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Friday, 26 March 2010

Qatar eyes stakes in Yamal

The closer gas cooperation between Russia and Qatar might pave the way for Qatar stakes in the Yamal Peninsula.
As confirmed by Prime Minister Vladimir Putin and Qatar’s Prime Minister and Foreign Minister Sheikh Hamad bin Jassim bin Jabor Al Thani in their meeting this week, the two gas producing giants agree to strengthen cooperation.
While Gazprom hopes to engage in the development of Block D at the North Field in Qatar, the Qatar Petroleum is interested in taking part in the development of a LNG plant at Yamal.
While the North Field is considered the biggest gas field in the world, the Yamal deposits are Russia’s biggest and Gazprom’s top priority.
During his visit to Russia, Sheikh Hamad bin Jassim bin Jabor Al Thani met both with Prime Minister Vladimir Putin and Gazprom CEO Aleksey Miller.
See press releases from the meeting with Putin and Miller here END

Moody's takes Dubai's DEWA off downgrade review

Moody's confirmed the ratings of Dubai Electricity & Water Authority (DEWA) on Thursday and took it off review for downgrade after the state-owned utility sealed a deal on the terms of its receivables securitisation programme.

Last year, Moody's lowered DEWA's issuer and Islamic bond ratings to 'Ba2' and placed it on review for downgrade after Dubai's debt crisis erupted in November, citing concerns about the utility's liquidity as it faced a risk of an accelerated payment of $2 billion.

"Note holders agreed to temporarily waive this trigger, and have since agreed to a range of longer term amendments to the documents, which have eased the liquidity pressure on DEWA," the agency said in a statement.


Rumors have swirled in Western capitals of late that Turkmenistan is on the verge of committing a specific amount of natural gas to a Western-backed, trans-Caspian export route. But a source within the Turkmen government is telling an opposition website that such talk is nothing more than a pipe dream.

The rumors about Turkmenistan’s readiness to supply the proposed trans-Caspian and Nabucco pipelines began after the German energy concern RWE recently announced that it was engaging in "intensive" negotiations with Ashgabat. The German firm -- which is a member of the Nabucco consortium, and which has extensive economic interests in Turkmenistan -- said it hoped to have a supply agreement signed by mid-year.

A source in the Turkmen Ministry of Petroleum and Mineral Resources told the opposition website, however, that Western officials and energy executives should not get their hopes up about an energy-export breakthrough. Turkmenistan has long expressed an interest in exporting gas via the planned trans-Caspian/Nabucco route, but has always refrained from making any specific commitment. [For background see the Eurasia Insight archive].

Court concession raises Islamic finance risk

An esoteric court case in England involving a Lebanese bank and a Kuwaiti investment company has highlighted a clash between conventional and Islamic commercial law with potentially significant repercussions for the $800bn Islamic finance industry.

Lebanese lender Blom Bank took the Investment Dar (TID) to court in July last year over the non-repayment of a $10m so-called “wakala” – a common instrument of Islamic financing – that it had placed with the Kuwaiti Islamic investment company, which had defaulted in 2009.

Blom Bank won a summary judgment stating that TID owed it the $10m but not the agreed “profit rate” stipulated in the wakala.

Restructuring proposal draws cautious welcome

As the credit crunch took its toll on Dubai in late 2008, Nakheel's chief executive was asked if he worried about the property developer repaying its Islamic bond due a year later.

"Why would I? The world will be a very different place then," Chris O'Donnell replied. A year later, Dubai was different - but not in the way he expected.

Dubai World, the state-owned conglomerate that includes Nakheel, almost allowed the sukuk bond to default and shocked markets by asking to restructure $26bn in debts. Oil-rich Abu Dhabi had to step in with a $10bn loan to help repay the bond, on top of an earlier $10bn loan from the United Arab Emirates central bank in February 2009.

Dubai does better

Dubai has learnt some lessons from its November trauma. Then, it so botched a request for a standstill on the debts of Dubai World, a state-owned conglomerate, that fears about the solvency of the statelet started to swirl. It made a cryptic announcement just as the emirate closed for several days to mark Eid, leaving investors confused, unable to get answers and fearing the worst. This week, announcing the terms of that same restructuring, the city-state showed a surer touch.

