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NewBase 03 March 2015 - Issue No. 552 Khaled Al Awadi

NewBase For discussion or further details on the news below you may contact us on +971504822502 , Dubai , UAE

Qatar Shell, QBIC, SDC, Silatech join hands for enhancing innovation and entrepreneurship

Qatar Shell, Qatar Business Incubator Centre (QBIC), Social Development Centre (SDC), and

Silatech have signed an agreement to host the ‘Navigator’, a “common purpose programme” for

emerging leaders. The first one will take place in Doha between May 24 and 28.

This announcement came on the first day of the ‘2nd Entrepreneurship in Economic Development Forum’ yesterday, which aims to foster the new generation of entrepreneurs in Qatar and the region. Many entrepreneurs attended the two-day forum that was hosted by the Ministry of Economy and Commerce and sponsored by Qatar Shell. The primary focus of ‘Navigator Leadership Programme’ in Doha will be innovation and entrepreneurship and it will help both develop the leadership capabilities of the participants and generate new ideas, which have the potential to be prototyped in the ‘real world’ beyond the programme. On the forum, Wael Sawan, chairman and managing director, Qatar Shell said, “In line with our support of the Qatar National Vision 2030, we are delighted to sponsor the ‘Second Entrepreneurship in Economic Development Forum’ and to continue supporting the development of a robust private sector that will help diversify Qatar’s economy.” “I am proud to announce that today will mark a further collaboration with key local




entrepreneurship organisations to bring the ‘Navigator’ a common purpose programme for emerging leaders to Qatar. ‘Navigator’ will play an important role in engaging emerging leaders in Qatar in some of the practical issues and challenges that arise from the vision for the country,” he added. Munther al-Dawood, projects and investment manager and acting CEO of SDC, said, “We at Social Development Centre are delighted to join hands with major organisations who share with us the same mission to inspire Qatari youth to take initiative and contribute innovatively to a more diverse Qatari corporate culture and economy. The ‘Navigator Leadership Programme’ will help entrepreneurs be more innovative as well as advance their leadership skills to maintain sustainable growth for their businesses and ultimately contribute to the National Vision 2030.” During the forum, Qatar Shell highlighted its increasing support for existing SMEs in recent years owing to its successful partnership with Qatar Development Bank. In 2013, QDB and Qatar Shell launched the “SME Business Opportunity Workshop,” which enables Qatari SMEs to compete for business opportunities within Qatar Shell’s supply chain. Three SMEs were awarded the contracts. Qatar Shell’s team of experts explained to participants at the forum the tendering process and qualification requirements to tender to become suppliers of choice to Pearl GTL, the world’s largest gas-to-liquids plant at Ras Laffan, a Qatar Petroleum-Qatar Shell joint venture. The presentation was part of Qatar Shell’s efforts to encourage SMEs to bid and win contracts with Pearl GTL. In 2014, Qatar Shell in partnership with QDB presented seven new specific business opportunities to the private sector; five new Qatari SMEs were awarded the contracts for Pearl GTL last December. This brings the total number of awarded SMEs to eight for the period 2013-2014. In addition to its efforts to support existing local SMEs, Qatar Shell seeks to inspire young Qataris to consider entrepreneurship as a career option.




IAEA Director-General highlights importance of nuclear techniques for development

WAM + NewBase

Helping countries meet their development needs using nuclear technology was one of the main points addressed by IAEA Director-General, Yukiya Amano, in his introductory statement to the Agency's Board of Governors on Monday. He also congratulated Guyana on becoming the 163rd Member State of the IAEA, and spoke about nuclear energy, nuclear verification, technical cooperation and nuclear applications, as well as nuclear safety and security.

Amano called on Member States who had not yet done so to become party to the Amendment to the Convention on the Physical Protection of Nuclear Material. The Convention establishes measures related to the prevention, detection and punishment of offences relating to nuclear material, while the 2005 Amendment strengthens provisions for States Parties to protect nuclear facilities and material in peaceful domestic use, storage and transport.

