GULF VIEW

 

Aug 29 - Sep 04, 2005

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OMV SELLS ITS E & P ASSETS IN QATAR TO MARUBENI

DOHA

OMV, a leading oil and gas group in Central Europe, has signed a sales agreement with Japan's Marubeni Corporation to sell its exploration and production assets in offshore Qatar, according to a company statement. OMV said it had 7.5% interests in Qatar's offshore blocks 12 and 13. Its share of production was about 1,100bpd in 2004.
"The disposal is part of our E&P portfolio rationalization," OMV said. "The partners agreed not to disclose the sales price. The completion of the transaction is subject to approvals by the Government of Qatar and the consortium partners, which are expected within the next few months".

The deal will have commercial effect from January 1. The Qatar assets were acquired by OMV in 2003, as part of the acquisition of the international E&P portfolio of Preussag Energie International GmbH. They comprise non-operated working interests in the producing Block 12 of Al Rayyan Field and in the exploration Block 13. Both blocks are located in shallow water offshore Qatar

IRAN PIPELINE

With India's petroleum minister Mani Shankar Aiyar emphasizing that India would go ahead with the proposed $7 billion gas pipeline from Iran through Pakistan, New Delhi is likely to seek improvements in World Trade Organization (WTO) rules related to such projects which involve freedom of transit, it is reported. Pipelines should be explicitly covered under Article 5 of GATT (General Agreement of Tariffs and Trade) which deals with freedom of transit, senior officials feel. This could make sure that Pakistan does not disrupt flow of Iran gas to India. The government's efforts to source oil and gas from the Central Asian region would also get a boost if such projects - which involve flow of goods through several countries - are secured by WTO norms.

India's attempt to spruce up its energy security by acquiring equity in overseas oil fields would also gain from 'WTO security shield' once norms laid down under Article 5 of GATT are strengthened.

The WTO rule on freedom of transit was originally introduced for ensuring trade channels of land-locked countries not choked.

Now, India is looking at the possibility of using the same set of norms for securing gas supply through pipelines as the European Union has already initiated a discussion on the issue.

The petroleum and commerce department are examining various aspects related to transit pipelines. Three financial consultants in fray for pipeline KPMG International, Ernst & Young and Standard Chartered bank are the three financial consultants short listed by Indian Oil Corp (Indian Oil) for the multibillion dollar Iran-Pakistan-India gas pipeline project. "Out of five who had bid, we short listed these three for making detailed presentations on the international best practices in pipeline projects and their proposals," Indian Oil finance director S.V. Narasimhan said. "We will finalize the financial consultants by month end or the beginning of September," he said.

The selected consultants would be given time till November to present project models for the execution of the natural gas pipeline project, now estimated to cost over $7 billion given the rise in input costs of products like steel. The project design would have to address security concerns, a financing model for the execution of the project and work out a formula for ensuring delivery of natural gas at India's border at a price lower than the imported liquefied natural gas (LNG) among other factors.

India is committed to having in place technical, legal and financial consultants ahead of the second round of the India-Pakistan joint working group meeting in Islamabad next month. While Indian Oil has been given the task of appointing the financial consultant, gas infrastructure Major GAIL (India) Ltd. will nominate the technical and legal consultants by month end.

Pakistan is also planning to appoint its own consultants as the three nations work towards finalizing the way forward before December end.

IRAN REJECTS

Iran has refused to accept a call by the European side on suspension of activities at Isfahan UCF to hold the scheduled talks on August 31, a senior Iranian official said.

Foreign Ministry spokesman Hamid-Reza Asefi, who is also deputy foreign minister for parliamentary and legal affairs, said "The performance of the Europeans indicates they are following other objectives from negotiations with Iran.

"The Islamic Republic of Iran has announced from the outset it seeks settlement of the issue through negotiation, but a negotiation which reinforces and ensures Iran's rights and which does not have any preconditions," he said.

The spokesman added, "Contrary to claims made by the Europeans, it was not Iran that violated the Paris Agreement but the Europeans themselves practically breached the agreement by ignoring Iran's rights and refraining from providing firm guarantees. "The Europeans, who interpreted and violated the Paris Agreement unilaterally, are to blame because activities in Isfahan (Uranium Conversion Unit) have nothing to do with enrichment and do not violate regulations or the Paris Agreement." He stressed, "By negotiation, the Islamic Republic does not mean just holding talks. We still believe negotiations should restore and guarantee Iran's rights to have access to peaceful nuclear technology." Iran offers condolences over Peruvian plane crash Asefi also on expressed his regret over a Peruvian plane crash on Tuesday last.

According to reports, a Peruvian passenger jet crashed during a severe storm in Peru's northeastern jungle, killing at least 40 people, police said. State-run airline TANS said it's Boeing 737-200 plane with 100 people aboard made an emergency landing without its landing gear in swampland about 500 miles (800 km) northeast of Lima.

In his message, Asefi said the crash of the Peruvian passenger plane brought deep sadness to the Iranian government and nation. He further expressed the Iranian government's deepest sympathy to the relatives of the victims. Asefi expounds on release of an Iranian from Guantanamo prison

Foreign Ministry spokesman also on Tuesday said that the Iranian detainee, Mohammad Anvarkord, has been released from Guantanamo Bay Prison through negotiation and mediation of the International Committee of the Red Cross.

