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Apr 09 - 15, 2001

Riyadh to attract foreign investment in gas sector

Saudi Arabia and the other states in the region are increasingly looking at gas as an economically interesting product. This clean fuel is taking on an increasingly prominent role in the Saudi economic strategy.

The recent Saudi initiative to attract foreign investment in the energy sector is revolving around up and downstream gas projects. The clean fuel is gradually assuming a pivotal position in the Saudi strategy. It is being estimated here that some $45 billion over a 22-year period will be invested in upstream gas production and processing facilities.

Prince Saudi Al-Faisal who is heading the Saudi team, in negotiations with the major oil companies of the world, has been reported as saying that the initiative will yield a foreign investment to the tune of $100 billion over the coming years.

LNG exports could also assume the role of the engine for growth for the region. The market prospects are however, at present limited to mostly the Gulf region. In Asia there is competition from the South East Asian producers that have a geographical advantage. Pakistan, which until recently was considered a natural destination, has discovered its own reserves of natural gas, many in the industry here believe.

Analysts therefore, here say that in the short to medium term, Pakistan may not need to import gas. India, where gas usage is expected to increase by an average of 8% per year until 2020, thus provides the only viable market for LNG. Hence agreements are in place for LNG imports in India from Oman's RasGas and discussions are also under way for imports of natural gas from Iran.

Energy analysts here in Dhahran are also keeping a close eye in this respect on the outcome of Indian Prime Minister's upcoming visit to Tehran. However, gas remains the focus of attention here. Saudi Arabia has proven gas reserves of 204.5 trillion cubic feet; most of which are currently in the form of associated gas mainly from the Ghawar and Safaniyeh fields.

Syria wants EU help for $5.66 bln plan

Syria will need to spend $5.66 billion in a decade to make its manufacturing industries competitive after signing a free trade agreement with the European Union, a senior official said on Wednesday.

Dr Mohammed Tawfiq Simaq, head of Syria's Industry Committee who is on the team negotiating the Association Agreement, expressed hope that the 15-nation bloc would provide generous help to finance the plan.

It would be implemented during a transitional 10-12-year period after the signing of the deal, he told Reuters in an interview.

Simaq said financial assistance and other subjects would be discussed at the next round of negotiations in Damascus on April 23.

"We expect the EU to provide generous assistance to allow us to implement this important industrial rehabilitation plan costing $5.66 billion," Simaq said.

Damascus would call for agricultural products to be among commodities included in the deal, he added. It did not want tariff-free commodities exchanges restricted to industrial commodities as the EU demanded.

Damascus would also urge a "more fair" distribution of EU aid to the Middle East to give Damascus "a share that goes in line with its important role in the area," Simaq said.

Syria received 1.2 per cent of the EU's $24.4 billion aid to the region in 1990-1998, while Israel received 32 per cent, Turkey 28 per cent, Tunisia 11 per cent and Egypt 8.5, he noted.

Syria began negotiating in 1998 for an Association Agreement that would create free trade between Damascus and the EU.

The deal, which will replace bilateral agreements between Syria and EU members, also will include political, economic, educational and cultural cooperation.

Egypt seeks free trade pact with the US

Egypt is seeking a free trade agreement with the United States that could offer US companies "a doorway" to Africa, the Middle East and Europe, Egyptian President Hosni Mubarak announced on Tuesday.

The Egyptian leader, in a speech prepared for delivery to the US Chamber of Commerce, said such an accord would consolidate a decade of reforms in Egypt that have expanded the role of the private sector, reduced government regulations and opened the economy to greater foreign investment.

Mubarak is currently in the United States on an official visit, and on Monday became the first Arab leader to confer with President George W. Bush.

Palestinian budget faces $526 m 2001 deficit

Palestinian lawmakers on Wednesday approved the 2001 budget with a deficit of $526 million, which they said might rise to $605 million by year-end if Israeli restrictions persisted.