"Entry into force of the Amendment is within our grasp," the Director-General said. "As of today, we need 17 States to become party to the Amendment to bring it into force. I encourage all States which have not yet done so to become party to the Amendment so it comes into force this year." In describing the IAEA’s work in international development, Amano underscored the impact of nuclear technology in meeting global needs.

"When I visit Member States, I see first-hand the great importance of the Agency's work to make nuclear technologies available for development. It is gratifying to observe the beneficial impact this remarkable technology has on the lives of millions of people." He highlighted the Agency's involvement in technical cooperation projects, including a new project designed to support Africa's regional capacities for responding to diseases like the Ebola Virus Disease, which broke out in 2014.

"The project will support the establishment of early warning systems and build national and regional capacity for the fast and sensitive diagnosis of zoonotic diseases," Mr Amano said. These are infectious diseases of animals, like Ebola, that can be transmitted to humans.

Much of the IAEA's assistance to Member States is supported by the IAEA nuclear applications laboratories in Seibersdorf, Austria. These laboratories are undergoing modernization under the ReNuAL project, which is now "moving into a critical period as far as extrabudgetary contributions are concerned," said Mr Amano.

Commitments of extra-budgetary financial contributions are needed by June to enable construction to begin this year, he noted. "I again appeal to all Member States to contribute generously, and I thank those that have already done so." Turning to the implementation of safeguards, Mr Amano expressed concern about the nuclear programme of the Democratic People's Republic of Korea (DPRK). He called upon the DPRK to resolve all outstanding issues, including complying fully with its obligations under relevant Security Council resolutions.




Ghana: Tullow falls on worries legal dispute could delay Ghana project Source: Reuters Tullow Oil lost over 200 million pounds ($308 million) of its market value on Monday, hit by concerns that a boundary dispute between Ivory Coast and Ghana could delay a project off the coast of West Africa.

The Africa-focused firm is developing the TEN project off the coast of Ghana, in waters over which there is a maritime boundary dispute between Ghana and Ivory Coast. Ivory Coast has made a request to the authority handling the case, the International Tribunal of the Law of the Sea (ITLOS), that Ghana suspend ongoing exploration and exploitation operations in the disputed area while the matter is considered. Tullow now faces a period of uncertainty while the tribunal makes a decision on the Ivorian request, which the company said was expected by the end of April.

Ghana dismissed fears of possible suspension of the project, saying there are no grounds for the grant of the Ivorian request. 'Government therefore says it sees no reason for any change in behaviour

unless and until the Special Chamber of the ITLOS so orders, which the Government considers highly unlikely,' a government statement said late on Monday.

'As permitted by international law, petroleum operations in the area will continue pending a speedy decision by the Special Chamber on this aspect of the case,' said the statement signed by Communications Minister Edward Omane Boamah.

Shares in Tullow lost over 6 percent of their value, making the company the top faller on Britain's bluechip index and putting them not far off a six-year low hit in January. 'This has the potential to cause serious delays to Tullow's flagship TEN project, which could significantly delay much-needed cash flow and put the balance sheet under pressure,' First Energy Capital analysts said in a note.

Tullow is due to finish work on TEN and start pumping oil by mid-2016, more than a year before ITLOS is expected to give a verdict in the maritime border dispute case. The company, which sources almost half of its total oil production in Ghana and also has smaller operations in Ivory Coast, said its legal advice was that Ghana's boundary claim had a strong case under international law.




Bells toll for Europe’s largest gas field Reuters + NewBase

Dutch church bells that for centuries have tolled to warn of floods across the low-lying countryside are sounding the alarm for a new threat: earthquakes linked to Europe’s largest natural gas field. “Money can buy a lot of things, but a building like this cannot be replaced,” said Jur Bekooy, a civil engineer with the Groningen Old Churches Association, pointing to cracks in the ceiling and walls of the 13th-century Maria Church in the village of Westerwijtwerd.

