Kuwait could switch the pricing of its crude sold to U.S. customers to the Argus Sour Crude Index, or ASCI, from Platt's West Texas Intermediate, or WTI, following in the footsteps of Saudi Arabia, Kuwaiti oil officials said.
"Kuwait could look at it definitely because we don't think the pricing peg today to the WTI is really representative of the market," a senior Kuwait oil official told Zawya Dow Jones.
Saudi Arabia, the world's biggest oil exporter, has dropped the longtime WTI benchmark, which is based on a formula tied to light, sweet crude futures traded on the New York Mercantile Exchange, or Nymex. State-owned Saudi Arabian Oil Co. will implement the new policy for January oil sales to the U.S.
Tuesday, 24 November 2009
Financial News: International Banks Beef Up Gulf Presence
Investment banks are back on the recruitment trail in the Middle East, hiring in Abu Dhabi and Qatar as they try to tap the newest source of capital markets and advisory fees in the region.
While banks are keeping a lid on staff numbers in Dubai, they are under pressure from clients and regulators to establish a bigger local presence in other oil-rich emirates in order to capture lucrative mandates.
Bassam Yammine, Credit Suisse's (CS) co-chief executive for the Middle East and head of investment banking and asset management in the region, said: "Before the crisis, banks were overbuilding their presence in the region.
While banks are keeping a lid on staff numbers in Dubai, they are under pressure from clients and regulators to establish a bigger local presence in other oil-rich emirates in order to capture lucrative mandates.
Bassam Yammine, Credit Suisse's (CS) co-chief executive for the Middle East and head of investment banking and asset management in the region, said: "Before the crisis, banks were overbuilding their presence in the region.
Private equity firms suffering from depression (Re-post)
Private equity practitioners used to be in the vanguard of regional capitalism, supporting small businesses as they grew bigger and gearing up to achieve a large return on capital employed. But now they are sunk deep in depression.
The Private Equity World Middle East 2009 conference this week attracted a good crowd and many sponsors. However, the gloom and despondency among delegates and speakers is tangible. Why are these canny business operators so depressed?
Double-dip recession
Basically they do not believe in the recovery and see a double-dip in the global economy as stimulus packages are withdrawn. The current uptick has left businesses too highly priced and their owners overconfident in the opinion of private equity firms.
At the same time the long term practitioners of this black art have balance sheets stuffed full of business stakes whose value they no longer believe in themselves, although they are reluctant or unable to sell them off on the cheap.
It is ironic that low interest rates from the Fed have fueled up stock markets around the world since the lows of March, but have not translated into new bank facilities for private equity firms. Banks are still slow to lend because securitization is still largely frozen.
You have to wonder if the private equity firms are not just seeing something that others are not. They are generally perceptive and well informed investors, and need to be in handling the risk profiles of often rather small companies.
Is the much heralded recovery just an illusion? Is business going to suffer a second blow from the unwinding of the crash? Will stock markets correct and fall again?
Eye of the storm
Terra Firma’s Guy Hands told a similar conference in Paris recently that he saw the global economy as being ‘in the eye of a storm’. Hands is one of private equity’s most famous and successful operators, even if he has dropped a clanger buying EMI.
For those who do not know their latin ‘Terra Firma’ translates as ’solid ground’. Hands has been in business for a long time and used to trade secondhand cars and art when I knew him at university.
We once debated the real value of money in the Oxford Union late one night. He always had his feet firmly on solid ground then, and I doubt he is far wrong now.
The Private Equity World Middle East 2009 conference this week attracted a good crowd and many sponsors. However, the gloom and despondency among delegates and speakers is tangible. Why are these canny business operators so depressed?
Double-dip recession
Basically they do not believe in the recovery and see a double-dip in the global economy as stimulus packages are withdrawn. The current uptick has left businesses too highly priced and their owners overconfident in the opinion of private equity firms.
At the same time the long term practitioners of this black art have balance sheets stuffed full of business stakes whose value they no longer believe in themselves, although they are reluctant or unable to sell them off on the cheap.
It is ironic that low interest rates from the Fed have fueled up stock markets around the world since the lows of March, but have not translated into new bank facilities for private equity firms. Banks are still slow to lend because securitization is still largely frozen.
You have to wonder if the private equity firms are not just seeing something that others are not. They are generally perceptive and well informed investors, and need to be in handling the risk profiles of often rather small companies.
Is the much heralded recovery just an illusion? Is business going to suffer a second blow from the unwinding of the crash? Will stock markets correct and fall again?
