GENERAL & ECONOMIC NEWS

Read More...

The International Monetary Fund (IMF) has urged member states of the Gulf Cooperation Council (GCC), which includes the Sultanate Oman, to press ahead with their privatisation programmes as a means to ameliorate their beleaguered fiscal positions. It is one of many recommendations articulated in a newly published paper, titled, ‘Learning to Live with Cheaper Oil: Policy Adjustment in Oil-Exporting Countries of the Middle East and Central Asia’.
Referencing plans by Oman, among other GCC states, to step up their privatisation strategies, the multilateral financial institution noted that privatisation of state-owned enterprises had the potential to improve productivity and efficiency, while also raising temporary financing for budgetary shortfalls.
However, efforts to this end have been sluggish thus far, the Fund lamented. “Implementation has often moved slowly, particularly in GCC countries where supporting institutional frameworks have sometimes been lacking, and where privatisation programmes have often focused on already-successful enterprises. Nonetheless, GCC divesture programmes have, in the past, managed to generate significant receipts from only a handful of high value operations,” the IMF paper said.

Oman`s total crude oil and condensates production during May 2016 stood at 30.10 million barrels, a daily average of 999,836 barrels, constituting a rise by 0.56 per cent compared to the daily production during April 2016 when calculating the daily average, according to the monthly report published by the Ministry of Oil and Gas.

The total quantities of crude oil exported abroad during May 2016 stood at 26.94 million barrels, a daily average of 869,007 barrels, registering a decline of 10.45 per cent compared to April 2016 while calculating the daily average.
The report said that while the imported quantities by China still constitute the major chunk of the Oman’s crude oil exports (60 per cent). In terms of major countries that imported Omani crude oil, China was followed by USA (14.02 per cent), Japan (13.54 per cent), India (3.76 per cent) and Taiwan (3.80 per cent).

The report added that the price of crude oil for the reference oil round the world witnessed a remarkable increase during May 2016. It continued its upward trend for the settlement price in April 2016 ; up by more than $4 per barrel compared to the settlement price in April 2016.

The average price of West Texas Intermediate (WTI) crude grade in New York touched $47.27 per barrel in April 2016, showing a rise with $5.26 a barrel over the previous month.

The average price of North Sea Brent grade reached $47.65 a barrel, an increase of $4.32 per barrel over March 2016.

The trading of Oman Crude Oil Future Contract on Dubai Mercantile Exchange (DME Oman) rose by more than 12.5 per cent compared with April 2016. Oman oil price (July Delivery 2016) stood at $44.33 a barrel, comprising a rise by $4.93 compared to June delivery 2016. It averaged between $46.46 a barrel and $41.12 a barrel.

This increase in the settlement price is attributed to a number of key factors that have direct effect on prices including but not limited to decrease in USA reserves, the US dollar exchange rate, the decrease in production by Nigeria, Libya and Venezuela, in addition to decreased production from Canada due to fires.

US West Coast refiners have imported several cargoes of crude from Oman in recent weeks, marking the first arrivals of oil from the Sultanate to the US in nearly three years.

The imports of the medium sour crude blend started entering the US in April, shortly after the price of crude from the Sultanate became more competitive against other grades that typically feed West Coast refineries.

Roughly 2 million barrels of Omani crude were unloaded in April and May each, and in June nearly 1 million barrels have unloaded, mostly at Long Beach, California, according to Reuters Trade Flows data and sources. Prior to this, the US had not imported crude from Oman in nearly three years, according to the US Energy Information Administration, as pricing spreads between Middle Eastern crude and other global benchmarks did not make such imports economically viable.

The first cargo arrived in early April on a Very Large Crude Carrier (VLCC) co-loaded with Kuwaiti crude, according to a source with access to bill of lading data, which details a shipper’s cargo. Another VLCC discharged nearly 2 million barrels in May, and the tanker C. Freedom discharged roughly 870,000 in early June, according to trading sources.

