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Jul 10 - 16, 2000

Saudi oil hike still planned

OPEC heavyweight Saudi Arabia and a few other oil producers remain on course to increase production by 500,000 barrels a day in the "next few days," a Gulf source said Thursday.

The source said the producers were intent on lowering crude prices and if other countries in OPEC were unable to increase output or unwilling to do so, it was "up to them."

"Saudi Arabia and other oil producers still plan in the next few days to increase production by a reasonable amount which is 500,000 barrels per day," the source said.

"Those who are going to join are definitely going to do it. Those who are not — either because they do not have the spare capacity or they do not want to — then that's OK too," he said.

Saudi Arabia, the world's largest exporter, was consulting with other producers and would continue to discuss the exact timing and method of the increase, he said.

An OPEC source has said that the United Arab Emirates, Algeria and Kuwait were likely to provide some of the extra oil, with Saudi Arabia pumping the lion's share.

Others within the Organization of Petroleum Exporting Countries are already producing at full capacity.

The news pressured oil prices for a third straight day though they remain well above OPEC's target of $25 a barrel. On Thursday, U.S. benchmark light crude for August delivery settled at $29.99 a barrel, down 68 cents. London Brent crude oil futures settled at $29.67, up 29 cents.

Oil prices fell sharply earlier this week after a Saudi announcement Monday that it was planning to raise output by 500,000 barrels per day (bpd) after two OPEC production increases this year failed to bring oil down from $30 a barrel.

High level Kuwait-Iran visits to divide offshore Gulf oil

Kuwait plans to send its foreign and oil ministers to non-Arab Iran in an attempt to reach a final maritime border deal to divide oil and gas reserves in the Gulf waterway.

Oil Minister Sheikh Saud Nasser Al-Sabah told Reuters on Wednesday he plans to visit Iran soon to discuss the issue after an agreement came closer on Sunday when Kuwait and Saudi Arabia signed a maritime border deal.

He did not say when the visit would take place to discuss a row which resurfaced in recent months when Iran started drilling in Al-Dorra offshore gas field, an area in the northern Gulf claimed by Tehran, Riyadh and Kuwait.

Influential Foreign Minister Sheikh Sabah Al-Ahmad Al-Sabah, Sheikh Saud and other officials on Tuesday held an extraordinary meeting with parliament's foreign relations committee to discuss the Saudi-Kuwaiti final border deal and plans to resolve the long-standing issue with Iran across the Gulf.

On Wednesday, committee head Mohammad Al-Saqr told reporters that the Kuwaiti cabinet was expected to approve the deal at its weekly meeting on Sunday.

He said his committee hopes to approve the deal early next week and send it to the elected parliament for approval before the start of a long summer recess later in July, opening the door for the government to go ahead with talks with Iran.

In 1997, Iran and Kuwait decided to postpone their continental shelf talks until Kuwait reached a deal with its close ally Saudi Arabia, the region's main Arab power.

Following Tuesday's meeting in parliament, MP Abdel-Mohsen Jamal said that for the Iranian portion of the deal, Kuwait plans to accept with an Iranian invitation extended to Sheikh Sabah who signed the deal with Saudi for the Kuwaiti side.

Bashar's economic reforms

A decision by Syria to consider allowing foreign banks into the country, if only in free-trade zones to begin with has been hailed as "a great step forward in the attraction of capital" by the Syrian media.

The swift rise of Bashar to the helm of the Syrian government in succession to his father has raised hopes among businessmen that chronic mismanagement and state interference in the economy will come to an end.

Yet, according to a Stratfore intelligence report, the latest decisions with respect to the banking sector seem to suggest that Bashar appears intent on creating a parallel banking system. A path that will circumvent Syria's current banking system — controlled by his father's Baath party loyalists — without directly challenging their entrenched interests.

The report however predicts that the young Assad's plans may ultimately result in his loss of the critical loyalty of his father's old allies.

Egypt gets wake-up call on economic reform

Reform or risk losing the confidence of foreign investors and international markets.

That was the ultimatum given by ratings agency Standard and Poor's (S&P) in a report this week that cut its outlook on Egypt to negative from stable and warned of a possible downgrade in credit ratings if no corrective action was taken.

"A downgrade of the ratings could occur over the next one to three years unless budgetary discipline is strengthened, privatisation is accelerated, and the conduct of monetary policy is made more transparent and flexible," S&P said.

"The pace of structural reform, which is central to the government's plans for more rapid growth in exports and real GDP, has faltered over the past two years," it added.

S&P's remarks echoed increasingly urgent calls by investors and analysts over recent months for speedy reforms in key areas such as foreign exchange policy and privatisation.

Challenge Fund setting up $100 mln fund with Jordan

The Challenge Fund LP is setting up a fund of up to $100 million with Jordan to invest in Jordanian and joint Israeli-Jordanian projects, the fund's president said on Wednesday.

"The fund was the initiative of (regional cooperation minister) Shimon Peres," Challenge Fund president Joseph Ciechanover told Reuters. "It will be a diversified investment fund and will be managed by us and someone in Jordan." The Jordanian investors in the fund have not been finalised but Ciechanover said Challenge was in advanced negotiations with certain Jordanian parties.

The World Bank has announced it wants to be a partner in the fund and several large foreign companies are interested in investing, he added.

Kuwait to raise capacity

Kuwait's oil production capacity could rise by another 410,000 barrels per day to around three million bpd next year after a Chinese firm hands over a troubled and much-delayed project to build two new gathering centres.

Oil Minister Sheikh Saud Nasser Al-Sabah came under attack in parliament on Wednesday during an oil sector debate which included strong criticism of the project by China National Petroleum Engineering Construction Corporation.