Eye of the storm
Terra Firma’s Guy Hands told a similar conference in Paris recently that he saw the global economy as being ‘in the eye of a storm’. Hands is one of private equity’s most famous and successful operators, even if he has dropped a clanger buying EMI.
For those who do not know their latin ‘Terra Firma’ translates as ’solid ground’. Hands has been in business for a long time and used to trade secondhand cars and art when I knew him at university.
We once debated the real value of money in the Oxford Union late one night. He always had his feet firmly on solid ground then, and I doubt he is far wrong now.
Oman sees oil price at $70-$80 per barrel in 2010
Oman expects oil prices to range between $70 and $80 a barrel in 2010, some 40-60 percent more than the $50 estimate the country is using for to calculate its budget, Oman's national economy minister said on Tuesday.
The independent producer is aiming for oil output of 870,000 barrels per day, up from a target around 800,000 bpd in 2009. If Oman reaches both targets, it would mark three consecutive years of oil output growth after several years of decline.
"The 2010 budget has been set for production of 870,000 barrel per day and we see oil prices in the range of $70-$80 per barrel," Ahmad Mekki, the national economy minister said in a statement.
The independent producer is aiming for oil output of 870,000 barrels per day, up from a target around 800,000 bpd in 2009. If Oman reaches both targets, it would mark three consecutive years of oil output growth after several years of decline.
"The 2010 budget has been set for production of 870,000 barrel per day and we see oil prices in the range of $70-$80 per barrel," Ahmad Mekki, the national economy minister said in a statement.
U.A.E. Posts Fourth Month of Deflation in October
United Arab Emirates’ consumer prices fell 0.4 percent in October from a year ago, the fourth consecutive month of deflation in the Gulf Arab state.
The decline in prices was led by cheaper food and clothing, the U.A.E.’s Economy Ministry said on its Web site today. In the month, consumer prices dropped 0.1 percent.
Lower oil prices have helped reduce inflation in Gulf Arab states this year. Crude dropped to a five-year low in December and is currently trading at $77 a barrel. It reached a record high of about double that level last year, pushing inflation above 10 percent in most of the region.
The decline in prices was led by cheaper food and clothing, the U.A.E.’s Economy Ministry said on its Web site today. In the month, consumer prices dropped 0.1 percent.
Lower oil prices have helped reduce inflation in Gulf Arab states this year. Crude dropped to a five-year low in December and is currently trading at $77 a barrel. It reached a record high of about double that level last year, pushing inflation above 10 percent in most of the region.
Dubai Shares Drop to Lowest in 2 Months on Pre-Holiday Selloff
Dubai’s shares fell to a two-month low, erasing yesterday’s gains, as European and Asian indexes dropped and investors opted to exit the markets before a four- day holiday weekend.
Emaar Properties PJSC, the United Arab Emirates’ biggest property developer, retreated to a three-week low, while Dubai Investments PJSC, which owns stakes in more than 40 companies, fell to its lowest level since Aug. 25. The DFM General Index lost 1.9 percent to 2,070.89, the lowest since Sept. 15. Abu Dhabi’s index declined 0.5 percent. The MSCI Emerging Markets Index slid 0.5 percent at 2:40 p.m. in Dubai.
“With the upcoming Eid holidays and weak international markets, the short-term focus is elsewhere,” said Ali Khan, head of cash-equity trading at Dubai-based Arqaam Capital Ltd. “With earnings season out the way, the only potential catalysts left are the pending Dubai Support Fund and Emaar’s Burj Dubai handover.”
Emaar Properties PJSC, the United Arab Emirates’ biggest property developer, retreated to a three-week low, while Dubai Investments PJSC, which owns stakes in more than 40 companies, fell to its lowest level since Aug. 25. The DFM General Index lost 1.9 percent to 2,070.89, the lowest since Sept. 15. Abu Dhabi’s index declined 0.5 percent. The MSCI Emerging Markets Index slid 0.5 percent at 2:40 p.m. in Dubai.
“With the upcoming Eid holidays and weak international markets, the short-term focus is elsewhere,” said Ali Khan, head of cash-equity trading at Dubai-based Arqaam Capital Ltd. “With earnings season out the way, the only potential catalysts left are the pending Dubai Support Fund and Emaar’s Burj Dubai handover.”
Dubai Surrenders Autonomy as Crisis Bolsters Oil-Rich Abu Dhabi
Until last month, a billboard at one of Dubai’s busiest roundabouts featured one photo, of Dubai ruler Sheikh Mohammed Bin Rashid Al Maktoum. The new billboard says “Long live our Emirates union” and also shows United Arab Emirates President Sheikh Khalifa Bin Zayed al Nayhan.