Singapore-based water treatment specialist Hyflux announced yesterday that its subsidiary Qurayat Desalination SAOC has achieved financial close for the non-recourse project financing of the Qurayat Independent Water Project (IWP) in the Sultanate Oman.
The $185 million facility is provided by Mizuho Bank Ltd, Standard Chartered Bank, Dubai International Financial Centre Branch and Singapore-based Clifford Capital Pte Ltd. The facility is a fixed-to-floating rate term loan provided by Clifford Capital Pte Ltd.
Qurayat IWP is a seawater reverse osmosis desalination plant located in Qurayat in Muscat Governorate and the group’s largest desalination project in the Sultanate of Oman. Under the water purchase agreement, desalinated water from this project will be supplied to Oman Power and Water Procurement Company SAOC for a period of 20 years, from 2017 to 2037.
This will add another 200,000 cubic metres per day of drinking water to the Sultanate’s water supply.
The Qurayat IWP was named the Best Water Deal Award at the annual EMEA Finance Project Finance Awards 2015.
Nominated by bankers and borrowers, and selected by the EMEA Finance team, the award aims to recognise the importance of financing that has been provided to the region’s leading companies and sovereigns as well as projects which exemplify innovative efforts in the capital markets.

The price of Oman crude for August delivery declined by 51 cents to US$46.41 per barrel on Tuesday on the Dubai Mercantile Exchange (DME).

The closing price for Oman crude on Monday was at US$46.92 per barrel.

The average price of Oman crude (for June delivery) has stabilised at US$39.4, which is US$3.06 per barrel higher than the May contract.

Oman’s government is turning to alternative funding sources such as procuring a $5 billion to $10 billion loan from the international market, said Hamoud Sangour Al Zadjali, executive president of the Central Bank of Oman, in an interview with Oxford Business Group (OBG). The additional fund is to avoid draining liquidity from the local banking system. The Sultanate last week raised $2.5 billion from its first international bond sale in almost two decades as it seeks to plug a budget deficit caused by crude’s decline…. Source: Times of Oman

A key agreement was signed between Oman LNG and the local Sur Municipal Committee. Oman LNG will raise the ante in their community engagement efforts through the “Harah” project; funding the establishment of three multipurpose outdoor facilities for the Wilayat of Sur and neighbouring communities. Through the project, Oman LNG aims to provide a better quality of life for the people living in the area.

The agreement will see the funding of the ‘Harah’ project which involves establishing a multipurpose playground for children in three locations in Sur. The playground will also include equipment designed specifically to suit the disabled. The project aims to provide children and youth with ample opportunities to develop talent in an ideal environment. The additional locations will also serve as a meeting place to engage in gainful activities for the community.

Sheikh Musallam bin Said Al Mahrooqi, Wali of Sur, signed the agreement with Sheikh Khalid bin Abdullah Al Massan, Chief Executive Officer of Oman LNG Development Foundation.

“This agreement is in line with the company`s robust efforts to promote and upgrade social welfare for different segments of the society. This, in turn, encourages the building of a strong and vibrant society that values and cares for its people," said Khalid Al Massan, CEO of Oman LNG Development Foundation.

Oman’s bond and sukuk issues grew substantially by 53.75 per cent or OMR653.62 million to OMR1.869 billion by the end of 2015, from OMR1.216 billion in the previous year.

“The Capital Market Authority (CMA) is continuously and putting in place the building blocks to ensure an effective and dynamic fixed income market in Oman. Some of our initiatives have begun to bear fruit,” said Abdullah bin Salem Al Salmi, executive president of CMA, while addressing a meeting to launch Oman chapter of Gulf Bond and Sukuk Association (GBSA).

The CMA fully supports the initiatives taken by the market players — as a vibrant fixed income market is essential to the development, financial stability and diversification of the regional economy, including Oman, he added.

“This is also an integral part of the overall strategy of the CMA to enable the capital market to play its vital role as an alternative fundraising platform for companies in the economic development of Oman.”

The chapter launch was timed to follow the release of the new Sukuk Regulation by the CMA and to support the growing interest among Oman companies to tap into capital market financing. An increasing number of companies are taking advantage of bonds and Sukuk to diversify their financing source away from the traditional banking sector. The new Sukuk Regulation provides more certainty and improve the prospects for companies to raise funding from the capital market.

