Newsletter - 1st edition, 2010

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Economic News

Port of Antwerp International to develop Port of Duqm, Oman

The port of Antwerp will help to develop the port of Duqm in the Sultanate of Oman. Port of Antwerp International will indeed play a prominent role in the development and operation of a large distribution hub in Duqm following a joint venture agreement signed between Antwerp Port Authority and the Government of Oman. This is the first project to be realised by Port of Antwerp International, a subsidiary of the Port Authority set up to implement the port’s foreland policy worldwide with the emphasis on cargo connections. The Port Authority will take on the Oman challenge in collaboration with Rent A Port within the “Consortium Antwerp Port.”

The Government of Oman plans to build a port and industrial complex in Duqm, with strong emphasis on petrochemicals. This future port has the potential to become one of the most important industrial and petrochemical hubs in the Middle East. In addition to exporting oil, the port will also concentrate on handling containers, conventional freight and bulk cargo. Acting through Port of Antwerp International, the port of Antwerp will make its management know-how and expertise available for development and operation of the port and industrial complex. The Antwerp presence in this hub will also create potential for synergies between this location and Antwerp.

Port of Antwerp was set up to participate and invest in overseas ports and port-related projects in strategic areas such as the Middle East, India, Sub-Saharan Africa and Brazil, as part of the port’s aim to systematically expand its presence in growth regions capable of generating trade that can be exploited to develop an international network of ports.

Towards an EU-GCC Free Trade Agreement

UAE-based daily newspaper Khaleej Times quotes the Spanish Ambassador to the United Arab Emirates saying the long-awaited Free Trade Agreement between the Gulf Cooperation Council and the European Union is likely to be signed in June. According to Ambassador Gonzalo de Benito, the agreement could be signed at the joint ministerial meeting to be held in Luxemburg on June 14th. Spain currently holds the temporary Presidency of the Council of the European Union and the Ambassador disclosed his country is keen to get the GCC-EU FTA during its EU presidency.

The Ambassador said the negotiators almost finished the pending issues and a common ground on the political issues which the EU includes in all the free trade agreements, although efforts are still needed to find a solution on the issue of the export duties.

Ambassador de Benito underlined that the GCC-EU free trade agreement would be the biggest of its kind in the world between two regions and proof of the growing convergence of interests between the countries of the Gulf Cooperation Council and the European Union.

The trade volume between the two partners amounts to more than 90 billion euros and relations are growing as well in the field of education and energy. Europe is also looking at the Gulf with a growing strategic perspective as the region is to produce 35 million barrels per day of oil in 2020, representing one third of world total demand. The presence of major sovereign funds, large infrastructure projects and domestic investment are the other factors that explain the importance of the Gulf region. The GCC Common Market and eventual Common Currency will further enhance these prospects.

OPEC revenues on the rise

Member states of the Organisation of Petroleum Exporting Countries (OPEC) earned nearly $187 billion in the first quarter of 2010, some 96% higher than their income in the same period of 2009. Saudi Arabia, the world’s oil powerhouse, netted more than a quarter of the 12-nation group’s total income, while Iran and the United Arab Emirates were in the second and third place. Saudi Arabia’s income stood at $52 billion and that of the UAE was estimated at nearly $17 billion. Nigeria came in the fourth place, followed by Kuwait (around $15 billion) and other key earners such as Angola and Algeria.

OPEC’s revenues in the first quarter of 2010 were almost double its income of around $95 billion in the first quarter of 2009. The price of OPEC’s basket of 12 crudes averages around $72 a barrel in the beginning of this year, to be compared to an average of approximately $42 in 2009. Experts believe prices could climb to $80 in 2011 because of an expected rise in global demand, prompting OPEC to boost output and bringing its revenues to $828 billion.

Prices reached their highest average of $95 in 2008 and this allied with high production lifted OPEC’s crude export earnings to a record high of nearly $955 billion.

Aramco not to scale down its Yanbu refinery project

The decision by ConocoPhilips to pull out from Saudi Aramco’s Yanbu export refinery project is unlikely to imply a scaling down of the project. Analysts indeed underline that Saudi Aramco has the capacity, willingness and financial sources to push ahead with the project, although the refinery could eventually face some delays. The Yanbu project involves construction of a refinery especially designed to process Arabian heavy crude and will produce high-quality, ultra-low sulphur refined products meeting the strictest international specifications.

Saudi Aramco boosted its oil production capacity to 12.5 million barrels per day since last year and now focuses the development of its refining, petrochemicals and gas capabilities. The Yanbu refinery is a strategic part of this objective and is expected to become one of the most competitive refineries in the world. Aramco plans to invest more than $120 billion in the next six years to develop crude oil and petrochemical projects.

Aqaba could host Jordan’s first nuclear plant

The Jordan Atomic Energy Commission (JAEC) discussed a geological feasibility study indicating that a site south of the Red Sea port of Aqaba is suitable for the construction of the country’s first nuclear reactor. The study was conducted by Tractebel and the company is now to realise an environment impact assessment at the site.

Over the past two years, Jordan concluded agreements with at least eight countries to obtain assistance for the development of its nuclear programme for peaceful uses. JAEC signed a contract with Tractebel in September 2009 to investigate the Aqaba site which was identified by the Commission and a technical national committee. The study covered public health, safety and security issues, in addition to specialised surveys to assess geological stability, soil characteristics, water proximity, risk assessment, environment impact and natural and human induced events. Tractebel was selected from six international companies which competed for the site study.

Jordan currently imports some 95% of its energy requirements and its plans foresee a nuclear power plant for electricity and desalination in operation by 2015. The country’s Committee for Nuclear Strategy has set out a programme for nuclear power to provide 30% of electricity by 2030 or 2040 and to provide for exports.

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