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Wednesday, 30 December 2009

Dubai panel set up to solve Amlak, Tamweel disputes | Reuters

Dubai panel set up to solve Amlak, Tamweel disputes
| Reuters

Public Warehousing (Agility) in talks with U.S. to settle fraud case

The Kuwaiti firm indicted last month for allegedly overcharging the Army on a multibillion-dollar contract to supply food to U.S. troops in Iraq, Kuwait and Jordan has announced it is negotiating with the Justice Department to settle the case.

Public Warehousing Co. made the announcement in a statement posted Monday on the Kuwait Stock Exchange Web site and added: "No deal has been struck so far and there are no guarantees that the negotiations will result in a settlement."

Last month, Public Warehousing -- which is in the process of changing its name to Agility -- was indicted in Atlanta for allegedly submitting inflated bills and false claims for food and other products supplied to the U.S. military over the past six years in contracts worth $8.5 billion. The company has denied the charges.

Russian oil firms moving back into Iraq

The big Western oil giants are moving back into Iraq, which has the potential to out-produce Saudi Arabia, and the Russians aren't far behind. A joint-venture of Lukoil of Russia (75 per cent) and Norways's State-controlled Statoil (25 per cent) will develop the West Qurna Phase II project in southern Iraq with estimated reserves of 13 billion barrels of light oil.

Lukoil wanted to bypass the lease auction process and revive an old contract negotiated during the Saddam Hussein era, but was refused. The joint-venture said it will invest several billion dollars in the project - the new field will produce up to 1.8 million barrels daily.

Iraq has already held two auctions of leases and ten development contracts were signed with Western energy firms. Potentially they could quadruple Iraq's oil production to about 12 million barrels daily, equalling Saudi Arabia's present maximum capacity.

GCC Infrastructure Roads & Railways - Markaz Report

Kuwait Financial Centre "Markaz" has released its latest infrastructure report focusing on the roads and railways sector in the GCC. The authors of the report M.R. Raghu and Amrith Mukkamala state that the GCC region has historically focused its transportation investments in building roadways. This has ensured high quality of roads across most of the GCC countries. The paved roads as a percentage of total roads in most of the GCC countries is close to 100% as compared to other emerging countries average which is below 75%.

This can be mainly attributed to the significantly higher density of motor vehicles per kilometer of road in some of the GCC countries as compared to the BRIC peers. Among the six GCC countries four countries - UAE, Kuwait, Bahrain & Qatar have significantly higher traffic density in comparison to rest of the countries.

Also, the higher density of vehicles is because of the low road density. Other than Bahrain, the rest of the countries in the GCC have significantly low levels of road density. Majority of the countries in the GCC fare poorly when compared to developed nations also. US and United Kingdom have a road density of 0.68 and 1.72 respectively compared to say Saudi Arabia which is at 0.10.

Dubai Stocks Advance as Oil Trades Close to $80 on Economy

Dubai stocks advanced for third time this week, led by Emaar Properties PJSC and Emirates NBD PJSC, as oil traded close to $80 a barrel.

Emaar, the United Arab Emirates’ largest real-estate company, gained 2.4 percent and Emirates NBD, the country’s biggest bank, surged the most in two weeks. The DFM General Index increased 1.2 percent to close at 1,810.24, bringing the advance for the year to 11 percent. The measure declined 72 percent last year. Abu Dhabi’s ADX General Index, which is up 15 percent this year, added 0.1 percent.

Oil advanced 8.8 percent since Dec. 21. A U.S. government report today is forecast to show a decline in stockpiles of the fuel in the largest energy-consuming nation. Another U.S. report may show manufacturing expanded in December for a fifth month, adding to signs the economy is gaining momentum. Oil, which traded as high as $79.19 a barrel, has surged 77 percent this year. The six Arab Gulf states in the Gulf Cooperation Council supply about 20 percent of world’s oil.

Fifty faces that shaped the decade (Join the debate click here)

In a decade that opened with the devastating events of September 11 and had survived the prospect of a global economic collapse as it closed, the FT’s choice of the 50 people who most shaped the last 10 years forms a very diverse group: not all are heroes, some are villains, and many fall somewhere in between. All such lists are subjective and somewhat arbitrary, but we have tried to capture individuals who have had a powerful impact on the world or their region – for good or bad – in four areas: politics, business, economics and culture.

It was not an easy task. There could easily have been 50 people from each category. So the men and women on our list should be seen as representative of the larger themes of the decade. There are some striking omissions, because we felt that a historic event or trend had been captured by someone already on our list. Why no Saddam Hussein? Surely Iraq, and the overthrow of its ruler, has been one of the stories of the decade? Ultimately, we felt that the Iraq war was encapsulated by the two western politicians who did most to create it: George W Bush and Tony Blair.