The budget, administered by the Palestinian Authority, runs from January 1 to December 31 and covers about three million people in the West Bank, Gaza and Arab East Jerusalem.

Lawmakers said it was approved after taking into consideration harsh economic conditions experienced by the Palestinian Authority and its people since the outbreak of their uprising against Israeli occupation more than six months ago.

Daoud Al-Zeer, head of the Palestinian Legislative Council's budget committee, told Reuters the Authority's revenues in 2001 were expected to drop to $758 million from $1 billion last year.

He said the decrease was the direct result of an Israeli blockade on Palestinian areas. Israel said it imposed the restrictions at the start of the uprising for security reasons.

Kuwait finances strong as GDP expands by 27.7pc

The finances of small Opec member Kuwait are at record strength mainly due to a sharp rise in oil earnings, but the state-dominated economy is still suffering from a slowdown as the country mulls major economic reforms.

Kuwait, which depends almost solely on oil income, reported on Tuesday a 27.7 per cent growth in nominal GDP for 2000 while economists expect the net budget surplus in the fiscal period to end-March 2001 to come in at $3.9 billion.

According to Planning Ministry figures obtained by Reuters, Kuwait's Gross Domestic Product (GDP) at current prices soared in 2000 to a provisional 11.59 billion dinars from nine billion the previous year and 7.74 billion dinars in 1998.

The 27.7 per cent growth follows a GDP rise of 17.2 per cent in 1999 when the average price for Kuwaiti crudes rose to $16.73 a barrel from $10.62 in 1998. The average in 2000 was $25.7.

GDP fell 15 per cent in 1998 to 7.742 billion dinars.

Growth from oil in 2000 GDP was 66.4 per cent following a 41.5 per cent gain in 1999 and a drop of 34.7 per cent in 1998.

Riyadh extends meat import ban

Saudi Arabia has extended a ban on beef and mutton imports to include several Arab, African and Asian states to prevent a spread of foot-and-mouth disease to the kingdom.

A trade circular issued by the Saudi trade ministry on Sunday said the temporary ban covered all mutton and beef products from Gulf Arab and African states, in addition to Pakistan, China, Syria, Jordan and Yemen.

The circular said the decision was taken in light of reports by the International Epizootic Office (OIE) the world's animal health organization and recent media reports on cases of foot-and-mouth disease in several countries.

Saudi Arabia banned imports of beef and mutton from Turkey and Lebanon last month due to concerns over the disease, which is not harmful to humans but can cause severe weight loss in livestock.

Israel hits Palestinians post with mortars

The Israeli army fired mortars on a position of Palestinian leader Yasser Arafat's elite Force 17 on Wednesday, saying it was the first time it had used such weapons against the Palestinians, while scattered clashes broke out in the Gaza Strip and West Bank.

The army said the strike at a Force 17 post in the northern Gaza Strip was in response to a Palestinian mortar attack on a nearby Jewish settlement of Netzarim in the early hours of Wednesday.

"It is the first time that the Israeli Defence Forces has fired mortar shells. however the other side has fired them many times," an army spokeswoman said.

A Palestinian security source and witnesses said at least five bombs were fired on the post, leaving several rooms damaged but no one hurt.

Syria to recognize Palestinian passports

Syria has begun to admit holders of passports issued by Yasser Arafat's Palestinian Authority, amid improving relations between Arafat and the Damascus government, former Palestinian parliament speaker Khaled Al-Fahum said Thursday.

Several Palestinian officials and ordinary citizens have travelled to Syria recently on Palestinian Authority passports, said Fahum, who heads the Damascus-based National Palestinian Salvation Front, opposed to Arafat.

Sudan plane crash

Sudan's deputy defense minister and 14 other military personnel were immediately buried after a plane crash which has thrown the capital into mourning, newspapers and state television said on Thursday.

They were laid to rest in the oil-producing area of Adar Yiel, about 500 km (300 miles) south of Khartoum, after the crash in war-torn southern Sudan on Wednesday, the independent Al-Ayyam paper said. The daily Alwan said 16 survivors were flown to Khartoum.