Dubai’s financial woes have tamed the once-independent emirate and forced it closer to Abu Dhabi, which holds 90 percent of the U.A.E.’s oil. Sheikh Mohammed last week demoted three business aides and fired one. All had been pivotal in the debt-fueled expansion of past years, requiring Dubai’s rescue with a $10-billion loan from the U.A.E. central bank.
The global financial crisis that swept into Dubai last year not only put an end to a construction boom that saddled it with $80 billion of debt. It may also mark a turning point in the U.A.E.’s history toward a stronger central state, which investors say will make Dubai a more attractive destination by bolstering its creditworthiness.
Dubai’s financial woes have tamed the once-independent emirate and forced it closer to Abu Dhabi, which holds 90 percent of the U.A.E.’s oil. Sheikh Mohammed last week demoted three business aides and fired one. All had been pivotal in the debt-fueled expansion of past years, requiring Dubai’s rescue with a $10-billion loan from the U.A.E. central bank.
The global financial crisis that swept into Dubai last year not only put an end to a construction boom that saddled it with $80 billion of debt. It may also mark a turning point in the U.A.E.’s history toward a stronger central state, which investors say will make Dubai a more attractive destination by bolstering its creditworthiness.
Iran 3rd major oil supplier of China
Iran was the third major oil supplier of China in the month of October, during which some 1,646,000 tons of crude oil was exported, SHANA news agency reported.
Angola with 3,825,007 tons and Saudi Arabia with 3,816,467 tons of crude oil were respectively the first and second major oil suppliers of China in October.
China imported a total of 19,300,000 tons of crude oil in October, showing 20 percent increase in comparison to the previous year’s figure.
For 2007 China has imported some 165 million tons of crude oil, which is 9.4 percent more than the 2008 figure. Iran’s exports account for 20,215,713 tons of this amount.END
Angola with 3,825,007 tons and Saudi Arabia with 3,816,467 tons of crude oil were respectively the first and second major oil suppliers of China in October.
China imported a total of 19,300,000 tons of crude oil in October, showing 20 percent increase in comparison to the previous year’s figure.
For 2007 China has imported some 165 million tons of crude oil, which is 9.4 percent more than the 2008 figure. Iran’s exports account for 20,215,713 tons of this amount.END
Dubai International Capital May Preserve Assets Through 2010
Dubai International Capital LLC, an investment company owned by Dubai’s ruler that had planned to merge with another of Sheikh Mohammed Bin Rashid al-Maktoum’s companies, may preserve existing assets in 2010, its Executive Chairman said.
“We have spent the last 12 months protecting our capital and preserving what we own,” Sameer al-Ansari said at a conference in Dubai today. “Most private-equity companies will also spend 2010 preserving what they have.”
Dubai Group LLC, which is reported to have slashed its workforce by more than 70 percent, and Dubai Capital said in February they would combine their back-office operations to cut costs as access to credit dried up. Dubai, whose growth slowed to 5 percent this year from 14 percent in 2008, had to be bailed out by fellow emirate Abu Dhabi in February with a $10 billion bond issue after it amassed $80 billion of debt during the city’s six-year construction boom.
“We have spent the last 12 months protecting our capital and preserving what we own,” Sameer al-Ansari said at a conference in Dubai today. “Most private-equity companies will also spend 2010 preserving what they have.”
Dubai Group LLC, which is reported to have slashed its workforce by more than 70 percent, and Dubai Capital said in February they would combine their back-office operations to cut costs as access to credit dried up. Dubai, whose growth slowed to 5 percent this year from 14 percent in 2008, had to be bailed out by fellow emirate Abu Dhabi in February with a $10 billion bond issue after it amassed $80 billion of debt during the city’s six-year construction boom.
SABB Ranked Strongest Bank in Saudi Arabia
The Saudi British Bank (SABB) was recently ranked as Saudi Arabia's strongest bank in 2009, according to the most recent publication of The Asian Banker Journal. In addition, the magazine recognized SABB as the seventh strongest bank in the entire region. The assessment calculates business strength on several indicators, including balance sheet growth, risk profile, liquidity, and profitability and asset quality, as well as taking into account banks’ response to the global financial downturn. The Journal noted that size alone rarely indicated the strength of a bank, although SABB does rank among the Kingdom’s top four banks in terms of assets.END
Shell delays $8bn Qatar project
Royal Dutch Shell yesterday said it had delayed its $8 billion Qatargas 4 liquefied natural gas (LNG) project by around a year, with startup now planned for late next year and first cargo possibly pushed into 2011.
"We had been planning for a startup in early 2010 but now we expect that to come in late 2010," a spokeswoman said, adding the slippage represented a delay of 10 months.
