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May 21 - Jun 03, 2001

Saudi awards multi-billion dollar gas projects

Saudi Arabia on Friday declared eight leading energy companies winners in the race for a stake in its multi-billion dollar gas development initiative, the kingdom's biggest opening to foreign investors for 25 years.

Supermajors ExxonMobil and Royal/Dutch Shell won starring roles in three projects that are estimated to require combined initial investment of $25 billion.

Saudi Foreign Minister Prince Saud Al-Faisal said Exxon, Shell, BP and Phillips were given stakes in the biggest of the projects on offer, the $15 billion development in South Ghawar, known as core venture one, the Saudi Press Agency (SPA) announced.

Exxon also secured the leading role in core venture two, on the Red Sea coast, with Enron and Occidental taking smaller shares.

Shell, TotalFinaElf and Conoco won stakes in core venture three, for development of gas at Shaybah in the empty quarter of southeast Saudi Arabia.

Hard negotiations will now start to finalise full contracts by a year-end target, said Exxon Mobil chief executive Lee Raymond.

"I think people need to understand that there are some tough issues given the immensity of the projects. There are so many potential interfaces with the Saudi economy that there will be some tough decisions," Raymond said in an interview with Reuters. The awards mark the biggest advance in the kingdom's efforts to develop its gas reserves, the world's fourth largest, since Riyadh unveiled the energy opening more than two years ago.

Eleven companies since have competed furiously for the opportunity to invest in the world's leading energy producer a country that had forbidden upstream investment since nationalisation in 1975.

With Kuwait about to open its doors to foreign investors Mexico is left as the last bastion of energy nationalisation.

OPEC seeks $28 target

OPEC has no interest in the basket price of its crude rising above $28 a barrel, the organization's chief said in an interview on Wednesday.

OPEC Secretary-General Ali Rodriguez Araque told the online edition of the Financial Times in an interview that Opec would "act as necessary to maintain stability."

In an attempt to damp down concern about a surge in oil prices in the fourth quarter, Rodriguez said the oil producers would keep average prices for the seven-crude OPEC basket in the $22 to $28 a barrel range.

He said he believed there was a consensus among members to maintain the current production ceiling of 24.2 million barrels a day when they meet in Vienna early next month.

The average price of the OPEC basket last week was $26.05 a barrel and stands at $24.58 for the year to date, the report said.

The ceiling excluded Iraqi exports, which are controlled by United Nations sanctions.

Commenting on the plans of President George W. Bush, unveiled last week, to boost domestic oil production, Rodriguez said a U.S. policy of reducing import dependence was more realistic than those of the Nixon administration in the mid-1970s, which proposed to eliminate imports.

Some oil market analysts argue that OPEC needs to raise output from July to pre-empt a tightening of supplies and prevent prices spiraling towards the end of the year.

But Rodriguez said the organization had the ability to bring spare capacity onstream when needed to maintain market stability.

Global oil demand at 76.7million barrels a day in the first quarter is rising at a slower rate than forecast and non-OPEC production is set to increase.

Qatar poised to dominate Gulf gas supply

Gas-rich Qatar is poised to become the leading exporter to its Gulf neighbours faced with shrinking supplies.

"We have gas for everybody in the world who wants it," said a Qatari official.

Demand in the Gulf region has been rising at 6.5 per cent a year and some states are already starting to feel pinched, Nasser Jaidah, director of Oil and Gas ventures at Qatar Petroleum, said at a recent gas conference.

But Qatar is ready to spring to their rescue with the world's third largest reserves after Russia and Iran.

Its North Field is the biggest concentration of non-associated natural gas with more than 500 trillion cubic feet (tcf) of deposits. "The current year is the last year of surplus gas supply in the Gulf Cooperation Council (GCC) states," Jaidah said.

By 2005, the overall deficit in the GCC grouping Saudi Arabia, Kuwait, Bahrain, the UAE, Oman and Qatar will rise to 4.5 billion cubic feet per day (cfd) and in 2010 to six billion cfd, he said.

Iraq renews trade warning over proposed sanctions

Iraq said on Thursday it would severe all trade ties, including oil sales, with any country that implemented a proposed new British-US sanctions plan against Baghdad.

Britain and the United States are trying to promote a new system of "smart sanctions" that would ease restrictions on imports of civilian goods while tightening controls on the smuggling of weapons-related imports.

"If any country approves and implements the new sanctions against Iraq, it is only natural that Iraq should react by halting its trade relations including the sale of oil to that country," Minister of State for Foreign Affairs Naji Sabri Ahmed told Reuters Television.

"But we hope nearby countries will not apply this, and we were told by them that they will not." Iraq, which insists it will reject the new sanctions, said this week it would suspend an oil-for-food programme and halt all oil exports if the sanctions were adopted.

The oil-for-food programme puts proceeds from Iraqi oil sales in a UN account and then pays suppliers of food, medicine and many other goods.

New raid on Palestinian territory

Israeli tanks and a bulldozer staged a new raid Thursday into Palestinian territory near a Jewish settlement in the Gaza Strip, before withdrawing from most of the area, Palestinian security officials said.

