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GULF

Nov 29, 1999

  1. International
  2. Finance
  3. Industry
  4. Policy
  5. Trade
  6. Gulf

Riyady signs $1.9b plane finance deal

Saudi Arabia has signed a $1.94 billion loan deal with foreign l banks to help finance its pur- ] chase of airplanes from Boeing, ] an official from lead arranger Chase Manhattan said.

The official at Chase's regional headquarters in Bahrain said the loan, backed by U.S. Export-lmport Bank (Eximbank) guarantees, had been signed in London by Saudi Finance Minister Ibrahim Al-Assaf on Thursday.

The official said $1.04 billion of the financing was co-arranged and was to be provided by National Westminster of Britain and France's Societe Generale.

The remaining $903 million was to be provided by the Private Export Funding Corp (Pefco) of the United States.

A Chase statement received said the loan was "the single largest financing ever to be supported by Eximbank".

Crude prices soar as Iraq stops exports

Oil prices rocketed to a new nine-year high after Iraq suspended oil exports under its humanitarian exchange programme with the United Nations.

London January Brent futures opened at S25.90, the highest oil price since January 1991 when allied forces were preparing to eject Iraqi troops from Kuwait. By 1600 GMT Brent stood at $25.67 a barrel, 63 cents up from Friday's close.

Prices leapt as Iraq's Oil Minister Amir Mohammed Rasheed confirmed that Iraq had stopped oil deliveries under the latest six-month phase of its oil-for-food exchange with the UN.

Baghdad protested the UN's proposal to extend by two weeks the sixth phase of the programme and accused the United States of trying to push other Security Council members into accept a draft resolution on weapons inspections.

Oil analysts said the loss of Iraq's 22 million barrels a day of exports from the 75 million barrels daily world market would exacerbate a looming supply shortage this winter.

Clearly the West doesn't want oil prices to go any higher and Saddam knows that," said Nauman Barakat of ABN Amro in New York of Iraqi leader Saddam Hussein. "His timing is impeccable."

But the United States said there was no immediate crisis. State Departnent spokesman James Rubin said there was a lot of oil in the system."

Oil prices had already surged to their highest point since the Gulf crisis as big producers kept a tight rein on supplies and ran down stocks of spare oil in industrialised countries.

Export group Opec has said it will keep holding back supply until March and has yet to decide whether or not to ease the curbs at that time.

Opec President Abdullah bin Hamad Al Attiyah said on Sunday that some producers wanted to extend agreed production curbs to end-June or even end-2000.

$220 mln World Bank loan

Yemen said the World Bank had pledged $220 million in credit to the Arab state if it presses ahead with economic reforms.

"The World Bank promised $220 million in different projects for Yemen for 2000," Planning and Development Minister Ahmad Mahammad Soufan told.

Internet joint venture

Credit Libanais, one of Lebanon's top 10 banks, announced the formation of a joint venture with local internet provider Data Management to help Arab businesses set up virtual shops and get a share of increasing commerce on the World Wide Web.

The Bank's chairman, Joseph Torbey, said the new company, called NetCommerce, hopes to have businesses from Lebanon, Jordan and Syria — where internet access is severely restricted — to list on its internet sites.

Exhibition in Baghdad

Some 60 foreign oil firms are to attend an industry exhibition in Baghdad to show new equipment used in the extraction and refining of crude, the official INA news agency said Tuesday.

The bulk of the firms are from Russia, Italy, the Netherlands, France, China, Turkey, the United Arab Emirates, Qatar and Lebanon, the agency said, quoting an oil ministry source.

The exhibition, which begins November 27, will run concurrently with an oil seminar, INA added.

More than 50 foreign oil firms took part in a Baghdad exhibition in September.

No hasty OPEC output moves after price rally

Giant oil producer Iran said on Tuesday that the current oil price rally and Iraq's decision to halt oil exports after a dispute with the United Nations would not prompt a sudden OPEC production increase.

Iran's OPEC Governor Hussein Kazempour Ardebili told Reuters in a telephone interview his country was not concerned about the surge in oil prices to fresh nine-year highs because the average price this year was still too low for producers.

Jordan, Israel try to breath life in economic relations

The peace treaty between Jordan and Israel was signed five years ago, yet economic relations between the two countries are still going at a snail's pace despite what the two sides have agreed on. All indications show that despite the fact that some of the main goals of the treaty were not met due to Israel's reluctance not to allow Jordanian products to enter its markets, some suggest that new changes could soon be taking place.

