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Aug 07 - 13, 2000

Crude prices rise sharply

Crude oil prices were sharply higher Wednesday after a closely monitored report from the American Petroleum Institute indicated a sharp fall in petroleum reserves.

The American Petroleum Institute (API) said late Tuesday that U.S. oil inventories declined by nine million barrels, confounding analysts' forecasts that higher imports would result in a one-million-barrel increase.

U.S. light sweet crude futures for September delivery rose 69 cents to $28.48 a barrel on the New York Mercantile Exchange. London's benchmark Brent for September delivery rose 64 cents to $27.40.

OPEC has said that it will increase its output if the price of its basket of different oil types stays above $25 a barrel. The oil cartel supplies around 40 per cent of the world's crude.

Analysts warned, however, that early stock figures are notoriously unreliable and are often subject to revision.

"The market is so volatile at the moment ... the one thing the oil market desperately needs at the moment is clarity from OPEC, and it's not getting it," Julian Lee, a senior strategist at the Center for Global Energy Studies, told.

The cost of a barrel of crude oil has come down from more than $30 in the past few weeks as traders anticipated a glut of product coming on to the market. However, there is some dispute among oil market participants, not least among OPEC members themselves, as to the underlying balance of demand and supply in the world economy.

Some OPEC hawks, notably Iran, have indicated their concern that oil prices could crash again if too much supply comes on to the market. The price of a barrel of oil fell in early 1999 as low as $10.

Large oil-consuming nations, such as the United States, want a stable oil price around $25 to prevent a global economic crunch. Big producers, such as Saudi Arabia, OPEC's largest producer, have said they share that goal, which aims to avert a renewed drive to exploit alternative energy sources.

S. Arabia's non-oil exports decline

Saudi Arabia's non-oil exports fell for the second year in a row in '99, dropping to SR19.9bn ($5.3bn), from SR 21.7bn in '98 and SR25.3bn in '97. A report published by the Saudi Export Centre, attributed the decline to rise in import duties of certain countries, specially Egypt, protectionist policies in Europe and the volatility of exchange rates.

Chemicals accounted for a large part of Saudi Arabia's non-oil exports, amounting to SR9.18bn, 46.1% of the total last year, followed by plastics, rubber and derivatives (SR2.17bn, 10.9% of the total) and electrical instruments and equipment (SR 873m, 4.4% of the total last year). Petrochemicals and other chemical goods produced by the Saudi Basic Industries Corporation (SABIC) thus formed the bulk of non-oil Saudi exports.

The main markets of non-oil exports are the United Arab Emirates, which imported such products worth SR2.86bn, 14.3% of the total during the year under discussion. The US imported products worth SR1.83bn, 9.2% of the total, Kuwait imported non-oil products worth SR1.69bn, 8.5% of the total and India imported products worth SR914m, 4.6% of the non-oil exports.

Meanwhile, the total value of imports into Saudi Arabia fell in '99 by 17% to SR105bn, as compared to '98. Although the total value of goods imported went down, the overall quantity that entered the kingdom went up by 7% in '99. In particular textiles and clothing imports rose in '99 by 5% as far as the quantity is concerned but the aggregate value of the imports fell down by 13% to SR6.5bn.

The quantity of chemicals imported went up by almost one third. However, the value of these imports went down by 1%. Imports of foodstuff went up by 15% by weight but their aggregate value went down by 3% during '99 as compared to the previous year. More or less it's the same case with medicines and other items including the transport sector.

Support for Arafat over Jerusalem

Egypt offered on Thursday to help Israel reach a peace deal with the Palestinians but said it would not put pressure on Palestinian President Yasser Arafat to make concessions on Jerusalem.

As Israeli Prime Minister Ehud Barak consulted President Hosni Mubarak in Egypt, Arafat turned up in South Africa to appeal to former President Nelson Mandela to intervene and revive the peace process following the failed Camp David summit.

Barak said Mubarak had proved an "attentive listener" during 90 minutes of talks at a palace near the Mediterranean coast.

