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Sunday, 4 February 2018

The week in energy: Pipeline diplomacy

The week in energy: Pipeline diplomacy:

"The history of gas pipelines in Europe shows energy realpolitik at its most pragmatic. Ideology and alliances may be important, but providing heat and light is something else again, and it has generally been the practical imperatives of energy supply and demand that have dictated policy. In 1968 Austria became the first western European country to buy gas from the Soviet Union, starting off with very small volumes but then ramping up quickly in the 1970s. From 1974 Italy, Germany and France followed suit.

After the Soviet invasion of Afghanistan in 1979 and the imposition of martial law in Poland, Cold War tensions escalated, and the increasingly close energy ties between Russia and western Europe became an urgent concern for the US. When the Soviet Union sought to build a large new pipeline to the west from the Urengoy gasfield in northern Siberia, financed by European banks and using European suppliers, the Reagan administration imposed sanctions to try to stop it, seeing the project as a critical source of export earnings for the USSR. European leaders held firm, however, and the sanctions were dropped. The pipeline entered service with a ceremony in France in 1984. There have been reports since that an explosion on a Russian pipeline in 1982 was the result of US sabotage.

Tensions over the Nord Stream 2 project, which would double the volume of gas that can be delivered from Russia to Germany under the Baltic Sea, have been less dramatic. But last weekend Rex Tillerson, the former ExxonMobil chief executive now US secretary of state, said the US opposed the project, arguing that the planned pipeline undermines Europe’s energy security and stability, and would give Russia “yet another tool to politicise energy.” That position aligns the US with Poland, which is worried about the way that the pipeline enables Russia to bypass it for gas deliveries. The first Nord Stream pipeline, which entered service in 2011, was compared by a previous Polish defence minister to the Molotov-Ribbentrop pact that partitioned Poland between Hitler and Stalin. Poland’s views on the expansion of the connection as Nord Stream 2 have been expressed in more measured language, but are as strong as ever."



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Saudi Arabia pursuing an appropriate fiscal balance target, IMF mission chief says - The National

Saudi Arabia pursuing an appropriate fiscal balance target, IMF mission chief says - The National:

"Saudi Arabia, the world’s biggest oil exporter, is pursuing an “appropriate” policy by pushing back its deadline of achieving a balanced budget to 2023, giving the economy a breather as it slows down fiscal reforms to propel growth that stagnated in 2017, the IMF mission chief to Saudi Arabia said. “We are happy to see that the government has now set a later date for returning the budget to balance and we think that is entirely appropriate. If they can achieve a budget balance by 2023 that would be fine,” said Tim Callen. The kingdom revealed last year its biggest budget ever for 2018, allocated 200 billion riyal to a four-year stimulus programme and approved bonuses for public sector employees, measures that are aimed at accelerating growth hurt by austerity and low oil prices."



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QNB most valuable banking brand - The Peninsula Qatar

QNB most valuable banking brand - The Peninsula Qatar:

"QNB Group was recognised once again as the most valuable banking brand in the Middle East and Africa region with brand value worth US $4.2bn, according to The Banker’s 2018 Brand Finance Global 500 report published in its February edition. QNB’s brand value has grown to $4.2bn compared to $3.8bn in 2017, an 11 percent year-on-year increase, while the Group’s Brand Strength Index (BSI) has increased from 76.4 out of 100 to 78.4 out of 100, driven by its constant strong financial performance and growing international expansion. QNB also marked a new and significant milestone in support of its vision to become a leading bank in the Middle East, Africa, and Southeast Asia by 2020, ranking second most valuable banking brand in Southeast Asia (SEA) ahead of major banks in Malaysia, Indonesia, Thailand, Philippines, and Singapore."



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GCC issued record $50bn in sovereign debt in 2017 - The Peninsula Qatar

GCC issued record $50bn in sovereign debt in 2017 - The Peninsula Qatar:

"GCC sovereigns issued a record $50bn in international debt in 2017, helping push total GCC issuance – public and private – over $100bn for a second consecutive year. Despite this, reduced austerity and stronger commodity prices helped confidence return to the region, pushing benchmark yields lower, while international benchmark rates edged higher or were little changed. Synchronized global growth, on the other hand, ushered in tighter credit and monetary conditions. NBK Group noted in its  GCC debt market research note that GCC benchmark yields maturing in 8-9 years were mixed, with some little changed while others saw their risk premium shrink significantly.  Movement was first dictated by the weakness in commodity prices and later by regional tensions."