The raid in an area just south of Gaza City occurred after the Israeli army said Palestinian militants fired mortar bombs at the Netzarim settlement, but there were no casualties or damage.

Israeli tanks firing shells and one bulldozer raided the Sheikh Ajleen neighbourhood, on the coast near the settlement, to destroy vineyards and tear down a wall around a home, security sources said.

Several hours later Israeli tanks remained at the side of a road in the area, but were allowing traffic through.

General Abdel Razeq al-Majeida, head of Palestinian general security in the Gaza Strip, also reported that Israeli helicopters late Wednesday night had been flying over the southern, eastern and northern outskirts of Gaza City.

Iran's Khatami campaigns under reform banner

Iran's election campaign geared up on Thursday after an opening shot from clear favourite President Mohammed Khatami saying reform was irresistible.

The diffident, mid-ranking cleric looked determined and decisive as he fielded questions from students in a television broadcast late on Wednesday, in contrast to a tearful address three weeks ago when he declared he would run for re-election.

"Reform cannot be stopped because its roots are in the will of the people," he told state television in his opening comments of his re-election campaign.

Analysts dismiss Khatami's nine mostly conservative challengers in the June 8 polls, but predict he could have trouble mobilizing his own supporters because of disillusionment at the slow pace of political, social and economic change.

A low turnout could hamper Khatami's mandate to press on with reform against resistance from conservatives in the judiciary and the 12-man Guardian Council which can veto laws.

Saudi crown prince declines US invitation

Saudi Crown Prince Abdullah Bin Abdul Aziz has declined an invitation to visit the United States next month, news reports carried by the press indicate. According to the US officials, quoted, Crown prince Abdullah has declined the invitation because of the perceived US inaction in the current Palestinian-Israel conflict.

The US officials are seeing the rebuff by the Saudi Crown Prince as an indication of Arabs' displeasure with the Bush administration's stance on the issue and the more distant approach to the conflict.

Mubarak warns of economic neglect of Africa

Egyptian President Hosni Mubarak warned Tuesday or the risks of "economic marginalisation" for Africa due to globalisation, at the opening of a summit of the Common Market for Eastern and Southern Africa (COMESA).

"The challenges of economic, commercial, cultural and intellectual globalisation are multiplying," host Mubarak said in his opening address to the COMESA summit in Cairo.

"They are challenges which bring the danger of economic marginalisation, in particular with the abolition of frontiers and the lifting of restrictions on the movement of products, services and capital," he said.

Mubarak said COMESA should take advantage of cooperation forums with global economic institutions and trade blocs to "create an international economic order which will take into consideration the interests of all parties." He also underlined the need to attract capital, encourage direct foreign investment and increase security in the conflict-ravaged COMESA region, which groups 21 countries and around 380 million inhabitants.

Egypt approves tax

The Egyptian parliament has given its approval for new taxes to be imposed on wholesalers and retailers under the final phases of a sales tax law despite opposition criticism, parliamentary sources said on Tuesday.

"The People's Assembly approved a government request to implement the last two stages of the tax law during a late night session which was boycotted by about 54 legislators", they said.

Only industrial producers, service providers and importers had been paying the tax in the first stage of the General Sales Tax Law that started to come into force in 1991.

Under the newly passed stages of the law, which come into effect as soon as they are signed by President Hosni Mubarak, wholesalers and retailers whose annual turnover is at least 150,000 pounds ($39,000) will be liable to pay the tax.

Kuwait Airways could set up regional airline

Kuwait Airways (KAC) is studying a plan to form a regional airline with private investors to serve costly short-range destinations, a move designed to help cut repeated losses since the devastation of the 1991 Gulf War.

Chairman of the national flag carrier Ahmad Al-Zibn told Reuters in an interview on Tuesday that the move was among KAC measures to cut costs in an effort to return to profitability.

The net loss over the last nine-month fiscal period (July 2000-March 2001) was around 31 million dinars ($101 million) and KAC is projecting a similar shortfall in the new fiscal year which started April 1 2001. KAC suffers from heavy debt payments for a new fleet after it lost 84 percent of its assets during the 1990-91 Gulf crisis.

Syrian trade minister in Baghdad

Syrian Economy and Foreign Trade Minister Mohammed Imadi arrived in Baghdad late Monday aboard a direct flight from Damascus for talks focusing on commercial issues.

Joined by officials from his ministry and those of health and irrigation, Imadi will participate in a meeting of the two countries' joint commission.

"We are going to work by all means to expand cooperation between Iraq and Syria in various areas," the Syrian minister told reporters at the airport.

Iraqi Trade Minister Mohamed Mahdi Saleh said the joint commission would hold its first meeting on Tuesday, concentrating on "cooperation in the economic, scientific and technical fields".

Saudi king expands advisory council

Saudi Arabia on Thursday appointed an expanded 120-member consultative Shura council, the second expansion of the country's only representative body since it was set up in 1993.

The official Saudi Press Agency (SPA) said the new all-male council, which operates only as an advisory and not a legislative body, starts a four-year term on Saturday. It replaces a 90-member body.

King Fahd on Thursday decreed the expansion of the Shura Council introduced among promises to bring about gradual popular representation as part of long-awaited political and other reforms.