According to a report issued by the Foreign Ministry Media Department, Asefi added that upon entering Afghanistan illegally some years ago, Anvarkord along with several Afghans, was arrested by the U.S. troops and transferred to the U.S. Naval Base at Guantanamo Bay, where he was detained.

"Based on investigations, in Guantanamo Prison Anvarkord was mistreated and exposed to extensive psychological pressure. "The inhuman behavior of the prison keepers, in violation of human rights, caused psychological disorder for him, so that he needs to be recuperated and treated," added Asefi.

IPIC IN FAR EAST

Abu Dhabi Oil Investment Fund, the financial arm of International Petroleum Investment Company (IPIC), announced plans earlier this week to expand its operations to Far Eastern markets. The firm, which is owned by the Abu Dhabi government, has embarked on an acquisition spree securing a stake into state-owned Chinese Petroleum Corp (CPC) and possibly making a bid for Royal Dutch Shell's LPG business, "We are looking to buy refineries and marketing companies in the Far East, targeting Thailand, Malaysia and Korea," said Khadem Al Qubaisi, head of IPIC's investment management division. "We are also interested in utilities and gas companies because it is important for us to diversify our portfolio and we need exposure on the utility side, especially in Malaysia."

Company officials also spoke about possibly doubling IPIC's stake in Spanish oil firm Cepsa to more than 15% by buying stock from bank Santander.

IPIC signed a memorandum of understanding with CPC in June giving it the right to buy 20-25% of CPC and set up a petrochemical joint venture with the Taiwanese firm, Al Qubaisi said.

Al Qubaisi said IPIC had formally expressed interest in a planned sale by Royal Dutch Shell of its liquefied petroleum gas business, which analysts said could be worth more than $2 billion.

As for increasing its stake in Cepsa by buying some of the shares of Spanish bank Santander, IPIC said the deal was conditional on the UAE and Spain resolving taxation issues. "We now hold a 9.5% stake in Cepsa and we want to raise the stake to 15%," Al Qubaisi said. "We are a long-term strategic investor in Cepsa and we want to strengthen our investment."

However, any sale of shares in Cepsa is effectively frozen at present because of a dispute between its two biggest shareholders Santander and France's Total. In further plans, IPIC is evaluating the possibility of joining a natural gas pipeline project, Nabucco, which will run from Turkey to Europe, and also considers entering the U.S. market.

IPIC's downstream investments outside of Abu Dhabi are estimated at $1.35 billion, covering six refineries with a combined production capacity of 642,500 barrels per day, 2,800 marketing outlets, and exploration and production rights in 11 countries.

SYMPOSIUM ON THE LIFE OF PROPHET (PBUH)

The Directorate of Education, Jeddah, is organizing a four-day symposium on the life of Prophet Muhammad (pbuh) under the tile "Allah's messenger as if you are seeing him".

The symposium, the first of its kind, will be held under the supervision of The Girls' Administration for Education Development. The event aims to present the Prophet's life and characteristics in a practical program for the young to follow as a role model.

The symposium will he held at the Prince Bandar ibn Sultan Hall at Dar Al-Hekma College. Dr. Abdullah Omar Naseef, former deputy chairman of the Shoura Council and former secretary-general of the Muslim World League, will be the honorary guest at the event which will be attended by Abdul Kareem Al-Hukail, director general of the Directorate of Education, Makkah region for girls, and Abdullah Al-Huaimel, the director general of the Directorate of Education, Makkah region for boys. More than 1,200 people are expected to attend.

Among the topics to be discussed are: The misconceptions and misleading campaigns against Islam and the Prophet's Sunnah; women's rights; loving the Prophet without extremes and following the Prophet's example by focusing on internal changes and implementation. The speakers will include Dr. Aiydh Al-Qarni, Dr. Salman Al-Ouda, Dr. Zaghlool Al-Najjar, Dr. Fatima Naseef and Dr. Nora Al-Saad.

SAUDIZATION DRIVE

With companies under pressure to Saudize, the Leylati wedding hall complex has managed to succeed at both maintaining its prestige and reputation and employing Saudi women workers in most divisions of the office. The management has created opportunities for these young women, which have broadened their horizons and benefited the company. Career opportunities range from management skills, catering, event organizing, and dealing with their important clientele.

The Management Department was previously run by four Lebanese women. This has now changed; all employees working in this sector are Saudi women. "It was hard to find Saudi women who would be dedicated to the job. We need our employees to be patient with clients, proficient in two languages, experienced, and presentable," said Wassma Al-Fadul, the Laylati sales representative in the management section. The eight-hour working day, six days a week, makes it harder for women workers to take on such demanding responsibilities.

Leylati is famous for the Filipino waitresses and caterers who serve the late night shifts during weddings. In the past year, strenuous efforts were made to train Saudi women to operate at the same level. The supervisors admit to their strict approach when dealing with their trainees, but found it essential; many who want the work are not qualified and the company was under time constraints to employ more Saudis.