This week marked the launching of the 'Bridging of Jordan's Rift Corporation' by His Majesty King Abdallah II.

The corporation is a US-funded $5 million economic project formed earlier this year by a group of leading American entrepreneurs and politicians who share the concept of enhancing economic relations between Jordan and Israel in the desert region south of the Dead Sea. It received full support from Mrs Clinton, who paid last week, a two-day visit to Jordan to promote economic and social development projects between the US and Jordan.

Kuwait fund lends Morocco $30.4 mln

Kuwait's Arab Fund for Economic and Social Development on Tuesday granted Morocco a loan of 10 million Kuwaiti dinars ($30.4 million) to help in financing the expansion of the North African country's main airport, Morocco's finance ministry said.

A ministry statement said the loan would cover most of the project's total cost, estimated at 375 million dirhams ($37.9 million). But it gave no details about its terms.

The project involves building a new departure terminal at Mohammed V international airport near Morocco's business capital of Casablanca and other facilities, it added.

The UAE takes initiative against EU tariff

The UAE will lead a coalition against the European Union's 6 per cent tax on aluminium imports during the coming WTO round in Seattle, according to a senior Dubai government official, the UAE Gulf Daily news paper reported Monday.

"A third meeting will be held with our allies to make sure they have a positive stand towards the product," said Khaled Buhumaid, government strategic affairs manager for the Dubai Department of Economic Development. "All WTO members who are affected by the 6 per cent tax are joining," the paper said.

Earlier, Buhumaid said the EU is expected to respond in January to the GCC proposal to temporarily lift the aluminium tariff.

Oman, British bourses sign cooperation accord

The Muscat Securities Market (MSM) and London Stock Exchange (LSE) signed a cooperation agreement here on Monday, the first between the LSE and a Gulf Arab state.

"It is the first agreement of this kind we have signed with any of the Gulf countries," LSE chairman Sir John Kemp-Walsh said at a signing ceremony which was attended by Britain's Prince Charles.

"The MSM since its establishment in 1989 has made impressive progress, particularly the establishment of the Capital Market Authority (to oversee the MSM) and the move to electronic trading," he said.

Kuwaiti stocks plummet below 1,400 point barrier

The suffering Kuwait Stock Exchange (KSE) plummeted below the 1,400-point barrier on Sunday but newspapers dismissed reports that major investors were boycotting the market to force the government to intervene.

The KSE index dipped to another year-low of 1,397.4 points as the ailing bourse has dropped 15.5 percent from its 1999 high and a staggering 50.7 percent from its peak almost two years ago.

Qatargas exports to reach 5.8m tons

Qatar Liquefied Gas Co. (Qatargas) will have exported 5.8 million tons of liquefied natural gas (LNG) by the end of 1999, most of it to Japan, the company said Tuesday, quoted by the official QNA news agency.

Qatargas vice-president Faisal Mahammed Al-Suaidi said the firm's annual production capacity had reached eight million tons, an increase of 30 percent over its previous capacity.

Foreigners eye piece of Saudi insurance cake

Foreign insurance firms are hoping to cash in once a new health scheme obliging some 6.5 million expatriates in Saudi Arabia to hold private medical insurance is implemented.

But industry experts warn the sector will not be profitable unless the kingdom eases restrictions and introduces market regulations.

"There will be explosive growth," American Life Insurance Company (ALICO) Middle East said in a statement sent to Reuters.

"It is estimated that, of the 6.5 million expatriates currently in the kingdom, five million are believed to be uninsured, indicating a potential market of around three billion riyals ($800 million)," ALICO said.

Saudi Arabia approved the long-awaited health insurance scheme in August. Foreigners, who make up about one third of the 18 million population, now enjoy mostly free medical services.

Laws to fight money laundering

The Gulf banking hub of Bahrain is to introduce new legislation by the end of 1999 to fight money-laundering, the island state`s central bank governor said, quoted by the Bahrain Tribune daily on Thursday.

"The new regulations will make the country among the leading states that have comprehensive legislation to

counter the menace," Bahrain Monetary Agency (BMA) governor Shaikh Abdullah bin Khalifa Al-Khalifa said.

No details were given of what the new regulations would cover.

