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Jun 26 - Jul 02, 2000

OPEC agrees modest output increase, prices rise

OPEC on Wednesday approved a cautious deal to raise world crude supplies and tame runaway oil prices that have pushed up energy bills in the West.

The cartel agreed to lift output for 10 member countries by a modest three per cent increment of 710,000 barrels daily.

US Energy Secretary Bill Richardson said: "I am pleased with this figure and hopefully, with additional oil from non-OPEC countries that might be announced soon, this will be good news for the American consumer." But dealers said the increase might not prove enough to calm prices. Light crude oil futures in New York traded up 72 cents to $31.37 a barrel — well in excess of the $25 a barrel OPEC is targeting.

"We are going to have firmer prices. OPEC wants to lag, not to lead the market," said Gary Ross of US consultants PIRA.

The pact raises production limits for 10 OPEC members, excluding sanctions-bound Iraq, to 25.4 million bpd from 24.69 million. Leakage over quotas means current output already is estimated at about 25.3 million.

"With extra leakage, this will probably mean only 400,000 bpd of net new oil which means there's no soft landing for oil prices," said Leo Drollas of London's Centre for Global Energy Studies. Outside the cartel, Mexico and Norway are expected to announce their own additional supplies. Asked what OPEC would do if prices stay high, OPEC Secretary General Rilwanu Lukman said:

"We will do whatever it takes to bring (prices) down to a level we consider more reasonable." The producer group meets again on September 10 in Vienna.

OPEC's deal, effective from July 1, includes Iran. Iranian Oil Minister Bijan Zanganeh said he would endorse the pact.

Irritated by heavy US lobbying in March, Tehran declined to sign a deal that lifted exports by a hefty seven percent.

G15 blame West, warn of international mergers

The G15 group of developing nations complained Tuesday that mergers involving multinational corporations were making life even harder for smaller businesses, Egyptian President Hosni Mubarak said.

The group's leaders warned of "the repercussions of mergers between large companies on small and medium-size firms' ability to compete," Mubarak told reporters at the close of the G15's annual summit.

The growth of mega-companies through such mergers is having a negative effect on the labour situation within the kind of businesses that poorer countries need to provide employment, he said.

The G15, founded in 1989 to counter the power of the wealthy industrialized nations, will group 19 nations after the admission of new members Iran and Colombia.

Leaders of developing nations on Monday had blasted the West for shackling them with unjust trade terms and crushing debts, with Jamaica's prime minister accusing the rich of consigning them to the "graveyard of penury".

The G-15 group of African, Asian and Latin American countries wants to raise its voice ahead of next month's meeting of G8 industrialised nations.

After a formal opening at President Hosni Mubarak's palace, the leaders held two sessions of talks at a resort on the outskirts of Cairo before adjourning the summit to Tuesday.

Jamaican Prime Minister J.P Patterson said in a speech that globalisation had favoured a few and marginalised the weakest. He said the industrialised north must not use globalisation to shirk its part in the war on poverty while developing nations "buckle under the burden of external debt, perpetuated by those whose past transgressions, current intransigence and myopic vision will condemn us to the graveyard of penury".

Nigerian President Olusegun Obasanjo also bemoaned the debt burden faced by the African continent.

Kuwait delays key economic reforms

Kuwait's government submitted a plan of action for economic reforms to a parliamentary committee on Wednesday, but major economic legislation has been put on hold until October, the finance minister announced.

"We presented a programme with definite dates for implementation. The programme has been accepted by the committee," Sheikh Ahmad Abdullah Al-Sabah told reporters after a meeting with parliament's economic panel.

But he said that approval of major legislation like privatisation, foreign investments and income tax would be delayed because of parliament's long summer recess expected to start in July.

Committee chairman MP Abdelwahab al-Haroun said the government's plan focuses on five main economic planks: financial reforms, privatisation, organisation of the labour market, administrative development and the Kuwait Stock Exchange (KSE).