But Egyptian Foreign Minister Amr Moussa said after the talks that his country remained firm in its support for Arafat over Jerusalem — the main stumbling block at talks.

"Our assistance is assured...but we remain firm that any settlement, in order to last, has to be balanced, it has to be fair," he told reporters.

"Are we supposed to pressure President Arafat to make concessions on Jerusalem? This is not our job. Concessions are needed from all parties within the framework of international legitimacy, not outside it."

Saudi sets deadline for gas plans

Saudi experts have briefed foreign companies on three core gas projects up for grabs under the kingdom's energy investment initiative, setting an August 26 deadline for proposals, the Middle East Economic Survey reported on Monday.

Shortlisted companies attended a technical meeting in Riyadh on 12 July when they were addressed by officials from a number of ministries and other bodies, as well as a representative of Saudi Aramco, the newsletter reported.

"This was followed by briefings in Dhahran by a Saudi Aramco Study Team on 22-24 July," the weekly said. "Their proposals have to be submitted to the Saudi Negotiating Team by 26 August." The shortlisted firms are Royal Dutch(Shell, Phillips, Chevron, ExxonMobil, Texaco, Conoco, Enron)Oxy, BP Amoco, Eni, Marathon and TotalFinaElf.

Iraq lays claim to world's biggest oil reserves

Iraq has the world's largest oil reserves, Petroleum Minister Amer Rashid claimed in an intervew published Sunday.

He did not give figures or mention Saudi Arabia which is generally estimated to have reserves of 261 billion barrels of crude compared to Iraq's 100 billion barrels.

"We state that Iraq has enormous oil (production) capacity and reserves which put it in first place among the countries which hold the largest crude reserves in the world," he told the financial weekly Al-Iqtissadi.

Rashid said the output from Iraq's southern oil fields alone "is equivalent to that of an OPEC member country and it increases day after day." Deputy Prime Minister Tareq Aziz has also stated this year that Iraq has the largest reserves in the world, and not the second largest as is widely accepted.

World Bank says has not urged Lebanon to devalue

The World Bank urged the Lebanese government on Thursday to embark swiftly on privatisation to reduce the country's massive public debt, but denied it had advocated a currency devaluation.

"People have been talking about devaluation and saying that the World Bank have been recommending that. My answer is very simple: no," Hari Prasad, the bank's representative in Lebanon, told Reuters.

"It is not true and that was not one of the subjects on which we have been consulted," Prasad said in an interview.

He dismissed fresh press reports that Lebanon would be placed "under the custody" of the bank and speculation by financiers that it has asked the government to devalue to make it easier to repay the stock of Lebanese pound debt with foreign currency revenue.

US, Jordan close in on free-trade deal

The United States and Jordan are close to completing a market-opening agreement that would slash trade barriers between the two countries, allies in the Middle East peace process, President Bill Clinton's top negotiator said on Tuesday.

US Trade Representative Charlene Barshefsky said "substantial progress" was made in negotiations this week in Amman on the proposed trade pact, which would give Jordanian goods duty free access to the US market and similar benefits for US exporters.

"We won't be initialing or signing anything, but the progress certainly is sufficiently strong that I don't believe it will require substantial new negotiations," Barshefsky told reporters in Washington in a video conference call after meeting with Jordan's King Abdullah and other top officials.

Tenders for wind power farms

Morocco issued on Wednesday an international tender for the construction of $200 million wind power farms in the northern and southern areas of Tangiers and Tarfaya, a senior ONE manager said.

"We launched today an international tender to select the best technical and financial offer over the building of Tangiers and Tarfaya wind power farms," Ali Fassi Fihri, a senior manager at ONE told Reuters.

The closing date was set for November 1, 2000, Fassi Fihri said.

Financing deals with Lebanon

The Arab Trade Finance Programme (ATFP) said on Monday it signed financing deals worth a total of $84.6 million with the Lebanese government and two Lebanese banks.

The Abu Dhabi-based ATFP said a $14.6 million loan would go to the Lebanese government for structural reforms in the financial sector. Lebanon would get another $40 million to help refinance trade deals with other Arab countries.

