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Sharp oil price rises set to continue

London: Oil prices are likely to continue to rise rampantly for awhile yet as supply worries and investor demand for commodities outweigh concerns of economic slowdown. Crude hit a record high of $101.32 on Wednesday. The price has climbed from below $50 at the start of 2007 and below $20 in early 2002. “From here, we think that the next stage may well be a period of consolidation in the high $90s, and that could include increasingly frequent moves above $100,” said Paul Horsnell of Barclays Capital. Prices have risen in part because of expectations that the Organisation of the Petroleum Exporting Countries (Opec), rather than increase oil output, will maintain or even cut supply at a meeting on March 5. Opec argues that factors beyond its control, such as speculation, are boosting prices. One Opec minister made clear on Thursday that oil’s push into triple digits would not bounce the group into changing supplies. Reaction “We will not just react to $100 oil,” Qatar’s oil minister, Abdullah Al Attiyah, said in a telephone interview. “Opec will move when it sees physical demand for its oil.” Besides the likelihood of no extra Opec oil, technical analysis – using past price moves to predict future direction – indicates crude may move higher still, according to London-based ODL Securities, a trading firm. Andy Riddell, joint head of commodities at ODL, said charts indicate that US crude and Brent could move higher to $103.00 and $101.50 respectively, before the Opec meeting. “It’s technical and speculative buying,” he said of oil’s record run. “You look at all the chart patterns and they are pointing upwards.” Others see limited scope for prices to hit further highs in coming weeks. Oil demand typically weakens in the second quarter as consumers in the northern hemisphere use less fuel for heating. Crude oil inventories in the United States, the top consumer, have risen for the last five weeks. “There may still be some potential for prices to press even higher, but we do see rising stocks and the approach of the second-quarter supply-demand surplus period as gradually closing the window on further gains,” said Tim Evans, analyst at Citi Futures. “The market may not yet be satisfied that a top is at hand, but we still think one is forming.” Other factors that could puncture the rally include a steep drop in US or Asian equities, signs that the US economic slowdown is spreading or a surprise boost in Opec supply, MF Global said. While there may be no single factor that explains the latest run-up, which coincided with rises in other commodities such as aluminium and copper, some advise against betting that oil will fall just yet. Indicators Signs of rising inflation are attracting a flow of money into commodities, which are traditionally used as hedges against inflation. “We still do not see much in terms of news that justifies the blistering rally we have had over the past few days, but neither would we advocate going short here,” MF Global said. Source : Reuters

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UAE rules out dirham revaluation in ‘foreseeable future’

Dubai: The UAE on Thursday ruled out any change to the dirham-dollar peg in the “foreseeable future,” saying the current foreign exchange policy has served the country well. “It is a very important stability anchor,” UAE Central Bank governor Sultan Nasser Al Suweidi said of the currency peg. He also said the goal of a GCC common currency may not be achieved in 2010 as planned. “We do not have to artificially manipulate our currencies to compensate for the loss of value as a result of natural fluctuations. You have to let the market flow normally, supply and demand will determine everything,” Al Suweidi told reporters when asked if the bank will revalue the dirham while keeping it pegged to the falling US currency. Source : Guilfnews

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Dubai : Cleveland Clinic to manage Shaikh Khalifa Medical City

Abu Dhabi: An agreement was signed yesterday between the Abu Dhabi Health Authority and the US-based Cleveland Clinic under which the hospital took over the management of the Shaikh Khalifa Medical City in Abu Dhabi. The pact was signed in the presence of General Shaikh Mohammad Bin Zayed Al Nahyan, Abu Dhabi Crown Prince and Deputy Supreme Commander of the UAE Armed Forces. Shaikh Mohammad said attracting the best health establishments in the world to Abu Dhabi is part of the government’s healthcare policy. The facilities include the 550-bed Shaikh Khalifa Hospital, the 120-bed Behavioural Science ward, 100-bed Abu Dhabi Rehabilitation Centre, 12 outpatient clinics and nine primary health clinics.

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Dubai : Gulf Air declares early retirement scheme

Dubai: Bahrain-based Gulf Air yesterday announced an early retirement package for Bahraini and Omani employees. The opportunity will be available until June 21, an e-mail statement said. “Bahraini and Omani employees have the choice of a cash-only benefit that includes three months’ salary plus one month salary for each complete year of service,” it said. “Or, for staff with more than 10 years service in Gulf Air, the option to choose cash and benefits including six months’ salary plus one month pay for each full five years of service, a one-time contribution to the GOSI pension plan (maximum contribution of five years, decreasing for employees aged 55-60 for male and 50-55 for female employees) and health benefits for three years at the airline rate.” Fewer expatriates The airline has also decided to reduce the number of expatriates in its non-flying operations. The majority of these departures will occur in accordance with the expatriates’ personal contracts. The staff affected will be informed personally over the next two weeks. Gulf Air Chairman Mahmoud Kooheji reaffirmed that pilots and cabin crew need not fear job cuts. The assurance came as Kooheji announced that an improved pay package for Gulf Air pilots has been developed and will be presented to the company’s board next Wednesday.