The launch event was officiated by the CMA, and attended by representatives of Oman’s leading banks, investors, legal firms and private companies.

Sohar port announced the official completion of terminal C at its Oman International Container Terminal (OICT), besides opening a new operations control centre (OCC) and a state-of-the-art remote control crane centre.

The new facility allows the remote operation of recently installed quayside cranes that have sufficient reach to load and unload 20,000 twenty-foot equivalent unit (TEU) ships, said a press release. As a taste of things to come, on Friday saw the first visit of a 13,000 TEU vessel to Sohar Port, the MVMSC Altair at 366 metres the largest container vessel ever to visit the Omani logistics hub.

Dr Ahmed Mohammed Salem Al Futaisi, minister of transport and communications and Sultan bin Salim Al Habsi, chairman of the board of Sohar Port and Freezone, secretary general of the Supreme Council for Planning, were present at the function.

A tender of Government Treasury Bills, issue number 008, was held at the Central Bank of Oman (CBO) this week.

The total value of the allotted Treasury bills amounted to OMR41 million, for a maturity period of 28 days, from May 25, until next June 22, 2016.

The average accepted price reached 99.957 for every OMR100, while the minimum accepted price arrived at 99.955 per OMR100. Whereas the average discount rate and the average yield reached 0.56276 per cent and 0.56301 per cent, respectively.

CORPORATE NEWS

Read More...

The Board of Directors of the Public Authority for Stores and Food Reserve (PASFR) approved the draft budget for 2017 during a meeting held under HE Dr Fuad Bin Ja’afar Al Sajwani, Minister of Agriculture and Fisheries, Chairman of the PASFR Board.

The board reviewed implementation of the decisions made at its previous meeting and viewed minutes of the first meeting.

It also discussed several items listed at the agenda that include discussing the PASFR administrative, financial and commercial report, as well as discussing and approving the draft PASFR budget for 2017.

Additionally, the board viewed outcomes of following up recommendations of the study on opportunities of improving financial revenues and developing the PASFR financial systems.

The recent upswing in international oil prices, which has seen the price of Omani crude more than double to over $46 per barrel since the start of the year, is no cause for celebration just yet, according to a top official of the Ministry of Oil and Gas. Salim bin Nasser al Aufi, Under-Secretary, urged the nation’s energy producers “to stay the course” as they continue to deliver on their production targets while operating in a low oil price environment. “It’s too early to start feeling comfortable now that prices are picking up,” Al Aufi warned. “We have a programme and strategy set for low oil price challenges. We are still in a low oil price scenario. The (recent) improvement in the oil price is shaky.”

Cost-containment strategies adopted by oil and gas producers in the wake of the oil price collapse have seen budgets pared to the bone, several capital-intensive mega schemes deferred, workforces downsized, and production costs and wastage significantly reduced, in a far-reaching effort to sustain operations in a low oil price environment. “It’s too early to start celebrating, and even if the price picks up I want the companies to continue to be very resilient and scrutinise every dollar they spend,” the Under-Secretary noted. “Our message to the companies is to stay the course, capture all the benefits gained by scrutinising all our activities and our spends, and building on it to make sure we don’t allow waste to creep back in again into the business. There is still a lot of work that needs to be done, and I think they should continue on that journey. Of course, a lot has been done, but we need to make sure we hold on to it,” Al Aufi stated.

The first phase of the Innovation Complex, Muscat will be completed next year and the construction of the second phase will commence after one year form the completion and operation of the first phase. Dr Abdulbaqi bin Ali al Khabouri (inset picture), Director of Science Parks at The Research Council (TRC), said that approximately 70 per cent of the first phase is complete adding that the main building occupies 32,000 sq metres. The 7-storey building will be constructed to the most advanced international standards which will make it a leading project for scientific innovation. A plot of 540,000 sq metres adjoining Sultan Qaboos University (SQU) in Al Khoudh district has been earmarked for complex which will be constructed in three phases in 10 years’ time.

