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 1. INTERNATIONAL   2. INDUSTRY
 3. FINANCE  4. POLICY
 5. TRADE  6. GULF

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GULF

June 10 - 16, 2002

INTER-ARAB TRADE 'FALLS SINCE THE ESTABLISHMENT OF GCC'

Accusing regional governments of failing to support joint ventures, a senior Bahraini official says inter-Arab Gulf trade has been on the decline since the establishment of the Gulf Cooperation Council.

"The inter-regional trade, particularly joint projects, had been flourishing in the pre-GCC era," Abdullah Mansour, undersecretary, Ministry of Commerce and Industry, said, but did not give out any numbers.

Mansour, who was speaking at a seminar on 'GCC Economic Integration', organised by the Bahrain Centre for Studies and Research (BCSR), called on major private sector institutions to pressure governments for the aim of reinvigorating inter-GCC economic and commercial projects.

Speaking earlier, Dr Majeed Al Alawi, vice-chairman of the BCSR said: "The strategic and security future of our region depends a great deal on the inter-cooperation between its countries, its economic integration in particular."

However, Dr Ali Al Mannai, BCSR economic research director said inter-GCC exports represent only seven per cent of the total regional exports.

He attributed the low number to the dominance of oil as the main item of export 88 per cent.

"The establishment of the Customs Union (expected in January 2003) will not increase the inter-regional trade volume as widely, and indeed wrongfully, assumed, because GCC countries do not possess the sufficient industrial base," he explained.

Al Mannai said the existence of multiple free trade zones in the region that deal with similar foreign-produced goods, and the production of mostly the same products mainly petrochemicals, create an atmosphere of fierce competition among GCC states that hinders most integration schemes.

IRAN TO INVITE FOREIGN OIL EXPLORATION FIRMS

Iran is in the process of offering exploration rights to foreign companies and joint ventures for some new oil and gas fields in the Gulf and Oman Sea, according to a senior Iranian government official.

Joint seismic surveys have already been carried out with some foreign experts in certain blocks and some surveys are under way in other blocks to assess the availability of energy sources, a deputy Iranian minister was quoted as saying to Petronews in Tehran recently.

"We are conducting joint seismic surveys with some foreign companies in Oman Sea, Strait of Hormuz and the Gulf to determine the level of oil and gas reserves in the region. We are developing new energy blocks and would invite foreign exploration companies and joint ventures to invest in the energy sector," said Mehdi Mirmoezi, Iran's Deputy Minister of Petroleum and president of National Iranian Oil Co (NIOC) in Tehran.

"During the last 20 years, Gulf countries had supplied less than 17 per cent of the global oil demand. It is expected during next 20 years some 85 per cent of global oil demand would be met by them.

"The Islamic Republic of Iran, the second largest oil producer among Opec members, must supply almost 12 per cent of total global oil demand in the next 20 years. Therefore, priority is particularly given to the internal policies to attract the investment in oil sector."

Iran's present gas reserves are estimated to be over 26 trillion cubic metres (tcm). Oil is the source of 85 per cent of its foreign currency and 98 per cent of internal energy.

Iran currently has 15.8 per cent of the world's gas reserves and 8 per cent of this lies in the South Pars gas field the largest gas field in the world. Almost half of the field's 14 sub-fields have been awarded. The remaining are in the process of being tendered.

The country has spent $600 million in recent months as capital investment in the oil industry.

UAE'S CURRENT ACCOUNT MAY REMAIN IN SURPLUS

The UAE's current account is expected to remain in surplus in the next two fiscal years despite a projected decline in oil export earnings, a plunge in international interest rates and a high import bill, according to a Western report.

The surplus will allow the government to shun borrowing and at the same time support its overseas assets which in turn will consolidate the UAE's financial credibility in global markets, the London-based Economic Intelligence Unit (EIU) said.

Although oil prices and production are forecast to be lower, the UAE's current account will record a surplus of around $5.2 billion this year and $5.3 billion in 2003, the report said.

The balance, however, is lower than the current account surplus recorded in 2000 and 2001, when it stood at $13.2 billion and $9 billion respectively.