She declined to say when first cargoes would load commence but a statement from the company said ramp-up of the project could continue into 2011, raising the prospect the facility may not be in a position to load ships until then.
The delay was due to contractors struggling to keep up with the pace of developments in Qatar's gas industry, the spokeswoman said.END
"We had been planning for a startup in early 2010 but now we expect that to come in late 2010," a spokeswoman said, adding the slippage represented a delay of 10 months.
She declined to say when first cargoes would load commence but a statement from the company said ramp-up of the project could continue into 2011, raising the prospect the facility may not be in a position to load ships until then.
The delay was due to contractors struggling to keep up with the pace of developments in Qatar's gas industry, the spokeswoman said.END
Pharos $350m argriculture fund targets Middle East investors
Pharos Financial Advisors today launched a $350m private equity fund focused on acquiring and operating land in Eastern Europe, Eurasia and Africa.
Pharos, a Russian-based investment firm which expanded to Dubai last year, is expecting to raise more than half of the fund from investors in the Middle East.
The Pharos Miro Agricultural fund, with a minimum subscription of $6m, is being offered to family offices, private equity groups and other investors across the region.
Pharos, a Russian-based investment firm which expanded to Dubai last year, is expecting to raise more than half of the fund from investors in the Middle East.
The Pharos Miro Agricultural fund, with a minimum subscription of $6m, is being offered to family offices, private equity groups and other investors across the region.
Egypt's Citadel lists shares, eyes rights issue
Cairo-based private equity firm Citadel Capital has listed its shares on Egypt's stock exchange in preparation for a likely rights issue in the coming months, Chairman Ahmed Heikal said on Monday.
Citadel Capital, which manages $8.3 billion in investments, has said it is looking to expand its investments in Middle East and East African countries, especially those with big domestic markets such as Algeria, Egypt, Sudan, Ethiopia and Kenya.
"Following the share listing, and the shares start trading, then we will examine the size of the rights issue that we would like to do, depending the investments that are be about to finalized," Heikal said in a telephone interview.
Citadel Capital, which manages $8.3 billion in investments, has said it is looking to expand its investments in Middle East and East African countries, especially those with big domestic markets such as Algeria, Egypt, Sudan, Ethiopia and Kenya.
"Following the share listing, and the shares start trading, then we will examine the size of the rights issue that we would like to do, depending the investments that are be about to finalized," Heikal said in a telephone interview.
Comment: Leaders pay price for Dubai excess (Complete article)
Six hundred years ago, Ibn Khaldoun, the pre-eminent Arab social scientist, argued that tough desert tribes would always supplant urban elites in an inexorable cycle of renewal.
A contemporary example of this evolutionary theory occurred at the World Economic Forum last weekend as Omar bin Sulaiman, the long-standing chief of the Dubai International Financial Centre, was abruptly dismissed. The news was imparted in a terse press release, while Hamdan bin Mohammed Al Maktoum, the emirate’s crown prince, addressed the forum. Fairly or not, much of Dubai’s elite is being made to atone for the wastage that accompanied a period of giddy growth that has turned into bust.
In a move more symbolically important than Mr bin Sulaiman’s dismissal, Mohammed al-Gergawi, chairman of the ruling family’s Dubai Holding conglomerate, Sultan bin Sulayem, who presides over the indebted Dubai World , and Mohammed Alabbar, chairman of Emaar Properties, last week left the board of the Investment Corporation of Dubai. ICD is a government holding company led by Mohammed al-Shaibani, the increasingly powerful head of the ruler’s court.
The departures should help assuage the concerns of Dubai’s financiers in the banking community and of members of the Abu Dhabi government, some of whom have been calling for change at the top, people with knowledge of the situation say.
The ruler’s court has installed new officials at ICD and the financial support fund, a body overseeing the $20bn bail-out for cash-strapped state enterprises. But the removal of Mr bin Sulaiman, who helped put Dubai on the global financial map, has surprised many. It echoes the experience of Nasser al-Shaikh, the chief of the finance department, who was publicly sacked in April.
The two were prominent younger Dubai leaders who were addressing the emirate’s $80bn debt, and who helped coax February’s $10bn bail-out loan from the central bank of the United Arab Emirates.
Some say Mr bin Sulaiman is the latest victim in a political tussle that has seen increasing powers vested in the ruler’s court. Mr Gergawi, who used to be chief vizier, has lost much power, and Mr bin Sulaiman, a protégé, seems to have followed, the people say.
The latest sacking comes amid a government audit investigation into excessive bonuses and financial abuse, which has uncovered wrongdoing across the emirate’s state-linked real estate companies.