Some of our choices may not be familiar names around the world, but they will have had an important effect on their region or particular industry. And in the cultural category, our list focuses on those who have had a profound influence on a large number of people, rather than making judgments about the instrinsic artistic merit of their work.

We recognise that the 50 faces on this list are a jumping-off point for debate. Who did we miss? Who should not have made the cut? Who will shape the next decade? Join the debate through headline link.

Ten reasons not to be optimistic about 2010

1. Global bank balance sheets remain loaded with toxic assets. The real banking crisis has not started. Government bailouts have delayed the day of reckoning, not eliminated it.

2. Stock markets rebounded ‘too far, too fast’ in 2009 and are overdue for a big correction.

3. Chinese exports fell around 20 per cent in 2009, and have not recovered. Global trade continues to reel from the worst crash since the 1930s.

4. US consumer and commercial lending is sharply down. The banks still are not lending for spending.

5. Property values continue to deteriorate around the world putting new financial pressure on owners and banks. US mortgage resets are the sub-prime crisis part two.

6. A double-dip recession like 1980-82 is the most likely scenario with a further leg down in the second half of 2010. The 2009 downturn was too short following a major financial crisis.

7. Emerging markets like India and China are faking their growth – Chinese exports for example are in a deep depression. These markets are anyway too small to lead global recovery.

8. Oil prices are too high, and generally depress economic activity.

9. The record gold price indicates that smart investors are expecting the worst.

10. In past major global financial crises a bond market crash has always been the final phase, and we have not seen that yet. This will bring much higher interest rates, and a boom in the gold price.

DIFC unveils Sharia-backed hedging agreement

The Dubai International Financial Centre (DIFC) hosted a meeting of the Sharia Advisory Panel of the International Islamic Financial Market (IIFM) to obtain guidance from scholars and to explain the benefits of its Tahawwut (Hedging) Master Agreement.

The agreement provides a framework and mechanism on hedging or risk management transactions that can be undertaken by the Islamic finance industry. It has been developed by the IIFM jointly with the International Swaps and Derivatives Association (ISDA).

The DIFC meeting focused on the key features and mechanics of the Tahawwut documentation, which the IIFM and ISDA have developed in consultation with market participants and under the guidance of the IIFM Sharia Panel.

Farhan Al Bastaki, Executive Director, Islamic Finance, DIFC Authority, said "...few have realised that a more stable, asset-backed and efficient system already exists. Islamic finance has withstood the negative impact of the global financial crisis."END

Turkey seeks closer link to Emirates

Turkey and the UAE will develop closer economic ties and increase cross-border investment despite the financial crisis and lingering disputes over US$80 million (Dh293.8m) in unpaid contracting bills, a prominent Turkish businessman says.

Direct investments from the Gulf into Turkey accounted for only 2 per cent of overall foreign investment in the country, said Korhan Kurdoglu, the chairman of the Turkish-UAE Business Council.

And Mr Kurdoglu said only between 1 and 2 per cent of the GCC’s total foreign investment went to Turkey, a state of affairs he expected would improve.

Seminal atomic accord proves West to East flow

The US$20 billion (Dh73.46bn) agreement between the UAE and South Korea to build four nuclear reactors in the Emirates over the next seven years is epochal in several ways.

It is the biggest foreign contract ever awarded by the country and is therefore proof that, despite the credit crisis and short-lived recession, the Emirates has the resources to continue pursuing the goals of its central economic strategy.

It is simultaneously a signal of political maturity that the country was able to negotiate with the international community over the sensitive issue of nuclear power and conclude a deal without any of the uproar that accompanied Iran’s declaration of its nuclear ambitions.

Abu Dhabi says assets at least double GDP

Abu Dhabi assured Moody's that its financial assets are worth at least double the value of the Gulf emirate's gross domestic product, well above the external debt of the United Arab Emirates, the rating agency said on Tuesday.

The UAE federation's debt has more than tripled since 2005 fuelled by ambitious projects of Abu Dhabi's neighbour Dubai.

Dubai, shocked markets last month, asking for a repayment freeze on billions of dollars worth of debt at its flagship firms before Abu Dhabi stepped in with a last-minute bailout.

Sabic Plans 10 Billion-Riyal Bond Sale to Saudi Fund

Saudi Basic Industries Corp., the world’s largest petrochemical maker known as Sabic, plans to raise 10 billion riyals ($2.7 billion) in a private placement of bonds to the government-run Public Investment Fund.