He told MPs "Yes, there is delay in construction and yes, there is an existing problem" with the $391.5 million project which was awarded in December 1995 to build gathering centres (GC) 27 and 28 with a total production capacity of 410,000 bpd.

Egypt approves partnership deal with Europe

Egyptian President Hosny Mubarak approved on Thursday the signing of a trade partnership agreement with Europe, saying it was necessary to modernize the local economy and boost exports.

Mubarak's decision came following extensive debates on the possible negative effects of the Egyptian-European Partnership Agreement, which will gradually reduce customs in trade deals between the two sides.

Several Egyptian business federations had expressed reservations about the agreement and its effect on local industry and the agricultural sector.

Cairo tried to calm their fears by saying that it would also reduce high customs and tariffs on imported goods necessary for the industry, allowing local products to stand up to European competition.

SIPC plant

The kingdom's third privately-owned petrochemical company, Saudi International Petrochemical Co. (SIPC), has announced work will start on an 11-billion-dollar plant in the Gulf town of Jubail, newspapers reported Thursday.

The SIPC plant will be fully operational by the end of 2003, the Arab News quoted company chairman Abdulaziz al-Zamil as saying.

Qafco in Norsk unit deal

Qatar Fertilisers Co (Qafco), a Qatari joint venture with Norway's Norsk Hydro, said on Thursday it had signed a deal with Hydro France, a Norsk unit, to market 150,000 tonnes a year of urea in South Africa.

Iran's first alumina project hits snag

Iran's first major alumina project contracted to a Czech company has run into a hitch over its design, Iranian sources said on Thursday.

The project in northeastern Jajarm region was due to go on stream last September with an ultimate annual production capacity of 280,000 tonnes.

LNG exports

Oman said on Thursday it had exported the first shipment of liquefied natural gas (LNG) to the United States as part of a short-term agreement with Coral Energy, the gas marketing arm of Royal Dutch/Shell Group.

"This is the first LNG cargo to the US as part of the short-term agreement with Coral Energy. The second and final delivery will be sent in August," an LNG spokesman in the ministry of oil and gas, told Reuters.

He said the first cargo was 60,000 tonnes of LNG.

Iraq establishes fund

Iraqi authorities have established a special fund to encourage economic projects in the sanctions-hit country, newspapers reported Tuesday.

The fund will have an initial capital of 50 billion dinars (25 million dollars) and 50 million euros "to finance activities in the private, mixed and cooperative sectors in the framework of reactivating the economy." The fund will grant loans to businessmen on their presentation of a feasibility study of projects they wish to launch, papers said.

IDB gets $84 mln financing

Saudi-based Islamic Development Bank (IDB) signed an agreement Wednesday to receive an $84 million financing facility, co-arranger Gulf International Bank (GIB) said.

"The facility which is for $84 million was jointly arranged by Gulf International Bank and Kuwait Finance House," Bahrain-based GIB said in a statement.

It said a number of other banks had taken part in the deal, including Standard Chartered Bank, ABN-Amro Bank, Arab National Bank, Beit Ettamwil TounsiSaudi (BEST Bank), Dubai Islamic Bank, Jordan Islamic Bank for Finance and Investment, and Al Aqsa Islamic Bank.

Syria allocates $1.7 bln to find new jobs

The Syrian government has allocated 80 billion Syrian pounds ($1.7 billion) as part of an emergency plan to fight its growing unemployment problem, Prime Minister Mohammed Mustafa Mero said.

A senior official on Monday quoted Mero as saying during a special meeting held at the planning ministry on Sunday that the emergency plan was aimed at finding jobs for the unemployed both in the private and public sectors.

He gave no figures for the number unemployed but economic sources said the government needed to provide jobs for some 200,0000 new workers every year.

New polyethylene plants

The giant Saudi Basic Industries Corp. (SABIC) has opened two new polyethylene plants with a total capacity of 485,000 metric tonnes a year, newspapers reported on Friday.

A 220,000-tonne factory for low density polyethylene started production on June 11 in the industrial city of Jubail on the Gulf coast and a 265,000-tonne plant for high density product was launched on June 9 in the Red Sea city of Yanbu.

Iraq building six new refineries

Iraq is building six small refineries and the first will come on stream later this month, an Iraqi newspaper said on Sunday.

The official al-Qadissiya, quoting Industry Minister Adnan Abdul-Majeed Jassim, said a new refinery with a capacity of 10,000 barrels per day (bpd) was being built in the town of Baiji, 220 km (138 miles) north of Baghdad.

"Ministry technicians in cooperation with experts from the oil ministry are about to finish a refinery at Baiji which will be operational this month," Jassim said.

Damascus, Istanbul rail link opens

A new 1,500 kilometre (940 mile) train service linking Damascus with Istanbul in Turkey was inaugurated Tuesday, the railway company said Wednesday.

The once a week service will enable passengers to book through from one city to another for the first time since the collapse of the Ottoman empire in 1918.

Suez Canal income seen topping $2 bln

Higher oil prices and the recovery of Asian markets are expected to push up revenues of Egypt's Suez Canal this year to well above 1999's $1.86 billion, the head of the Canal Authority was quoted as saying on Tuesday .

"We expect revenues to exceed $2 billion during the current year," the United Arab Emirates' al-Bayan newspaper quoted Ahmed Fadel as saying in Cairo.

Pyramid reopens

Egypt's second biggest pyramid will reopen soon following a year-long facelift that involved scraping salt, lipstick and graffiti off inner walls. Zahi Hawass, director of the Giza plateau where Egypt's three great pyramids sit, said restoration work on the 4,500-year-old pyramid of Khafre (Chefren) had just finished and tourists would be treated to a more impressive display.