State radio said the plane carrying Colonel Ibrahim Shams Al-Din, state minister in the ministry of National Defense, had overshot the runway at Adar Yiel and crashed, killing the colonel and 14 others.

Israel, Palestinians hold talks

Israel and the Palestinians held their highest-level meeting in two months on Wednesday ahead of US-arranged talks on ending clashes.

Shortly after the meeting between Israeli Foreign Minister Shimon Peres and Palestinian ministers Nabil Shaath and Saeb Erekat in Athens, a fierce gun battle between Israeli soldiers and Palestinians erupted near the West Bank city of Nablus.

Mubarak met US Donald Rumsfeld

Egypt's President Hosni Mubarak met US Defence Secretary Donald Rumsfeld on Tuesday and a Pentagon official said they discussed bilateral ties and violence that has stalled the Middle East peace process.

The two men talked for about 45 minutes at Blair House, the official US guest residence across the street from the White House, according to Pentagon spokesman Brian Whitman.

"They spoke of the strong bilateral relations between our countries and discussed regional issues," Whitman told Reuters.

He said the two did not discuss any potential American arms sales to Egypt. The United States is Egypt's biggest supplier of military weaponry.

Kuwait bourse fell 2.2 pc

Kuwait's stock market fell 2.2 per cent in the week to Wednesday, ending a rally which pulled the market up 12 per cent from five-year lows in January.

The Kuwait Stock Exchange (KSE) index has been on a steady weekly rise since mid-January but this week it fell 32 points to 1,430.9 points after hitting a year high of 1,475.1 on March 28.

"The decline started on March 31, otherwise we would have finished the month up maybe 8-9 per cent," said Sami Al-Hasawi of Kuwait Finance Centre. "This is a healthy correction and the gains are still there.

Some of the blue chips are still up 20-25 per cent for the year." Traders said the decline was partly due to profit taking but also the halting of a plan by the state to sell half of its 49.2 per cent stake in Mobiles Telecommunications Co (MTC) for just over half-a-billion dollars.

Egyptian companies

Egypt, eager to secure a foothold in Iraq's promising market, has organised a trade fair in Baghdad in a further step towards enhancing ties with its Gulf War foe Iraq.

A total of 180 Egyptian firms exhibited products that included food, medicine, construction materials, vehicles and electrical appliances in the fair, the first by Egypt following the signing of a free trade agreement with Iraq in January.

UAE exempts import duty

The United Arab Emirates (UAE) has decided to exempt Palestinian products from import duties in line with an Arab summit resolution, newspapers reported Tuesday.

The move by the Emirati cabinet Monday "falls into the framework of support from the UAE to the Palestinian people in the current circumstances," Palestinian consul general in Dubai Salim Abu Sultan told.

Banks face tough times

Long considered the showcase of a glamorous economy, the shine is coming off Lebanese banks as they face the possibility of another year of declining profits.

Overall profitability fell 20 per cent to $348 million last year, compared with $436 million in 1999 and $503 million in 1998. Returns on assets and equity have been also declining.

The banking system is geared effectively to finance the debt-ridden government with the central bank discreetly convincing Lebanon's 75 family-dominated banks to lend to the state when almost everyone else thought it was too risky.

The banks have benefited handsomely by assuming Lebanon's sovereign risk. The majority of their profits after the 1975-90 civil war came from buying Lebanese pound treasury bills, yields of which reached around 40 per cent in 1995.

Dusit Dubai

Dmg Index Exhibitions, organisers of the annual Index interiors and furniture show held in Dubai, has signed up the soon-to-open five-star deluxe Dusit Dubai as the official Index 2001 hotel.

"As one of the closest hotels to the Dubai World Trade Centre, Dusit Dubai has trade shows, their exhibitors and visitors as key customer targets," said Steve Jones, Director of Sales and Marketing, Dusit Dubai. "As Index is now the largest event to be held at the DWTC, it was essential that we built a working relationship with the organisers."