NEW US SECURITY MEASURES ANGER ARABS

America's latest security precautions will not make it any safer, in fact they may make matters worse, according to Arabs both in the Middle East and the United States.

On Wednesday US Attorney General John Ashcroft announced plans to fingerprint and photograph thousands of visitors, focusing on those from the Middle East.

The plans have been denounced by civil rights groups as racist.

In the United Arab Emirates, Dubai's police chief was quoted on Thursday in the local paper Gulf News as saying that Arabs are shocked by the way Muslims and Arabs are being vilified and targeted in the US.

BRITAIN WELCOMES MUBARAK PLAN

Britain has welcomed the Egyptian President's plan to set up a timetable for the creation of a Palestinian state and achieve peace in the Middle East.

British Prime Minister Tony Blair indicated that he even was willing to go to the Middle East "as a mediator" when the need arises.

British government sources told Gulf News that Blair had 'whole heartedly supported' Mubarak's views on how to get the peace process out of the current impasse.

The sources explained that Mubarak's new ideas combined with the Crown Prince Abdullah's initiative "can move us many miles down the road and bring the parties very close indeed to a genuine and final settlement in the Middle East".

ARAFAT DEFIANT AFTER HQ RAID

Palestinian leader Yasser Arafat has responded with defiance after Israeli forces stormed his headquarters in the West Bank town of Ramallah, demolishing buildings and firing tank shells.

Mr Arafat was speaking after Israel tanks and troops ended a six-hour raid on his compound in response to Wednesday's suicide attack in northern Israel.

The Palestinian leader emerged from his compound on Thursday flashing the victory sign and promising the Israeli raid would "increase the steadfastness of our people".

"I call on all the world to see this racism and this fascism," he said. "They try to say that they can defeat us. Nobody can defeat the Palestinian people."

Two of Mr Arafat's security staff were killed in the raid and inspections of the damage showed a tank shell or rocket had punched a hole in Mr Arafat's bedroom about 1.5 metres (five feet) from where he said he was meant to have been sleeping.

ISRAEL STARTS NEW SETTLEMENT

Israel began work on a new Jewish settlement in occupied Al Quds on Monday. An Israeli contractor began drawing a fence around an area of some 10 hectares in the Arab neighbourhood of Jabel Mukhaber, where the Jewish compound, to be called Nof Zahav (Golden View), will be built. It will contain several hundred apartments, a luxury hotel and a cable car.

EMIRATES SIGNS DH5.5B ENGINE DEAL

Emirates airline has signed a Dh5.5 billion ($1.5 billion) deal with the GE-PW Engine Alliance for its GP7000 engine family to power its 22 firm and 10 option Airbus A380-800 aircraft, WAM reports from Dubai.

ASIAN CRUDE MARKET STEADY

The Asian crudes market was thin with the absence of buyers keeping market talk scant.

Traders said that the few cargoes of leftover Abu Dhabi crudes for July remained unsold, while Oman market was getting off to a slow start for August.

On Asian sweet crudes, buyers were also mostly in hiding, watching the arbitrage opportunity to buy Brent-priced crudes instead, as the Brent/ Dubai spread narrowed.

EMNEX INDICES CLOSE HIGHER

The UAE stocks closed the week improving upon their positions of June 5 with the Emnex gaining 1.22 per cent to hit 2,007.75 points; and the NBAD Index rising by 0.91 per cent to 3114.40 points.

NBAD Index which lists 38 active listed and OTC stocks, saw its banking sector index rise 58.72 points, and its insurance sector index remained unchanged.

IRAQ 'HAS NO TERROR WEAPONS'

A former United Nations official who worked in Iraq says he does not believe it possesses weapons of mass destruction.

The official, Denis Halliday, was the UN humanitarian co-ordinator in Iraq in 1997-98.

Mr Halliday said he thought a US attack on Iraq was likely later this year, and people there were deeply concerned.

QATAR HEADS FOR BIG GAS DEVELOPMENT

Massive gas developments are to take place in Qatar in the coming years following confirmed results of the country's gas reserves being 900 trillion cubic feet (tcf), Abdulla bin Hamad Al Atiyyah, Qatar's Energy Minister said.