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UAE's Abraaj hires KPMG to look into healthcare fund after reported row with investors | ZAWYA MENA Edition

UAE's Abraaj hires KPMG to look into healthcare fund after reported row with investors | ZAWYA MENA Edition:

"Dubai-based private equity firm Abraaj Group has hired global auditing firm KPMG to look into the finances of its healthcare fund after a reported dispute with some its investors in the fund. "We are confident that the exercise being conducted by KPMG will confirm that all the funds were accounted for and used appropriately," it said in a statement on Sunday. The Wall Street Journal reported on Friday, citing unnamed sources, that four investors in a $1 billion healthcare fund managed by Abraaj had hired a forensic accountant to examine what happened to some of their money. "



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Qaddafi's Long Gone, But Libya's Oil Still Struggles - Bloomberg

Qaddafi's Long Gone, But Libya's Oil Still Struggles - Bloomberg:

"Theft, corruption and injustice are getting dangerously close to strangling the newly reborn Libyan oil industry in its cradle.  

Should anyone outside Libya care? Yes -- OPEC, Europe and the U.S., to name a few. 

On the face of it, National Oil Corp. had a good year in 2017, building on its successes of late 2016. The country's production tripled between the third quarter of 2016 and the last three months of 2017 -- a feat few thought possible."



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MIDEAST STOCKS-Region pulled down by Wall Street slide

MIDEAST STOCKS-Region pulled down by Wall Street slide:

"Middle Eastern stock markets sank on Sunday in response to Friday’s tumble on Wall Street, after U.S. data showed the strongest annual wage growth since 2009 and raised the risk of more interest rate hikes than expected this year.

The Saudi index dropped 0.6 percent with falling shares outnumbering gainers by 105 to 74. Saudi Arabian Mining Co (Ma‘aden), which had fallen 4.9 percent on Thursday after reporting a surprise fourth-quarter loss, lost a further 1.7 percent.

Mediterranean & Gulf Cooperative Insurance and Reinsurance plunged 9.9 percent after the Capital Market Authority said it might suspend or cancel trade in the stock, following the central bank’s decision to prohibit the firm from issuing or renewing policies pending a capital increase to address a low solvency margin."



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MIDEAST STOCKS-Gulf slides in response to Wall Street's tumble

MIDEAST STOCKS-Gulf slides in response to Wall Street's tumble:

"Gulf stock markets sank early on Sunday in response to Friday’s tumble on Wall Street, after U.S. data showed the strongest annual wage growth since 2009 and raised the risk of more interest rate hikes than expected this year. The Saudi index dropped 0.6 percent in the first hour with falling shares outnumbering gainers by a ratio of about two to one. Al Rajhi Bank, which rose strongly in January, partly on expectations it will be included in global emerging market indexes when Saudi Arabia is eventually upgraded to that status, fell back 1.2 percent. Mediterranean & Gulf Cooperative Insurance and Reinsurance plunged 7.5 percent after the Capital Market Authority said it might suspend or cancel trade in the stock, after the central bank prohibited the firm from issuing or renewing policies pending a capital increase to address a low solvency margin."



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Breaking down FAB's full-year numbers for a post-merger picture - The National

Breaking down FAB's full-year numbers for a post-merger picture - The National:

"First Abu Dhabi Bank (FAB), the lender created last year from the coming together of National Bank of Abu Dhabi and First Gulf Bank, released its first set of post-merger annual results on Monday. In this week’s column, I’ll be looking at the bank’s pro-forma statements from both last year and 2016, analysing how well the new institution has been doing thus far. In 2017, FAB’s loans and advances – the bank’s largest asset component - decreased by about Dh4 billion compared with 2016; this is puzzling, as the usual logic of a merger is to grow your main business line, rather than see it shrink. To be fair, in percentage terms it’s a decrease of just 1 per cent. The bank’s cash pile increased 12 per cent to Dh138bn from Dh123bn over the period, representing about 21 per cent of the bank’s balance sheet. Since cash yields next to nothing, to have such a large repository is unexpected"



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Saudi banks’ liquidity improves in 2017 | ZAWYA MENA Edition

Saudi banks’ liquidity improves in 2017 | ZAWYA MENA Edition:

"Saudi banks’ domestic liquid assets ended 2017 at a record high SR457 billion, despite subdued deposit growth and challenging business conditions, a credit positive, Moody’s Investors Service said in its Sectoral Comment issued last Feb. 1. The report said the Saudi banks’ domestic liquid assets grew 11% in 2017 and equaled 20% of banks’ assets at year-end 2017 (versus 14% as of year-end 2015). Similarly, Saudi banks’ ratio of reserves to total deposits was 14.8% as of year-end 2017, its highest since year-end 2012. The positive trends were achieved amid muted 0.1% deposit growth in 2017 and was mainly driven by a contraction of 1.0% in banks’ loans and a 43% increase in the banks’ holdings of domestic government bonds."



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