GULF

 

Dec 16 - Dec 22 , 2002

 

1.INTERNATIONAL

2. INDUSTRY

3. FINANCE

4. POLICY

5. TRADE

6. GULF

 

OPEC AGREES TO CUT OIL OUTPUT

The Opec cartel has agreed to reduce the amount of oil it exports into the global marketplace in order to shore up prices.Following a meeting of ministers in Vienna the other day, the group decided to cut output by between 1.5 and 1.7 million barrels a day.

"All of them [cartel members] said very strongly they will comply and they will do it," said Qatari oil minister Abdullah al-Attiyah.

It is the first time this year that Opec has decided to change its production quotas.

And the decision is likely to anger consumer nations who fear that higher oil prices will harm the process of economic recovery.

International oil prices soared following the cut.

New York's light sweet crude for delivery in January rose 61 cents a barrel to $28.01 while Brent North Sea crude for January delivery leapt 60 cents to $26.85 a barrel.

Oil prices have been kept high recently by the national strike in Venezuela and the threat of a US-led war against Iraq.

But the cartel is worried that crude oil prices could collapse next year.

Recently, the cartel has been struggling because many members are known to be producing much more than their quotas stipulate, in an attempt to increase their revenue.

The risk in this for Opec - besides damaged credibility - is that so much more oil reaches the market that it pushes down prices sharply, possibly out of the cartel's preferred $22-28 a barrel trading range.

Saudi Arabia urged its fellow members to ensure greater discipline, thus restoring the cartel's credibility.

As well as cutting output, the cartel has also agreed to raise its production quotas by 1.3 million barrels a day.

LEBANESE BANKS BAIL OUT GOVERNMENT

Lebanese banks have agreed to buy about $4bn (2.5bn) in interest-free government bonds in an attempt to help the country deal with its crippling debt burden.

Lebanon's public sector has debts of about $30bn - or almost 180% of gross domestic product - much of which was built up in the course of development and reconstruction after the 1975-90 civil war.

Last month, Lebanon won pledges for $4bn in low-interest loans from a number of international donors.

Prime Minister Rafiq Hariri has said that without the injection of funds Lebanon would be forced to default next year on its debt payments.

Without taking into account the latest moves, Lebanon was paying an average of 13% interest on its borrowings - a level commercial lenders have judged reflects the risk of default.

That level is expected to fall slightly, as Lebanon uses fresh funds to retire its most costly debt.

The Lebanese central bank said banks would buy a series of two-year euro-denominated bonds and six-month Lebanese pound treasury bills.

"The contribution arises because they would be investing, in special treasury bills that bear a zero interest rate, up to 10% of their deposits in Lebanese pounds and foreign currencies," said central bank first vice-governor Nasser al-Saidi.

"Ten per cent of that net deposit base would be approximately $4bn."

This would reduce Lebanon's debt servicing obligations by $400m a year, he added.

The chief of the country's banking association was reported as saying the banks wanted to do their part to help the country's finances.

GCC INCOME MAY FALL $4B ON OIL CUTBACKS

A series of oil production cuts intended to prevent a price collapse will likely cost GCC around $4 billion this year as their crude sales are projected to slide below $100 billion, according to independent estimates.

From nearly $101.7 billion in 2001, crude export earnings by the UAE and its GCC partners will recede to around $97.9 billion in 2002 within an overall decline in the revenues of the 11-nation Opec, said the London-based Centre for Global Energy Studies (CGES), which is owned by former Saudi Oil Minister Sheikh Ahmed Zaki Al Yamani.

As a whole, Opec's gross crude export sales are projected to retreat to around $169 billion this year from $166 billion in 2001, CGES deputy director, Leo Drollas, said. "The decline is because of lower production by Opec...prices were slightly higher but the increase was offset by the decline in supplies," he told Gulf News by telephone.

IRAQ CANCELS RUSSIAN OIL DEAL

Lukoil, the Russian oil giant, has received a letter from the Iraqi oil ministry cancelling a $3.7bn (2.4bn) oilfield development deal.

The Russian company said it was surprised by what it called an unwarranted move and said it would defend its interests in international courts.

Russia's economic interests in Iraq appear to have been dealt a severe blow.

The huge Al-Qurnah oilfield was one of Lukoil's most prized possessions.

"We do not understand how a petty bureaucrat from the oil ministry of Iraq can cancel a law which has been passed by Iraq's parliament," a Lukoil spokesman said.

The multi billion dollar contract for its development was signed in 1997.

But the UN oil embargo imposed on Iraq prevented Lukoil from investing properly in the project.

IRAQ CUTS AUSTRALIAN WHEAT IMPORTS

Iraq has cut its wheat imports from Australia by almost half, following Canberra's support for the US position on Iraq, and is reported to be seeking fresh supplies from France.

Iraq is one of Australia's biggest wheat customers, but threatened to reduce its order in July because Australia voiced support for the possible US attacks on Baghdad.

The Australian Wheat Board (AWB), the country's main wheat exporter, said Iraq had now reduced its order for 2003 by 44%.

The cut comes as Australian farmers suffer a severe drought which has cost them 5bn Australian dollars (1.8bn; $2.8bn) in lost income and could halve this winter's grain harvest.

The AWB has said that Iraq would buy 1m tonnes of wheat in 2003, compared with 1.8m in 2002.

IRAN ISSUES SECOND BOND DESPITE US SANCTIONS

Iran launched a 375 million euro bond, proving, analysts said, that despite US sanctions it can now borrow at will on the international markets.