But the minister reiterated last week that he would press ahead with reforms despite the surplus and that unpopular decisions were inevitable.

Tunisia strongest in Africa on economic growth prospects

Tunisia has the soundest economic growth prospects of African countries surveyed by the World Economic Forum (WEF), while Zimbabwe and Kenya are the 'losers', a WEF report released on Wednesday said.

The Africa Competitiveness Report on the economic health of 24 African countries was released ahead of the three-day WEF southern Africa economic meeting, due to start later on Wednesday.

The report, last issued in 1998, said that Tunisia was followed by Mauritius, Botswana, Namibia,

At the other end of the spectrum was Nigeria in 20th position — with analysts remarking that newfound democracy was offset by ethnic tension, poverty and debt — followed by Burkina Faso and Kenya.

Iran, Oman to finalise joint offshore gas field soon

The governments of Oman and Iran are soon expected to conclude final negotiations on developing their joint Bukha-Henjam offshore gas condensate field, a Ministry of Oil and Gas official said on Tuesday.

Hussein al-Lawati, the ministry's director-general of oil and gas exploration, told Reuters the two Gulf neighbours were concluding talks to review marketing options.

"The talks are in final stages to review a few market options that we have already identified," he said.

He added that the cost of the project and production would depend on terms to be negotiated with the potential buyers the ministry was negotiating with, but gave no further details.

The Bukha-Henjam field, which holds 1,800 billion cubic feet of gas and 400 million barrels of condensate, is located 12 km (7 miles) off the coast of northern Oman in the Straits of Hormuz, a strategic expanse of water shared by the two countries.

Ministry officials said Oman would own a 20 per cent stake in the project and the rest would go to the Iranian government.

France will swap 400 mln francs of Algerian debt

France will convert 400 million francs (61 million euros, 58.4 million dollars) of Algeria's debt into investment, once an agreement has been reached with the Paris Club of sovereign creditors, a source close to the French finance ministry said on Friday.

The ministry believes an agreement with the Paris Club, which is needed for France to go ahead with the debt conversion, could come by the end of the month. There was little doubt such an agreement would reached.

If the Paris Club gives the go-ahead, Algeria's foreign debt will be reduced by 400 million francs, the source said. Agreements on debt swaps or debt reductions are agreed by creditor countries together, rather than on a bilateral basis.

Algeria's foreign debt totals some 28.3 billion dollars, and owes some 3.5 billion euros (3.36 billion dollars) in French debt, making France the country's biggest single creditor, the source said.

$7.5 mln credit for Palestinian

The World Bank said Wednesday it had approved a 7.5 million dollar credit for the Palestinian Authority to improve roads, water distribution and sewage services in the West Bank and Gaza Strip.

The effort also aims to strengthen municipal and central government administration in the territories.

"About 400,000 persons in 35 communities in West Bank and Gaza are expected to benefit directly from the project," the World Bank said in a statement.

The funds support the Palestinian Authority's Second Municipal Infrastructure Development Project, which builds on an earlier initiative in the same sector.

The overall project cost is 26 million dollars. Also contributing are the Palestinian Authority itself, 4.4 million dollars, and the Saudi Fund, five million.

Jordan to boost foreign investment

Jordan, hoping to attact foreign investors, has launched an advertising campaign at home and abroad that bills the kingdom as "a small country with big ideas." Giant billboards have been erected around Amman in hopes of "increasing Jordanians' pride and their confidence in themselves," said an official at the royal palace, which is directing the campaign.

One sign includes a picture of a young Jordanian man and the words "With effort..." the first part of a quotation from Al-Mutanabbi, an Arab poet from the Middle Ages, that ends with the words "desires become fact." On the back of the billboard is a smiling young woman with the caption "Think Big." "The goal is to try to improve the mood of Jordanians mood, because a good mood is the best way to involve them in the process of change to the era of modern technology," the royal official said.