Work on the construction of a sewage treatment plant (STP) at Liwa is expected to start by the end of this year. “The tender has already been floated for constructing Liwa STP and its facilities. The tender is currently under evaluation and we hope to commence the work of this project by December 2016”, said Said bin Rashid al Asmi, Projects General-Manager in Haya Water. The plant, with a capacity of 10,000 cubic metres per day, is designed to fulfil the needs of the residents of Liwa for wastewater services taking into consideration the population growth and development that will be witnessed by the wilayat in the future.

The project will also include the establishment of an irrigation network with total length of about 63 km. This network will be utilised for irrigation and other commercial and industrial usages. “The construction of Liwa STP is expected to take two years. Haya Water anticipates that this project will add a great value to the area by protecting groundwater, enhancing public health, preserving the environment and providing treated wastewater for plantation, productive agriculture and other industrial and commercial purposes”, said Al Asmi. The government-owned company started executing these projects based on the Council of Ministers’ Decision in 2014 to expand the scope of work of Haya Water to cover all governorates of the Sultanate except Dhofar.

Al Meera Consumer Goods Company said Sunday that it has signed a number of usufruct agreements with Oman’s ministry of housing to have the right to use governmental plots of land in several areas in Oman.

According to a bourse filing, the deals will allow the company to establish new branches, a step which will enhance its position for the benefits of its shareholders.

The company’s Chairman, Thani Bin Thamer Al Thani, signed on Thursday in the Omani capital, Muscat, during the official visit by the Prime Minister and Minister of Interior, Abdullah Bin Naser Al Thani, to the Sultanate.

BP Oman plans to begin drilling its first well for gas exploration as part of the second developmental phase for the Khazzan field before the end of 2016, said the company`s president Yousuf Al Ojaili.

Speaking to Oman News Agency (ONA), the top official noted that he expects gas production from the second phase of the project which includes the drilling of 125 wells to be included in Oman`s national grid by 2020.

Worth noting, BP and Oman Oil signed a preliminary agreement in February with the Omani Ministry of Oil and Gas to extend the licence area of Block 61 in the Khazzan gas field project by around 1000 sq. km.

BP is the operator of Block 61 with 60% interest and Oman Oil holds the other 40%

The Port of Salalah has added another main line service with the commencement of Mediterranean Shipping Company’s New Falcon direct Asia-Middle East service. The first New Falcon Salalah port call, the 7,849TEU-capacity MSC Ningbo, arrived from Colombo on Tuesday.
The New Falcon Service, which was introduced by MSC in March of 2015, operates with a string of eight 8,000 TEU-capacity class vessels, featuring direct service between China, Singapore, Malaysia, Sri Lanka and India with the Persian Gulf, and now Oman.
“The New Falcon Service, which offers the fastest transit time from the Far East to Oman will not only cater to the growing import market of Salalah, but will also open new opportunities to serve our extended hinterland” said Port of Salalah CEO David Gledhill, adding “this new connectivity will also facilitate enhanced trade with other economies in the Middle East.”
Swiss-Based MSC is currently the world’s second-largest shipping line in both capacity, and fleet size, with an overall capacity of 2.68 million TEUs and 486 vessels, calling 315 ports on over 200 trade routes around the world.
“We are happy to see another MSC service calling on Salalah, demonstrating the confidence of one of the world’s great liner networks in our ability to meet the needs of global logistics community serving the people and businesses of the Persian Gulf and the Arabian Sea.” stated Ahmed Akaak, the Deputy CEO of the Port of Salalah.
The Port of Salalah, which is operated by APM Terminals as part of the APM Terminals Global Terminal Network, and in which APM Terminals holds a 30 per cent share, handled 2.6 million TEUs in 2015, along with 12.5 million tons of bulk cargo. The Port of Salalah has recently undergone an expansion, which doubled the quay length, and increase dry bulk capacity to 20 million tons, and liquid bulk capacity to 6 million tons annually.

Siemens Technology has helped Oman save 31 per cent of gas in power generation, a senior company official said.