True, it was the ruler who appointed these lieutenants to turn his vision of a world-beating Dubai into reality, and who encouraged a competitive environment that quickly built the infrastructure that the city now hopes can contribute to an economic revival.
These rivalries also fuelled excess. Dubai’s “masters of the universe” disregarded sustainability and increased the scale of mega-projects in order to trump colleagues’ plans.
The merchants who helped the ruling Maktoums turn a sleepy fishing village into a regional trading and commercial centre have been quietly suggesting that heads need to roll. So it is no surprise that Mr bin Sulaiman’s replacement is Ahmed al-Tayer, an old financial hand from one of a number of influential families, who have been calling for a return to a more conservative style.
The question now is whether a traditional approach will work for the DIFC. Mr bin Sulaiman revived the centre after its difficult birth in 2004 amid a scandal over regulatory independence. His blend of sales zeal and the promotion of culture and education has embedded the centre as a cornerstone of the emirate’s growth, so that it has weathered the global storm well.
The DIFC still faces challenges. Many executives have fallen idle amid the downturn, prompting wags to rename it “Dubai International Food Court”. There is also the prospect of renewed competition from Abu Dhabi and Qatar, two hydrocarbon-rich neighbours with financial ambitions of their own.
But the competition to be the regional financial centre is still Dubai’s race to lose.
A contemporary example of this evolutionary theory occurred at the World Economic Forum last weekend as Omar bin Sulaiman, the long-standing chief of the Dubai International Financial Centre, was abruptly dismissed. The news was imparted in a terse press release, while Hamdan bin Mohammed Al Maktoum, the emirate’s crown prince, addressed the forum. Fairly or not, much of Dubai’s elite is being made to atone for the wastage that accompanied a period of giddy growth that has turned into bust.
In a move more symbolically important than Mr bin Sulaiman’s dismissal, Mohammed al-Gergawi, chairman of the ruling family’s Dubai Holding conglomerate, Sultan bin Sulayem, who presides over the indebted Dubai World , and Mohammed Alabbar, chairman of Emaar Properties, last week left the board of the Investment Corporation of Dubai. ICD is a government holding company led by Mohammed al-Shaibani, the increasingly powerful head of the ruler’s court.
The departures should help assuage the concerns of Dubai’s financiers in the banking community and of members of the Abu Dhabi government, some of whom have been calling for change at the top, people with knowledge of the situation say.
The ruler’s court has installed new officials at ICD and the financial support fund, a body overseeing the $20bn bail-out for cash-strapped state enterprises. But the removal of Mr bin Sulaiman, who helped put Dubai on the global financial map, has surprised many. It echoes the experience of Nasser al-Shaikh, the chief of the finance department, who was publicly sacked in April.
The two were prominent younger Dubai leaders who were addressing the emirate’s $80bn debt, and who helped coax February’s $10bn bail-out loan from the central bank of the United Arab Emirates.
Some say Mr bin Sulaiman is the latest victim in a political tussle that has seen increasing powers vested in the ruler’s court. Mr Gergawi, who used to be chief vizier, has lost much power, and Mr bin Sulaiman, a protégé, seems to have followed, the people say.
The latest sacking comes amid a government audit investigation into excessive bonuses and financial abuse, which has uncovered wrongdoing across the emirate’s state-linked real estate companies.
True, it was the ruler who appointed these lieutenants to turn his vision of a world-beating Dubai into reality, and who encouraged a competitive environment that quickly built the infrastructure that the city now hopes can contribute to an economic revival.
These rivalries also fuelled excess. Dubai’s “masters of the universe” disregarded sustainability and increased the scale of mega-projects in order to trump colleagues’ plans.
The merchants who helped the ruling Maktoums turn a sleepy fishing village into a regional trading and commercial centre have been quietly suggesting that heads need to roll. So it is no surprise that Mr bin Sulaiman’s replacement is Ahmed al-Tayer, an old financial hand from one of a number of influential families, who have been calling for a return to a more conservative style.
The question now is whether a traditional approach will work for the DIFC. Mr bin Sulaiman revived the centre after its difficult birth in 2004 amid a scandal over regulatory independence. His blend of sales zeal and the promotion of culture and education has embedded the centre as a cornerstone of the emirate’s growth, so that it has weathered the global storm well.
The DIFC still faces challenges. Many executives have fallen idle amid the downturn, prompting wags to rename it “Dubai International Food Court”. There is also the prospect of renewed competition from Abu Dhabi and Qatar, two hydrocarbon-rich neighbours with financial ambitions of their own.
But the competition to be the regional financial centre is still Dubai’s race to lose.
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