The bond is the second this year by the country dubbed by Washington in January as part of an "axis of evil", and also the second since the 1979 Islamic revolution. Iran even achieved lower borrowing costs in launching the 2008 bonds. Their 7.75 per cent coupon, was a point lower than its 625 million euro five-year bond launched in July. Commerzbank and BNP Paribas managed both bond deals.

At a launch price of 99.43 per cent of face value, bond yields 423 basis points more than the euro-denominated benchmark, the German government's OBL141.

IRAN DENIES SECRET NUCLEAR PLAN

Iran has rejected United States claims that it is building two secret nuclear facilities which could be used in the production of nuclear weapons.

United States officials, speaking on condition of anonymity, said on the other day that two sites had been spotted in commercial satellite photographs taken in September.

Both facilities, near the towns of Natanz and Arak in central Iran, are of a type that could be used to help build a nuclear weapon, the officials said.

Iran responded by saying its nuclear energy programme was strictly for civilian use.

US CASH FOR MIDDLE EAST DEMOCRACY

The United States has launched a new initiative designed to spread democracy, education and open markets across the Middle East.

US Secretary of State Colin Powell pledged $29m to the cause during a speech in Washington.

He described this initiative as a way of broadening America's approach to the Middle East.

But the announcement has received a mixed welcome from Arab officials.

Mr Powell's speech is widely seen as an attempt to answer those who accuse Washington of favouring authoritarian pro-American governments.

IRAQ SIGNALS FURTHER UN CO-OPERATION

Iraq says it is preparing a list of government scientists UN inspectors may wish to interview in their mission to track down any weapons of mass destruction.

However a senior Iraqi official said there had been no formal request from the UN yet to provide names of those involved in biological, chemical and nuclear programmes - although the matter had been raised verbally.

WAR CRIMES ON SCREEN IN QATAR

The United States has for the first time allowed journalists into one of its military bases in the tiny Gulf state of Qatar, where a secret training exercise is under way.

Hundreds of coalition forces are involved in the operation, code-named Internal Look.

Although the US military deny there's any connection to events in Iraq, the exercise is widely seen as a rehearsal for a possible war against Saddam Hussein's regime.

INCREASED ACTIVITY ON OTC

THE UAE market closed the week on a positive note with the OTC market witnessing increased activity in select shares.

At the DFM, there was trading on five counters with Emirates Bank International leading the volumes with 10 trades of 46,745 shares, which were value at over Dh0.94 million. The share price was up 20 fils to Dh20.25.

DH365M DEALS STRUCK AT CHINA FAIR

A total of Dh365 million worth of deals has been finalised between local businessmen and companies with a number of dealers and manufacturers participating in the ongoing Chinese Commodities Fair at Expo Centre Sharjah and Chinamex complex in its second day, revealed Hao Feng, Chairman, General Manager, Chinamex.

CENTRAL BANK TO ISSUE DH50 SILVER COIN

The Central Bank will issue tomorrow a commemorative silver coin of Dh50 denomination on the occasion of the 20th anniversary of the establishment of the Administrative Development Institute.

The face of the coin depicts the image of the President, His Highness Shaikh Zayed bin Sultan Al Nahyan, along with the denomination while the obverse carries the logo of the occasion.

The coin that comes with a diameter of 40 mm and weighs 40 gms is an alloy of 92.5 per cent silver and 7.5 per cent copper.

SEVEN PALESTINIANS, TWO ISRAELIS KILLED IN VIOLENCE

Seven Palestinians, five of them unarmed, and two Israelis were killed in separate incidents in the Gaza Strip and the West Bank city of Hebron. Violence surged as a senior US official held talks with Israeli leaders on preparations for a possible US war on Iraq. Washington has sought to keep a lid on Israeli-Palestinian tensions while it seeks Arab support for such a campaign.

Israeli forces near the Karni border crossing in the Gaza Strip killed five unarmed Palestinians they believed were planning to climb a security fence to get into Israel, an Israeli military source said. Palestinian security sources said the men were labourers trying to sneak into Israel to find work.

US 'SATISFIED' BY YEMENI ASSURANCES

The United States says it was given assurances by Yemen that weaponry intercepted en route from North Korea is for defensive purposes only and won't be transferred to any other country.

US Secretary of State Colin Powell told reporters that it was on that basis that the US had decided to let the vessel carrying 15 Scud missiles and warheads proceed to Yemen.

US SIGNS MILITARY PACT WITH QATAR

The United States and Qatar have signed a military pact that formally allows American forces to use military airbases in the Gulf state. US Defence Secretary Donald Rumsfeld, who is currently visiting Qatar, said the pact would improve America's military readiness.

CHINA TO SET UP CTV PLANT IN UAE

Several Chinese manufacturing projects are coming up throughout the Middle East, including a Dh22 million ($6 million) colour television plant in the UAE, a Dh55 million ($15 million) oil pipeline flanges factory in Qatar, a Dh73.5 million ($20 million) cable unit in Saudi Arabia, and an ambitious industrial park housing at least 10 producers of high-tech equipment in Bahrain.

QATAR IN $22M CNTRACTS

Sheikh Saoud bin Abdulrahman Al Thani, secretary general of the Qatar National Olympic Committee, signed six major contracts valued at $22 million, at QSi Expo recently.

The contracts form part of a development plan announced earlier by Sheikh Saoud estimated to cost $1.8 billion.