“The latest three power plants in Oman utilise Siemens gas turbines. Because of the new technology that we brought in terms of high efficiency, I think saving 31 per cent of gas is really something we contributed to,” Markus Strohmeier, chief executive officer (CEO) of Siemens LLC in Oman told the Times of Oman in an exclusive interview.

The Germany-headquartered Siemens is one of the largest engineering companies in Europe and aims to develop a strong foothold in the Sultanate.

Strohmeier added that Siemens has been working a lot on the new MoUs inked between Petroleum Development Oman (PDO) and the Public Authority for Electricity and Water (PAEW), and between PDO and the Nama Group to improve the security and reliability of the Sultanate’s electricity network.

“We have been working on this with all the players to see the benefits of such interconnections. Because of the country’s power generation (using oil and gas) being connected through a national 400kV transmission, only we use the highest efficiency power plants and PDO can keep the low efficiency units in back up. This will generate huge gas savings. What we bring to Oman is innovation in terms of saving gas, oil, labour, power and that is basically contributing to cost saving and making Oman more competitive,” he added.

The Siemens CEO revealed that the company also plans to promote small power generators (2megawatt (MW) to 50 MW-capacity).

“There are so many villages that run on diesel power. The Rural Areas Electricity Company (Raeco) in Oman is still running diesel power plants in some areas, which come with some disadvantage. Low efficiency, high affordability and high maintenance, and lots of fuel to store and transport. We are offering them new gas turbines. Gas turbines that can also burn diesel. They run on dual fuel. It has less hassle and higher efficiency than the current generation,” Strohmeier said.

Asked if the company is bidding for new projects, he said; “A lot is going on. It’s an exciting time here. We have products that are simply offering more efficient higher quality and less cost. We are quite happy with the progress in Oman.”

He further said Siemens LLC was founded in Oman ten years ago and “every year is better than the year before. For us, Oman is a better place to be in. And we are excited.”

Strohmeier rejected the estimated growth figures in the Middle East and North Africa (Mena) region, which some assess could hover at around only 3.5 per cent till 2018.

“I don’t like these figures. This GDP measurement has been created probably 100 years ago. The GDP percentage doesn’t measure...for example, does it include software development? Does it include contributions of a knowledge-based society, if someone is sitting at home and has developed an app. The GDP percentage doesn’t measure this,” the Siemens official stated.

“They only measure, if you have a real company and you pay taxes, you arrive at these percentages. But if you have an app and you sell it through someone else in a different country, it never hits the GDP of the country where you sit, so all of this GDP measurement is ancient. There is a hidden economy taking enormous sizes. What we have been measuring for hundreds of years hasn’t changed. There is another economy as well,” he explained.

The Siemens official also stated that Oman has great potential for investments in power because of the increase in the population and size of the country.

“Population growth is key driver here. In Europe, population growth is stagnant. Of course we have a smaller influx, but the birth rate is low. We are stagnant. But in Oman we have enormous growth...everyone needs a new home, needs their own electrification,” he stated, adding “The over 8 per cent growth in power consumption will continue into the next decade here. You can’t see this in the European Union or America. The power sector is growing in Oman and the way it’s served will change in future. Different technologies are coming in.” “For us it’s an interesting market. We are hoping for new projects in innovative technologies, and we want to bring efficiency in the oil and gas sector...there are so many innovative products we can bring to Oman,” CEO Strohmeier said.

Oman`s majority state-owned Petroleum Development Oman, which accounts for around 70 per cent of the country`s total crude oil production, is looking at producing 600,000 barrels of crude oil per day (bpd), said the company’s Managing Director.

“PDO is trying to raise its output to 600,000 barrels per day, which we originally planned for 2019,” Raoul Restucci said on the sidelines of the Oil & Gas Year Oman 2016 sixth strategic roundtable.

Sandan Development has signed a construction agreement with Towell Construction & Co (TCC) to build the country’s first integrated light industries park.

The contracting firm will start work on the first phase of the park after one month and the whole project will be completed after two years, according to Said Al Rashdi, executive manager at Sandan.

Sandan Light Industries Park will spread over an area of 250,000 square metres and will accommodate 2,400 workshops, automobile showrooms, building material shops, 450 office space and 1,400 residential units.