The announcement of proposed terms for reorganising the debts of Dubai World (and Nakheel, a property subsidiary) was clear and professional, not vague and delphic. Dubai has shown that it is beginning to understand that, when dealing with international marketplaces, it must be transparent and unequivocal.

Dubai has also realised that it cannot trample foreign investors. The statelet has refused to guarantee Dubai World’s debts, but it has volunteered to make considerable sacrifices to private backers. This is shrewd: Dubai relies on the investment of strangers. It cannot be seen to hang them out to dry at the first opportunity.

Emirate’s carefully moulded plan welcomed

As the credit crunch took its toll on Dubai in late 2008, Nakheel’s chief executive was asked if he was worried about the repayment of the property developer’s 2009 Islamic bond due a year later.

“Why would I? The world will be a very different place then,” replied Chris O’Donnell.

A year later, Dubai was different – but not in quite the way he expected.

Bondholders have most reason to be happy

What does the debt restructuring proposal mean for banks?

Dubai proposes to pay bank creditors in full, but over time through two new tranches of debt with five and eight-year maturities. This was cautiously welcomed. Provided the new loans pay interest, banks should be able to avoid booking provisions.

But the level of interest payments is still under negotiation, and banks will not receive their capital back soon. More than 90 banks are exposed to Dubai World, and it is unclear whether everyone will accept the final terms.

Court finds Saudi billionaire in contempt over $9.2bn asset freeze

Maan al-Sanea, the Saudi billionaire, has been found in contempt by a Cayman Islands court for breaching a worldwide order freezing $9.2bn of his assets.

The judgment of the Cayman Islands Grand Court is another blow to Mr Sanea, the owner of Saad Group, in his bitter dispute with a rival Saudi company.

The complaint was filed by Ahmad Hamad Algosaibi and Brothers Company (Ahab), alleging that Mr Sanea broke the freezing order by transferring $60m from one of his companies to Saad Specialist Hospital in Saudi Arabia last July.

Finding the ripcord

EARLIER this year, Nasser al-Neyadi from the United Arab Emirates (UAE) leapt off Dubai’s newly opened Burj Khalifa, the tallest building in the world. He descended 672 metres (2,205 feet) in less than a minute, his fall broken by a parachute which opened ten seconds into the jump.

From the heady heights it reached in 2008, Dubai, one of seven members of the UAE, has fallen almost as far and as fast. Its hopes for a soft landing have always rested with its wealthy neighbour, Abu Dhabi, which sits on over 90% of the UAE’s oil reserves. But for a few horrible weeks at the end of last year, Dubai’s parachute refused to open—or perhaps the emirate simply fumbled as it reached for the ripcord.

In November Dubai threatened to default on a $4.05 billion sukuk, or Islamic bond, issued by Nakheel, a troubled property developer belonging to Dubai World, one of three government-owned conglomerates that set the pace for Dubai’s development. The announcement threw the emirate and the global credit markets into a vertiginous free-fall. As the ground approached, Abu Dhabi released more funds and the sukuk was eventually paid on time. But Dubai World’s other debts remained to be restructured. It was not clear who would get paid, how much or when.

Factbox: Dubai World restructuring plan

Dubai unveiled a long-awaited plan on Thursday to restructure state-owned conglomerate Dubai World's DBWLD.UL $26 billion debt.


The deal, which includes $9.5 billion aid from Dubai, now faces a jury of creditors.

Initial response from the market has been positive.

Debt-Burdened Dubai May Need Years to Rebuild Creditors’ Trust

Dubai may be seeing light at the end of the tunnel after markets welcomed its offer to repay around $25 billion in debt by 2018. The recovery still risks taking years as the sheikhdom rebuilds creditors’ trust.

Flagship holding company Dubai World, which owes this money, will get $9.5 billion in government funding over the next three years, the emirate announced yesterday. Dubai World’s property unit Nakheel PJSC was at the forefront of a building boom-to-bust which led to the worst property slump during the global recession after credit markets seized up.

Dubai, the second-biggest of the seven states that make up the United Arab Emirates, may still need assistance from its wealthier neighbor Abu Dhabi after getting $20 billion last year. Other sources of credit will be harder to tap after Dubai and its state-controlled companies amassed $109 billion in debt to turn the Persian Gulf city state into a financial and tourism center as oil reserves dwindled.