GCC panel to study creation of regional gas network

The six-nation Gulf Cooperation Council (GCC) has charged one of its offshoot organisations to carry out a feasibility study on creating a regional natural gas network, the group said in a statement Wednesday.

The Gulf Organisation for Industrial Consultancy (GOIC) signed the agreement Wednesday in Riyadh with the GCC's secretary general Jamil al-Hujailan, the statement said.

The project calls for establishing a gas grid among the six GCC members of Bahrain, Kuwait, Oman, Qatar, Saudi Arabia and the United Arab Emirates, "to firm-up complementary economies between Gulf countries."

GCC states hold about 15 percent of the world's gas reserves, as well as 45 percent of its oil reserves.

GCC economics shadows its political agenda

Gulf Arab leaders are showing increasing signs of a shift in priorities from political issues to a more economy oriented agenda.

The new trend has become more evident recently through comments reflected by a number of GCC leaders recently.

Meanwhile Gulf Arab leaders are to meet Saturday in Riyadh in a bid to thrash out an agreement on establishing a common market aimed at boosting their oil-dependent economies.

Relations with neighbouring Iraq and Iran will take a back seat at the 20th Gulf Cooperation Council (GCC) summit, for the first time since the body was founded in 1981 to counter Iranian militancy and the bloody Iran-Iraq war.

The three-day summit "will focus on economic matters," said GCC secretary general Jamil Al-Hujailan.

But "political questions will not be neglected," he said in reference to the issues of Iran, Iraq and Israeli-Arab relations.

The GCC groups Bahrain, Kuwait, Oman, Qatar, Saudi Arabia and the United Arab Emirates (UAE).

The change in focus has come in response to changing circumstances in the GCC, whose members control 45 percent of global crude oil reserves and some 20 percent of global production.

But GCC heavyweight Saudi Arabia, the world's largest oil producer, has repeatedly said oil at any price is not enough to sustain its economic well-being forever.

Hujailan underlined the importance of an agreement on a unified customs for the region, and "we hope to resolve this issue in a definitive manner during the summit."

The aim is to establish a customs union by March 2001, some 18 years after it was first proposed, in a bid to iron out differences in taxation, ranging from the Emirates' four percent to Saudi Arabia's top rate of 20 percent.

Jordan cleared for WTO membership

Jordan was cleared for entry to the World Trade Organisation (WTO) as long as trade ministers meeting in Seattle next week agree, diplomats said.

A WTO working party of current member states approved a "protocol of accession" setting out the conditions under which Jordan will join and the tariffs it will apply to imports.

The final go-ahead after such approval is normally given by the WTO's ruling General Council in Geneva, but ministers holding their bi-annual meeting take over the Council's role.

Once Jordan has their approval, which diplomats said will be virtually automatic, the kingdom will have to have the terms of entry ratified by its parliament.

Exactly 30 days after ratification has been notified to the WTO, Jordan will become a full member — probably in the first two months of next year.

Egyptian banks ready up for the 'Ramadan effect'

New shortages of dollars and Egyptian pounds are linked to the run-up to the Muslim fasting month of Ramadan and year-end, and should be no more than a temporary blip, bankers and analysts said on Tuesday.

"There is a 'Ramadan effect'," economist David Shelby of EFG-Hermes Brokerage told Reuters. "It is a holiday season.

People spend a lot more money. They buy more food, gifts."

Importers opened letters of credit three months ago for extra commodities for Ramadan, due to begin on December 8 or 9, subject to the sighting of the new moon, he added.

MobiNil hits new high as Cairo shares edge up

Cairo shares edged up as mobile telephone operator MobiNil touched a record high for the second day in a row, closing at 107.72 pounds.

Brokers said they expected the stock to hit new heights on Thursday, trading in the 107-110 pound range.

"MobiNil and CIB as always are getting a lot of attention," said Sherif Gaafar, senior account executive at El-Eman Securities.

MobiNil, or Egyptian Company for Mobile Services, gained 2.38 pounds, or 2.26 percent, to 107.72 pounds in volume of 387,025 shares. That topped Tuesday's record high of 106.98 pounds.

Saudi believes speculation behind oil rally

Saudi Arabia, the world's biggest oil exporter, believes speculation is behind the current oil price rally and remains determined to keep a rein on output until the end of March, a Gulf source said on Wednesday.

The source familiar with oil policy in OPEC kingpin Saudi Arabia said it was too early for producers to judge the longer-term market impact of the halt in Iraqi oil exports.