"The gas reserves in Qatar's North Field have been certified by a third party to be 900 tcf now. Therefore, large scale gas developments will take place now that the gas reserves have trebled from 300tcf in the mid-90s," Al Atiyyah told Gulf News.

"There is the whole gas basket LNG, LPG, GTL and other gas-based products for local and international markets, to be developed. You will see major activity in the country's gas sector," he said, adding that discussions to this effect will begin in the coming months.

MEAT, DAIRY PRODUCTS SURVEYED

The Veterinary Services Section in the Public Health Department of Dubai Municipality recently conducted a microbic survey on animal products establishments in Dubai to determine the level of salmonella pollution.

TOURISM INDUSTRY

Oman is opening up its doors for the tourism industry but a top official firmly believes that the time has come for the private sector to play a major role in promoting the Sultanate outside the country.

"The government is making every effort to make it easy for tourists to come to Oman, including the visa procedure," the Director of Tourism Affairs in Oman, Nawaf Juma Al Balushi, told Gulf News. However, he feels: "The private sector should invest in promoting the country as a tourist destination."

LOAN DEAL

Dubai Shipping Co (DSC), a wholly-owned subsidiary of Emirates National Oil Co (Enoc), has signed a Dh233 million ($63 million) medium-term loan facility with Mashreqbank, to provide funds for its expanding operations.

SAUDIS, OIL GROUP LIKELY TO SIGN MEGA DEAL

Saudi Arabia and a group of international oil giants are on the verge of reaching an agreement to launch a multibillion dollar gas project that has eluded the two sides for nearly a year despite its massive benefit to both, economists said.

The world's dominant oil power first floated the $25 billion gas initiative nearly five years ago when Crown Prince Abdullah bin Abdulaziz met chiefs of international oil giants and invited them to invest in the kingdom's massive but untapped gas sector.

There was a positive response and a preliminary agreement was reached last year between Riyadh and a consortium of eight global oil firms to develop gas fields for domestic consumption and associated industries.

PRACSI

Dubai-based Process Automa-tion Consultants and Systems Integrators (Pracsi), is going to install and commission a $7 million control system project in northern Iraq's three oil refineries under the UN Food for Oil Programme, next month.

OCCIDENTAL EYES FURTHER INVESTMENTS IN GULF

The U.S. energy major, Occidental Petroleum Corp with investments of more than $2 billion in the Gulf excluding the latest $310 million in the Dolphin gas project, is actively looking at further investments in the region.

Occidental has major oil producing operations in Yemen including exploration in many blocks. The company is active in Qatar, producing oil for nine years and is expanding its activities there. "We are also active in Oman's oil and gas sector," he said.

ASIAN INVESTORS

Recognising the rich contributions of Asian businessmen and investors to the national economy, Bahrain's Chamber of Commerce and Industry (BCCI) has established a permanent committee to look after the interests of at least 200 Asian traders in the island kingdom.

GIB FOR STC ISSUE

Saudi Arabia has mandated Gulf International Bank (GIB) to arrange the initial public offering (IPO) of state-owned Saudi Telecommunications Company (STC) before year-end, bankers in the kingdom said.

Bankers said they expected the government to offer up to 30 per cent of the 240 million shares of STC, or 72 million shares worth 3.6 billion riyals ($960 million).

IRAN TO PRESS ON WITH BOND PLANS

Iran is to press on with plans for its first bond issue since the Islamic revolution despite a snub by a major U.S. credit rating agency against a country President George W. Bush describes as part of an "axis of evil".

Banks putting together an offer of up to 500 million euros ($470 million) of international paper said they were undeterred by the withdrawal of Iran's sovereign debt rating by Moody's Investors Service.

SYRIA AID APPEAL AFTER DAM BURSTS

Syria has asked the United Nations for emergency aid after a dam burst, causing widespread flooding and massive damage.

Twenty people were killed and four were declared missing when 71 million cubic metres of water streamed out of the Zeyzoun dam, near the town of Hama, about 350 kilometres (220 miles) north of Damascus. Unconfirmed reports said there might be up to a 100 dead.