Presidents make first contact since 1980

Iranian President Mohammad Khatami and Egyptian President Hosni Mubarak spoke by telephone Wednesday in the first direct contact between leaders of the two countries since they broke off relations in 1980, state television said.

"In addition to bilateral ties, the two presidents talked about Iran joining the G15" group of developing nations, the television said. Mubarak "greeted his counterpart, expressed his pleasure at Iran's membership in the G15 and said he hoped that the two countries' relations will develop further," the television added. Iran joined the G15 during its 10th meeting Monday and Tuesday in Cairo.

Gas for huge industrialisation

Oman's government has set aside five trillion cubic feet (143 billion cubic metres) of gas for a major industrialisation drive in the Indian Ocean port city of Sohar, an oil and gas ministry official said Wednesday.

"The ministry of oil and gas has set aside five trillion cubic feet of gas for industries in Sohar" in the latest development plan, Khalifa bin Mubarak al-Hinai, the ministry's adviser for technical affairs, told Oman Observer.

"It will meet the feedstock and energy needs of the planned projects over their 25-year operational life," he said.

Peugeot to build in Iran

French carmaker Peugeot announced Saturday that it will begin production of its new 206 model in Iran in early 2001, the official agency IRNA reported.

"Following a test production of the Peugeot 206, 15 thousand units will be produced next year, and 120 thousand units will be produced in Iran by the end of 1383 (2003)," according to Hossien Amiri an official of the Iran Peugeot project, Hossien Amiri, IRNA said. The announcement came on the first day of a meeting in Tehran of French spare parts makers linked to the Peugeot plan, he added.

LINKdotNET

Link Egypt, one of the fastest growing Internet Solutions Providers (ISP) in the Middle East and a leading regional turnkey Internet solutions company, announced it is to merge with major Egyptian ISP, InTouch, forming LINKdotNET.

$66 mln refinery upgrade project

Bahrain's Prime Minister Sheikh Khalifa bin Sulman al-Khalifa inaugurated on Monday a $66 million in-line blending project at Bahrain's only oil refinery, a Bahrain Petroleum Company (BAPCO) statement said.

BAPCO, which runs the 250,000-barrels-per-day (bpd) plant, awarded Japan Gasoline Corp (JGC) a contract to carry out the work in 1998.

The project is part of a programme to upgrade the ageing refinery which was built in 1936.

Bahrain last year awarded International Bechtel Company Ltd a contract to conduct a study of engineering work that would reduce the amount of sulphur in its diesel oil to 0.05 per cent from the current level of about 0.5 per cent.

Saddam calls World Bank a 'cancer'

Iraqi President Saddam Hussein said Thursday the World Bank is a "cancer" gnawing at the Third World, the official INA news agency reported.

"Economists contract loans with the World Bank or other financial institutions which were created to be a cancer in Third World countries," he was quoted as telling Yemeni Transport Minister Abdel Malek al-Sayyani.

INA said Sayyani had brought Saddam a message from Yemeni President Ali Abdullah Saleh on the economic situation in his country, one of the world's poorest.

FIB changes name

Bahrain-based Faysal Islamic Bank (FIB) announced on Wednesday it has changed its official name to Shamil Bank of Bahrain.

"Shamil Bank of Bahrain, an Islamic bank, announces that after approval of the Commerce Ministry and the Bahrain Monetary Agency its name has changed from Faysal Islamic Bank of Bahrain to Shamil Bank of Bahrain," a bank statement said.

OPEC will defend $25 oil price: Naimi

Saudi Arabian Oil Minister Ali Al-Naimi said on Thursday OPEC would defend a $25 a barrel target price for its basket of crudes.

"We have a $25 target price, we will try to keep it there, we will do whatever needs to be done, we will watch it like a hawk," Naimi told reporters.

OPEC on Wednesday agreed to raise output by 708,000 barrels per day in a further move to pull runaway oil prices down to a level acceptable to consumers and to producers concerned over stunting demand. OPEC also raised output at its March meeting.