A trainee contacted by Arab News said that she was learning a lot at Leylati. "My job responsibilities are varied and the working atmosphere is very friendly. It is much better than sitting at home watching TV." Another employee said she was gaining a lot from her training. "We got used to the strict training regulations; they were very beneficial, particularly when we first started." Both have been working at Leylati for eight months, and are being trained at the wedding halls. Transportation is provided for the women employees, even after the late night shifts. Meals are provided throughout all shifts; one meal during their morning shift, another during the afternoon shift, the third at the beginning of the late night shift, and the final between the middle and end of late night shifts. In addition, all workers have a company uniform during the daytime shift, and another for the late night events. All women cover their hair with a white headscarf, as there are male employees working behind the scenes and with whom they have to interact in the kitchens for example.

Leylati is increasingly employing Saudi women to work in all fields suitable for women. Wassma Al-Fadul said that even though it was difficult at first to employ so many Saudi women and maintain the same standard, "We have become very hopeful however, as we see the success of our training program and the determination of the employees to succeed."

SALARY INCREASE TO COST ADDITIONAL SR 15 BILLION TO SAUDI GOVT.

It is estimated that the increase in wages is estimated at SR15 billion to government employees over a total base salary of SR100 billion yearly. Dr. Saad Alshiek undermined the inflationary effects of the decision if the increases are limited to the workers in government only. This is so despite the fact that increasing liquidity necessarily adds to the demand on goods and services and causes a general increase in prices inflation, the Al-Madinah newspaper reported.

The Saudi expert concluded that this increase in prices would be limited, because the increase in prices will be driven by an increased demand not an increase in the costs of production.

The expert counted the positive aspects of the decision of the Custodian of the Two Holy Mosques on the general economic performance in the long term.

These include that increasing prices will encourage private sector companies to higher production. This will increase supply to a higher demand (motivated by the wage increase) and will cause a stabilization of prices at a higher equilibrium.

The expert also predicted that the increase would result in the long-term flourishing of the economy. This will happen through the creation of more jobs and a resultant increase in demand. This increase in demand will, in turn, result in an increase in production. This will widen the circle of investments, growth and economic development. Companies will be able to absorb the higher salaries through expansion and added production.

The Saudi expert concluded that prices would increase in the short term, but that expanded production will lower prices in both the short and long terms. Strategically, the decision has a human aspect in aiding citizens and a political and social aspect in meeting the expectations of citizens after oil price increases. The higher oil price makes the government capable of affording wage increases.

The expert asserted that the decision would have economic and strategic avenues through increasing the pace of economic activity especially when fiscal policy is hampered (there are no taxes in Saudi Arabia). The government is capable of covering the added expenses including the future burdens of the decision on the national economy.

TELECOM

Riyadh A major contract for the sale of a 55 percent stake in fixed-line operator Turk Telekom was signed in Turkey yesterday. Oger Telecom, part of the Riyadh-based Saudi Oger group with substantial business presence in many foreign countries, signed the agreement with Turkish government to acquire the stake at a value of $6.55 billion.

On behalf of Turkey, the share sale agreement was signed by Turkish Minister of Finance Kemal Unakitan. Mohammed Hariri, senior vice president and chief financial officer of Saudi Oger, represented the Oger Telecom and inked the deal. The signing represents a significant step forward in the privatization, but closing the sale is still subject to Council of State opinion on Turk Telekom's concession agreement.

Speaking on this occasion, Hariri said: "We are fully committed to this investment and are confident of our ability to build value to all stakeholders including the management of Turk Telekom, its employees, its customers and to the public at large." A venture led by Saudi Oger Telecom and including Telecom Italia won a tender on July 1 this year offering $6.55 billion for a 55 percent stake in Turk Telekom.

Referring to the preparedness of the company, Dr. Paul Doany, Oger Telecom's managing director said: "The company's experts and specialists are working hard in all aspects including detailing the business, technical and commercial plans, while finalizing the operational plan well in advance."

"Our joint team with BT Telconsult (British Telecom's consultancy arm) is focusing on the fixed line business including new technology, products and services," said Doany.

NEW CABINET IN IRAN

The Majlis held confirmation votes on the 21 members of the cabinet team proposed by President Mahmud Ahmadinejad.

Seventeen were approved as ministers, and four were rejected. The nominees for the oil, education, welfare and social security, and cooperatives ministry portfolios failed to get the necessary votes, with the education minister getting the least votes.

President now has three months to present new candidates for vacant posts. The president is expected to take responsibility for the oil ministry himself in the interim.

"We should know that we cannot play with oil," Ali Asgari, an MP from Mashhad, said of the Islamic republic's main export.

"There are complicated issues within the oil sector. It is both an economical and political matter. When we want to threaten the Europeans in the negotiations, our leverage is oil," he said, referring to European pressure on Iran for its peaceful nuclear activities. Majlis speaker Gholam Ali Hadad-Adel said after the vote that parliament merely "wants to have a stronger government" and said the rejection of four ministers "is not a sign of any cooperation between the Majlis and the government."