welcome.

Hedge funds not only pulled out their capital – contributing to a liquidity crisis in some Gulf states – but they were also among the protagonists in a wave of short selling of regional heavyweight companies.

A year on, while risk appetite has improved and emerging markets have witnessed inflows from asset managers, hedge funds are returning only hesitantly to the Gulf.

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Entrepreneurs feel funds squeeze

Despite an established record as a manufacturer and exporter, Ahmed Abdel Wahab, an Egyptian businessman, has been finding it difficult to get a bank to lend him E£10m ($1.8m) to invest in a new plant producing brake pads.

Mr Abdel Wahab already has E£25m ($4.5m) of equity in the business, and an established record exporting pads to Europe, but even so, lenders have been balking.

“Last year it would have been easier,” says Mr Abdel Wahab. “I have not failed yet. There are promising negotiations with a bank. But it has not been easy.”

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Alafco sets course to beat headwinds

Banks like solid investments. Islamic banks require them. It is no surprise then that aircraft, airlines and aircraft leasing companies are increasingly favoured by sharia-compliant lenders.

In 2000, Kuwait Finance House, an Islamic banking company, jumped at the chance to buy into Alafco, the fast-growing Aviation Lease and Finance Company.

Alafco was transformed from a subsidiary of Kuwait Airways Corporation into a publicly listed business. It is now 54 per cent-owned by KFH, 11 per cent by Kuwait Airways while the remaining 35 per cent is public.

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