ATFP also said it signed a $20 million credit line with Byblos Bank and a $10 million credit line with Credit Libanais to finance imports from and exports to other Arab countries.

The loans were signed in Beirut on Sunday and Monday.

Chevron rejects Kuwaiti claims

Chevron Corp. on Wednesday rejected allegations by a Kuwaiti parliamentary committee that the US oil major could be responsible for two recent oil refinery blasts.

"Chevron wishes to make it very clear that it was not involved in either accident and there is no technical basis for these claims. We are seriously concerned by these allegations," a spokeswoman said.

"Chevron will continue to provide technical assistance as requested by the Kuwaitis to help them understand the causes of these two tragic accidents." Chevron was responding to a statement by a Kuwaiti parliamentary committee investigating the blasts at the country's Mina Al-Ahmadi and Shuaiba refineries.

The plants are run by the state-owned Kuwait National Petroleum Co (KNPC).

Arab fund signs

The Arab Trade Finance Programme (ATFP) said on Wednesday it had signed a $40 million line of credit with Morocco's finance ministry.

The Abu Dhabi-based ATFP said the line of credit would finance a variety of trade deals between Morocco and other Arab states. It gave no further details.

ATFP said the agreement, signed on Tuesday, would bring to 24 the number of credit line deals extended to Morocco, worth a total of $333 million.

Ferry service

Bahrain will launch a high-speed ferry next week capable of carrying 84 vehicles between the island state and six Gulf cities, the Gulf Daily News reported Wednesday.

The 585-passenger Tylos will offer a scheduled service from Bahrain to the two Iranian port cities of Bushehr and Bandar Abbas, the southern Iraqi port city of Umm Qasr, Kuwait City, Doha and Dubai, the paper said.

Yemen plans oil export terminal

Yemen is planning to build an export terminal at Ras Esaa on the Red Sea for its Marib crude, an oil ministry official said on Wednesday.

The port, west of Yemen, would aim to replace a single buoy moorings and storage tanker currently being used and was nearing the end of its commissioning life, the official told Reuters.

"The cabinet in its weekly meeting on Tuesday agreed on the proposal and assigned the oil ministry to start relevant measures," the oil ministry official said.

"The ministry will shortly start contacts and consultations with different foreign companies for the preparation of a complete economic and technical feasibility study (for the port)," the official told Reuters.

Iraq, Syria to resume rail link

A 60-year-old rail link between northern Iraq and Syria, suspended in 1981, is to resume service on August 11, an Iraqi official announced on Tuesday.

Ghassan Abdelrazek Al-Ani, director general of the State Enterprise for Iraqi Railways, said the train would run once a week between Mosul and Aleppo, some 350 kilometres (210 miles) north of Damascus.

Syria plans to double gas production

Syria expects its natural gas production to nearly double by 2005, Oil Minister Mohamed Maher Jamal told Al-Hayat newspaper in an interview published on Tuesday.

Jamal said he expected gas production to increase to 24 million cubic metres (mcm) in 2005 compared to around 13 mcm produced currently. He also said Syria was planning to produce 29 million tonnes of crude oil (around 600,000 barrels per day) in 2000 of which about 12 million tonnes would be available for export.

Iraq to re-access Aqaba port

Iraq is preparing to switch its trade back to Jordan's Red Sea port of Aqaba, a top Iraqi industrial official said, quoted in Tuesday's Jordanian newspapers.

"Iraq has taken the necessary steps for its exports and imports to start passing through Aqaba in the next few weeks," said Ihsan Abdel Razaq Yunes, chairman of the Union of Iraqi Industries.

Emirates profits soar 75%

The Emirates Bank Group announced Monday that profits in the first six months of 2000 soared to 69.64 million dollars, a rise of almost 75 per cent compared with the first half of last year.

The group's net profits rocketed to 255.58 million dirhams, up from 40.14 million dollars between January and June 1999.

GIB profits up 25%

Bahrain-based Gulf International Bank (GIB) on Monday announced a net profit of 64.7 millions dollars in the first six months of the year, up 25.4 per cent on the first half-year result of 1999.