The seven-year notes will help finance the company’s expansion plans, the Riyadh-based petrochemical maker said in a statement on the Saudi bourse Web site today. Sabic signed an agreement with the Public Investment Fund for the bond issue, according to the statement.

Sabic wants to triple its petrochemical production to 130 million tons by 2020 by building plants and acquiring facilities as the company prepares for higher demand for its products. Sabic’s bond issue will be the biggest since June when Saudi Electricity Co., the state-controlled power producer, raised 7 billion riyals by selling five-year Islamic bonds.

The coming oil glut that will force prices to drop sharply

The outlook for the oil price remains mired in much confusion. Peak oil theorists see production in terminal decline. Others, who expect the oil price to revisit its 2008 highs, argue that rapid demand growth from emerging markets, most notably China, will underpin a long and aggressive rally in the price. Some even argue that as the world runs out of oil we shall slip back into pre-industrial ways as energy is rationed and human behaviour has to change as a result - an argument that has been regularly trotted out over the last five centuries. First, in Britain in the 16th century as the country was perceived to be running out of wood, its then primary energy source. Then 300 years later by economist William Jevons who believed that Britain's coal supply, and therefore primary energy supply, was in terminal decline.

Market price signals, however, have an uncanny ability to change long-term supply and demand dynamics. Indeed, the high and rising price of oil from 2004/05 onwards, but most particularly in 2008, would appear to have delivered a very clear and identifiable supply response. Using conservative assumptions we expect that the future supply of oil will increase by approximately 9-10m barrels per day by 2017. That equates to a 10-12 per cent increase in global production capacity. Importantly it will more than absorb our estimated 5m bpd increase in Chinese demand, the biggest single driver of demand growth, over that timeframe.

That increase in supply reflects four key trends that are playing out at a country level. First there are those countries where politics, ageing fields and a poor investment environment have resulted in and are likely to continue to result in falling or, at best, stable production, despite often plentiful oil reserves. This group includes Venezuela, Mexico, Russia, Nigeria and Iran (representing 26 per cent of the world's reserves). Second is a group of countries, mostly western, where production peaked a number of years ago and where that trend seems likely to persist. This group typically fits the peak oil theorist's prescriptions and includes the UK (peaked in 1999), the US (1970 peak) and Norway (2001 peak).

S.Korea, China, UAE win Turkmen gas deal - sources

Firms from China, South Korea and the United Arab Emirates have won $9.7 billion worth of contracts to develop Turkmenistan's largest natural gas deposit, government sources in the Central Asian state said on Tuesday.

The decision marks the latest move by Turkmenistan, holder of the world's fourth-largest natural gas reserves, to diversify its energy industry away from Russia, its Soviet-era master and traditionally the main buyer of Turkmen gas.

The international pool of companies will drill and build gas plants at the South Iolotan deposit, which is ranked potentially as one of the biggest five natural gas deposits in the world.

Moody's Downgrades Abu Dhabi Commercial Bank PJSC Ratings

Moody's Investors Service downgraded its ratings on Abu Dhabi Commercial Bank PJSC (ADCB.AD), saying its standalone financial strength has weakened from increasing loan delinquencies and impairments of investments.

The rating agency also said it expects the weakening operating environment in Dubai and the recent restructuring of Dubai World (DWORLD.YY) will continue to weigh on the bank's loan quality and likely profitability in the foreseeable future.

Dubai World shocked investors last month by seeking a six-month moratorium on its $26 billion debt payments although Abu Dhabi later offered a bailout of the company, once a crown jewel in the business empire of Dubai's ruler, Sheik Mohammed bin Rashid Al Maktoum.

Abu Dhabi, the oil-rich capital of the seven-member United Arab Emirates, pumped $10 billion into Dubai's financial-support fund two weeks ago by buying its bonds.

Moody's put Abu Dhabi Commercial Bank's ratings on review earlier this month because of potential deterioration in Dubai's operating environment, including the bank's exposure to the ongoing restructuring of Dubai World companies' debt. Standard & Poor's Ratings Services also put the bank's ratings on review for downgrade after the Dubai World request for a delay in repaying its debt last month.

The bank's asset quality, which had been weakening since the beginning of 2008 because of subprime exposures, continued to deteriorate this year, especially because of its high loan concentrations to defaulting Saudi corporate bonds, Moody's said.

The firm noted that the bank has received a series of capital injections this year, boosting its capital levels, and the bank's parent, Abu Dhabi Investment Council, is able and willing to support the bank.

Moody's cut its long-term deposit ratings one notch to A1, four steps below the top rating of AAA, and lowered its bank financial strength rating to D+ from C-. The outlook on all ratings is negative.END