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 5. TRADE  6. GULF



Jan-28 - Feb-03, 2002

Arabs may invest $29b in refining, petrochemicals

Arab states are expected to pump at least $29 billion to set up new refining, gas and petrochemical projects and expand existing plants as they push ahead with plans to develop their industrial sector and diversify oil-reliant revenue.

The investments do not include mega projects to boost crude oil production capacity, which could double to around 44 million barrels per day in 2010, according to the annual Arab economic report for 2000, prepared by the Abu Dhabi-based Arab Monetary Fund, Organisation of Arab Petroleum Exporting Countries and Kuwait-based Arab Fund for Economic and Social Development.

The report estimated Saudi Arabia, the UAE and other oil giants in the Middle East will pump nearly a quarter of the world's projected investment of around $950 billion to maintain their existing oil output and expand capacity, which is estimated at around 23 million bpd.

Investments in the other sectors cover around $2.5 billion in refining, $17.2 billion in petrochemicals and over $9.3 billion in LNG and other gas industries.

The funds do not include investments by Qatar to expand its Ras Laffan LNG plant by around 3.5 million tonnes to more than 10 million tonnes. But oil industry sources estimated the project's cost at about $2 billion.

Qatar said last month it would pump as much as $15 billion to upgrade the production capacity of its LNG projects and tap the giant North Sea field, the biggest single gas reservoir in the world, with more than ten trillion cubic metres.

Qatar has already spent more than $10 billion to set up LNG ventures and fresh investments will turn the Gulf state into the world's top exporter of LNG by overtaking Indonesia. Officials have said their target is to reach 30 million tonnes per year within 15 years.

Arab states post strong growth

The economies of Arab countries galloped by nearly 12.5 per cent in 2000 and most of the increase was achieved in the Gulf due to strong oil prices, according to official and independent estimates.

The combined gross domestic product of the 22-nation Arab League leapt to $709 billion in 2000 from around $629 billion in 1999, said the annual 2000 Arab economic report, prepared by the Abu Dhabi-based Arab Monetary Fund, the 10-member Organisation of Arab Petroleum Exporting Countries and the Kuwaiti-based Arab Fund for Economic and Social Development.

"There was a growth of around 12.6 per cent mainly because of expansion in industries and other sectors and higher exports, mainly crude oil," it said.

Experts said it was the highest growth rate since early 1980s and Gulf oil producers recorded the largest growth in the region as oil sales account for more than 80 per cent of their income and a third of their GDP.

They estimated that the GDP in the six-nation GCC jumped more than 15 per cent in 2000 to around $330 billion, nearly 45 per cent of the total Arab GDP.

An Arab League study presented to an economic conference in Abu Dhabi last week showed the total Arab oil export earnings swelled to about $180 billion in 2000 from around $118 billion in 1999. The growth was due to a sharp increase in crude prices to nearly $27 from $17.50 a barrel.

Economists said they expected the Arab GDP to have slowed down in 2001 as crude prices lost nearly $4 with output also lower.

GCC in talks to check hawala deals

Monetary authorities in the GCC have begun discussions to devise a common system to ensure that the hawala system is not abused for illegal purposes, according to UAE Central Bank Governor, Sultan bin Nasser Al Suwaidi.

"If hawala is being misused by some people, it cannot be countered by the UAE alone. It has to be tackled at the GCC level and all our countries are making efforts to come out with a common system to make sure hawala is not misused," Al Suwaidi added.

"Many Asians use it to remit money in all GCC countries," he pointed out.

"The GCC can pick up the UAE anti-money laundering law straight away. The GCC can unify their approach to fight money laundering," Al Suwaidi said.

Bahrain is the only other GCC country to have such a law in place and complies with the criteria set by the global Financial Action Task Force (FATF).

UAE likely to record Dh16b trade surplus

The UAE is expected to record a trade surplus of Dh16.04 billion, equivalent to 7 per cent of the GDP in 2001, according to a study.

The trade surplus is set to decline to Dh9.68 billion in 2002 with the expected weakening of oil prices, said the latest country report on the UAE by Business Monitor International (BMI).

The UAE posted a trade surplus of Dh33.8 billion in 2000, according to provisional official figures. The Central Bank is yet to update provisional balance of payments figures released earlier in 2001.

The trade surplus will continue to be the dominant contributor to a healthy current account surplus and BMI expects the current account to record a Dh20.3 billion surplus in 2001.

For 2002, the current account will stand at Dh14.9 billion. Again, this marks a sharp fall on the 2000 surplus, which provisionally stands at Dh33.7 billion, equivalent to 15.1 per cent of the GDP, noted the report.

Anti-money laundering law signed

President His Highness Sheikh Zayed bin Sultan Al Nahyan signed a federal law, criminalising money laundering in the country.

The 25-article law will come into force from the day of its appearance in the official gazette. The law defines a money laundering offence as any act involving transfer, conversion or deposit, or concealment and disguise of property derived from any of the offences stated in item (2) of article (2) of the law.

The offences include, narcotics and psychotropic substances, kidnapping, piracy and terrorism, offences committed in violation of the environmental law and illicit dealing in firearms and ammunition. Offences of money laundering, according to the new law, also include bribery, embezzlement and related offences, fraud, breach of trust and other related offences.

Saudi current account positive despite lower oil prices

Saudi Arabia basked under another year of current account surplus in 2001 although it lost at least $8 billion in oil export revenue, experts said.

The kingdom had a current account surplus of around SR31.3 billion ($8.3 billion) last year.

The surplus is sharply lower than the SR53.7 billion ($14.3 billion) recorded in 2000 but is in contrast with the situation in 1999, when the current account suffered from an estimated $1.7 billion deficit.

Saudi Arabia's oil export earnings were estimated at around $50 billion in 2001 compared with $58 billion in 2000 as the average price of North Sea Brent crude declined by nearly $4 last year.

Warlord death 'link with Sharon case'

Israel and Lebanon are at loggerheads over the death on Thursday of former militia leader Elie Hobeika who was killed with five others in a massive car bomb in east Beirut.

Lebanese officials have implicated Israel in the assassination, saying it wanted prevent Hobeika from testifying against Israeli Prime Minister Ariel Sharon in a Belgian court case about the Sabra and Shatila refugee camp massacres in 1982.

Palestinians seek $10m for radio attack

Palestinian broadcasters say they plan to sue Israel for at least $10m compensation for destroying their headquarters and transmission tower.

Israel said it blew up the five-storey Palestinian Broadcasting Corporation (PBC) building in the West Bank city of Ramallah on Saturday in retaliation for the killing of six people by a Palestinian.

But despite the attack, the main Palestinian radio station, the Voice of Palestine, has continued to broadcast from other transmitters.

Saudi-U.S. ties ar