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Kuwait Airways to place $3b order

Kuwait City: Kuwait Airways plans to buy 12 Boeing Co and seven Airbus planes from Kuwait’s Aviation Lease and Finance Co (Alafco) for about $3 billion, a Kuwait Airways official said yesterday. The state-owned airline, which is looking to spend as much as $6 billion to replace its ageing fleet, will order the aircraft from the Kuwaiti lessor rather than the manufacturers so as to take delivery of them earlier, said the official, who did not want to be identified. Alafco, which is majority owned by Islamic bank Kuwait Finance House, has standing orders for some of the aircraft Kuwait Airways is planning to buy, including 12 Boeing 787 Dreamliners for delivery in 2010, the official said. Shopping list The airline also plans to purchase seven single-aisle Airbus A320s from Alafco for delivery in 2009, and take options for seven more, the official said. “We get the planes cheaper and quicker from Alafco,” the official said, declining to be more specific. Kuwait’s Al Watan newspaper reported the plan-ned order earlier yesterday. Ahmad Al Zabin, Alafco’s chief executive officer, could not immediately be reached for comment. Kuwait Airways owns 11.5 per cent of Alafco, which usually buys and leases out planes to airlines. In March, Alafco ordered 12 Boeing 787s and six 737-800s valued at $2.26 billion at list prices. In November it ordered six Airbus A320s. Shares in Alafco closed 1.75 per cent higher yesterday. Shares in Kuwait Finance House fell 1.5 per cent.

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Egypt poised to receive record net FDI this year

Athens: Egypt is set to see record net foreign direct investment flows of more than $10 billion in the current fiscal year ending June, the country’s investment minister said yesterday. Speaking in Athens, Mahmoud Mohieldin also said the country’s inflation was high but the government was working with the central bank to achieve the inflation target. Egypt is drawing interest from international firms, keen to benefit from the country’s privatisation programme. “This year, based on the three quarterly results, we are expecting [FDI] more than net $10 billion. Last year was $6.1 billion,” Mohieldin told reporters on the sidelines of an Institute of International Finance meeting. His previous estimate for the fiscal year, given in March, was $7.5-$8 billion. ——————————————————————————– ——————————————————————————– Mohieldin expected foreign investors to participate in the sale of the government stake in Bank of Alexandria, expected in October or November. “We are aiming for an IPO and as you know it’s an open market. So we expect it’s going to be a mix of Egyptian and foreign buyers,” he said. Egypt is offering 15 per cent of the shares in Bank of Alexandria on the stock market. It sold 80 per cent of the bank to Italy’s Sanpaolo in October for $1.6 billion.

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Arabian Cement makes move to expand abroad with Jordan plant

Amman: Arabian Cement is eyeing acquisitions in Africa and the Middle East as it prepares to start construction of its first cement plant outside Saudi Arabia – a $400 million project in Jordan, its chief executive said. “We are looking at any opportunity to construct a cement factory and seize the chance by focusing on the Middle East and North Africa region along with Africa,” Arabian Cement President and CEO Mohammad Uthman said. The company, which is investing around $900 million in projects to more than double capacity to seven million tonnes annually in the Saudi market by 2010, sees countries such as Sudan, Zimbabwe and others in East Africa as particularly attractive. “There are shortages there, and some countries don’t have any cement factories at all,” Uthman said. Partnership ——————————————————————————– ——————————————————————————– Arabian Cement may also opt for regional acquisitions in partnership with Italcementi, with which it is already an equity partner in a $600 million plant in Labuna, in western Saudi Arabia. The two firms are building a plant with four million tonnes of annual capacity to be completed by 2010, Uthman said. “They can participate with us any time as equity partners… our agreement with them is to set up factories or to acquire existing plants in any place in the Middle East,” Uthman said. The construction of Arabian Cement’s first project outside its home market in Jordan is expected to be completed within two years, Uthman said. The plant, to be located in the southern Qatrana area, will have an initial capacity of two million tonnes per year, which could double to four million if demand is sufficient. It could also export to neighbouring markets such as Iraq, Syria and the Palestinian territories, Uthman said. “If we find a market in Iraq and Syria or Palestine in future, the Jordan plant will have the capacity, and so we are planning this for the future,” he added.

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DME goes live with Oman crude futures contract

