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Friday, 31 July 2009

Exclusive: Burj Dubai linked to US $4bn claim

Burj Dubai taken from a construction site.Image via Wikipedia

A top contractor employed on the Burj Dubai has sought legal advice for a mammoth US $4.1 billion (AED15 billion) claim related to work it carried out on the world’s tallest tower, Construction Week can reveal.

Korean giant Samsung Engineering & Construction sought advice from UAE-based law firm Al Tamimi & Company, according to the Legal 500 2009: Europe, Middle East & Africa, published by UK-based Legalease.

All three parties concerned in the Legal 500 report have refused to discuss the possible multi-billion-dollar claim further.

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No green light yet on Shah sour gas project

A final investment decision on the US$10 billion (Dh36.7bn) Shah sour gas project has still not been made by the Abu Dhabi National Oil Company (ADNOC) and ConocoPhillips, the US energy company, despite the two signing a joint venture agreement earlier this month.

The investment decision would be made next year, said Sigmund Cornelius, the chief financial officer of ConocoPhillips.

“We had been operating informally under interim agreements at Shah. What you saw recently was just replacing the interim agreements to formally establish the joint venture,” Mr Cornelius said. “So it should not be construed as a decision that was made to go forward with the project.” The go-ahead would depend on the bids received for several key engineering, procurement and construction packages related to the proposed gasfield development, Mr Cornelius said.

DP World comes in better by volumes

Container handling volumes at DP World fell 10 per cent in the first half of this year across its network of ports worldwide as the economic downturn devastated global trade.

“The first six months of 2009 have seen some of the most challenging operating environments our industry has ever known,” said Mohammed Sharaf, the chief executive of DP World, the world’s fourth-largest ports operator.

“Unpredictable” trade trends are also continuing in the second half of the year, Mr Sharaf said.

Sagging oil refineries

With oil prices being streamed live on bubblevision, it is easy to obsess on the hyperkinetic futures market and forget that the large, integrated companies dominating the industry also make plenty of money from refining and marketing the stuff. “Crude” is much more than just benchmark WTI or Brent, and the gyrations of different varieties, along with a glut of refined products, have rained on the supermajors’ parade.

ExxonMobil’s unpleasant earnings surprise on Thursday, for example, came from a two-thirds drop in refining earnings. The story was much the same at BP, Shell and especially ConocoPhillips, all of which suffered from a convergence in prices of low-quality heavy crude with lighter grades.

Chevron signalled its results will be similarly hit, while pure refiners Valero and Tesoro both swung to losses in the last quarter. With Latin American and Middle Eastern producers paring heavy crude output, expensive refineries suited to handle it are sputtering. And, with demand falling amid plenty of new capacity in Asia, poor utilisation is sapping earnings.

The problem may be secular, rather than cyclical, for refiners in the developed world. The coming years will be particularly tough for US refineries as a result of ebbing demand, competition from biofuels and new emissions rules. Consulting firm Deloitte compares the coming years to the collapse in US refinery profits in the early 1980s, which led to many closures. There were 319 US refineries in 1980 and 149 by 2006.

Meanwhile, utilisation, which peaked at 90 per cent in 1977, fell below 70 per cent by 1981. More recently, utilisation peaked at 93 per cent in 2004 and Deloitte forecasts it will drop to 77 per cent by 2020.

Refining, recently promoted to being a high-flying profit-centre, is back to being a drag. Talk about a crude awakening.END

Caymans court puts freeze on Sanea's $9bn

A Cayman Islands court has ordered a worldwide freeze of assets belonging to Maan al Sanea and dozens of his companies in a ruling that steps up the pressure on the Saudi billionaire who is struggling with financial difficulties.

The decision by the court to freeze $9.2bn (€6.5bn, £5.5bn) was in response to a complaint filed by Ahmad Hamad Algosaibi and Brothers, another Saudi company that is embroiled in a bitter dispute with Mr Sanea, the owner of Saad Group.

Ahab, which is owned by one of Saudi Arabia's most prominent families, has accused Mr Sanea of "massive fraud" involving as much as $10bn in a separate suit filed in a New York court.

Bahrain central bank intervenes in dispute

Bahrain’s central bank said on Thursday it had taken control of the Bahrain-based banks owned by two prominent Saudi companies that are locked in a bitter dispute as they struggle with financial difficulties.

The central bank said it had assumed the administration of The International Banking Corporation, which is owned by Ahmad Hamad Algosaibi and Brothers (Ahab), and Awal Bank, which is part of Saad Group.

The problems with the two groups first surfaced when TIBC defaulted in May because Ahab was planning a group-wide debt restructuring.