Dubai: The Dubai Mercantile Exchange, the Middle East’s first energy futures and commodities exchange, went live yesterday with the Oman crude oil futures contract. Trading began at 2am yesterday at DME, a joint venture between Tatweer, a member of Dubai Holding, the New York Mercantile Exchange (Nymex) and the Oman Investment Fund (OIF). Preparations for the launch were in the works for the past three years. “It has been a challenging journey from the day we decided to set up the exchange to its launch. Today we have the international energy exchange up and running with a transparent price discovery mechanism that offers an effective risk management tool for the global energy trading community,” said DME Chairman Ahmad Sharaf during a teleconference yesterday. ——————————————————————————– ——————————————————————————– The first daily settlement price of the Oman contract, the Middle East’s first and only physically settled energy futures contract, was $64.09. This will be the first price used by Oman’s Ministry of Oil and Gas in calculating its official selling price. From now on, Oman’s pricing formula will be the average of the Oman crude oil futures contract’s daily settlement prices over each calendar month. The average set in June will determine the price of Oman’s August cargoes. In addition to the Oman crude oil futures contract DME yesterday launched two financially settled futures contracts, the Brent-Oman Spread Contract and the WTI-Oman Spread Contract. Membership The exchange currently has 60 members with 20 market makers. “We are not recognised by 14 leading overseas jurisdictions,” Sharaf said. “We are in the process of getting regulatory approvals from other major global jurisdictions.” Dubai recently adopted forward pricing of its crude oil based on the daily settlement price of the DME’s Oman contract. Oman made a similar commitment late last year abandoning its retroactive price discovery mechanism in favour of the new Oman futures prices traded on the DME. The DME’s sour crude contracts come as a challenge to the market where several attempts in the past to create a liquid sour contract failed. Traders expect the Dubai contracts will create viable hedging opportunities and price transparency. “The DME’s customers know that the contract’s deliverability provides true price convergence between the cash and physical markets. This is especially advantageous in Asia, which imports more than two thirds of its crude oil from the Middle East and has long sought greater price transparency and better risk management tools,” said Gary King, DME’s chief executive officer, in a statement. “Oman’s endorsement of the DME gives it a rare credibility that no other sour crude contracts in the past had managed to achieve. However, participation from bigger players like Saudi Arabia will be major factor in making it a liquid international exchange,” said a Dubai-based trader.

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Abu Dhabi’s green move gathers pace

Abu Dhabi The UAE’s response to global warming begins at home. Last month the Abu Dhabi Future Energy Company (Masdar) launched a $5 billion initiative to establish the world’s first totally green city in Abu Dhabi. The development extending over six square kil-ometres plans to achieve zero carbon dioxide emissions and zero waste and includes plans to invest $350 million in solar energy generation. The new city is scheduled for completion by late 2009, and comes as part of a series of projects adopted by the emirate recently to curb the greenhouse gas effect on the climate. Abu Dhabi also plans a 100-megawatt solar power plant. Solar power is a growing global trend among environment-conscious investors. ——————————————————————————– ——————————————————————————– The plant will be expandable to 500 mega-watts, with a target to generate enough power for 500,000 households. A pilot project is being planned in Dubai as well with the announcement by Tecom, a subsidiary of Dubai Holding, that it will supply all its developments with clean solar energy. “We have chosen to invest heavily in alternative energy, despite the fact that the UAE is among the top producers of oil worldwide, and given the country’s ambitious economic development plans,” Masdar’s chief executive officer, Sultan Al Jaber, told Gulf News. The initiative also makes sense economically, says one expert. “Though it might seem paradoxical that Abu Dhabi adopts such an initiative, yet in the short term this can save substantial amounts of energy, while in the longer term, alternative sources, especially solar power, will present an important aspect in the world’s energy mix,” said Eckart Woertz, the economist at the Gulf Research Centre. “Capturing carbon dioxide will not only help to curb global warming, but will also provide an alternative to oil field injections of natural gas,” he added. Abu Dhabi accounts for more than 90 per cent of the UAE’s oil resources, and the country’s reserves, exceeding 100 billion barrels, rank third largest in the world. According to a recent report by the Intergovernmental Panel on Climate Change, the greenhouse effect on climate change in the Middle East region will result in an increase in the region’s temperature of 1-2 degrees Celsius by 2030. Impact The impact on the region’s ecological system, water resources and health could be catastrophic. The majority of greenhouse gas emissions has usually been blamed on the developed world, headed by the US, Europe, and Japan. However, a report published last month on the Science and Development Network website argues that developing countries account for 40 per cent of the total emissions worldwide. Even more dramatically, the report stipulates that emissions from developing economies made up 73 per cent of the global growth in emissions during the period from 2000 to 2004, largely due to the moving energy-intensive activities from the developed to the developing world. China and India are by far the largest contributors to such emissions growth, according to the website report, but the effect of the massive econ-omic development and diversification plans in the Gulf Cooperation Council (GCC) countries cannot be ruled out. “What we are trying to do is to set an example not only in the region, but worldwide, for other nations to follow, as environmental issues do have a global effect,” Al Jaber said. According to United Nations statistics, the UAE ranks 43rd among polluters.

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Qatar wins $2b Tunisia contract to build refinery

Tunis: Tunisia’s Energy Ministry awarded Qatar-state owned Qatar Petroleum Company a $2 billion refinery deal, ministry and company officials said yesterday. “We are happy today to sign the agreement with Tunisia to construct a refinery whose capacity is about 150,000 barrels per day”, Abdullah Hamad Attiyah, Qatar’s vice prime minister and minister of Industry, said at the ceremony to sign the agreement in Tunis. The Qatari company, in partnership with British Petrofac, was selected by the Tunisian ministry to build, own, manage and run the refinery for at least 30 years. The planned plant will be located in the coastal town of Skhira. Capacity Tunisia only has a refinery in the northern city of Bizerte with a capacity of 30,000 barrels per day. It wants to expand its refining potential to satisfy an economy that has been growing by an average of 5 percent over the past decade. Source : El watan