Long ignored, voices like Bekooy’s are being heard as elections loom this month and following a damning report from the independent Dutch Safety Board. It accused the government and the field’s operators, Royal Dutch Shell and Exxon Mobil Corp, of ignoring the threat of earthquakes linked to the massive Groningen gas field for years. There are now questions about the future exploitation of the field that lies under the northern province of Groningen, with implications that reach well beyond its significance for Dutch state coffers.

Lessons from Groningen, which lies far from any natural fault line, feed into a debate over the threat posed by hydraulic fracturing in the US, China, Britain and elsewhere. The world’s 10th largest gas field, Groningen is expected to supply the bulk of the Netherlands’ annual gas needs of 20bn-30bn cubic metres (bcm) until the mid-2020s. The Dutch also have contracts to sell 40-60 bcm annually to buyers in Germany, Britain, Italy, Belgium and France. In all, Groningen and a few smaller Dutch fields supply 15% of Europe’s gas consumption, providing one alternative to Russian supply. When Economic Affairs Minister Henk Kamp recently ordered production at Groningen cut by 16%, gas prices jumped across Western Europe. Groningen has been in continuous production since 1963. As far back as 1993 small quakes were definitively linked to its output. But in the late 2000s, they suddenly became more frequent and stronger.

A view of a gas production plant in Zand in Groningen . The world’s 10th largest gas field,

Groningen is expected to supply the bulk of the Netherlands’ annual gas needs of 20bn-

30bn cubic metres until the mid-2020s




With government finances under pressure from the 2008 financial crisis, production at Groningen had been ramped up from around 30 bcm in 2007 to more than 50 bcm by 2010. The money generated helped the Dutch cushion the blow of austerity policies championed by the Cabinet. As Prime Minister Mark Rutte publicly pressed southern European governments to bring their spending under control, Dutch government gas revenues of €15bn by 2013 were about the size of the national deficit.

Without gas, the deficit that year would have doubled from 2.5% to 5%, violating eurozone budget rules. But on August 16, 2012, an earthquake with its epicentre under the town of Huizinge marked the beginning of the end for aggressive output from Groningen. It registered 3.6 on the Richter scale, larger than any predicted by engineers at NAM, the joint venture field operator between Shell and Exxon. “Until the Huizinge earthquake, we had 1,100 damage claims in 20 years,” said NAM spokesman Sander van Rootselaar. “After the quake we had more than 30,000.” Earthquakes caused by gas production are usually small, unless they happen near a fault line and can trigger a larger natural quake. But in Groningen they occur close to the surface, damaging stone and brick buildings never designed to withstand shaking. When parliament gathered in The Hague to debate gas policy in early February, church bells all across Groningen province were rung in protest. NAM has so far put aside €1.2bn ($1.34bn) to compensate damage claims. More claims are rolling in, including after a 2.6 quake registered in the town of Appingedam last week. But safety is the bigger issue. In January 2013, the regulatory agency tasked with overseeing gas production warned the government of a “linear relationship” between the rate of production and the chance of earthquakes at Groningen. It said it could not rule out quakes measuring 4 or even 5 on the Richter scale, with risk to human life. The State Supervision of Mines advised production be cut “as quickly and as much as is possible and realistic.”




But that year, with the Dutch economy in recession, the Groningen field produced 53.4 bcm, its most in decades. “In 2013, when it was very cold in Europe, there was enough gas in Groningen to really run it hard,” said Thomson Reuters Point Carbon analyst Oliver Sanderson.

The earthquakes continued. As the Dutch economy showed signs of recovery, Kamp ordered production temporarily lowered, to 42.5 bcm for 2014 and 39.5 bcm for 2015. Then, in February, the Safety Board issued its finding that NAM and the government had put profits first and “failed to act with due care for the safety of citizens in Groningen”. After previewing the conclusions, Kamp on February 9 ordered Groningen production cut to 16.5 bcm for the first half of 2015, implying a cut to 33 bcm for the year. Prices in Northwest Europe surged as much as 20% in response. GasTerra, the Netherlands’ national trading company, was forced to purchase gas on the open market to meet its obligations. The immediate impact of the Kamp output cut on prices has since faded, helped by mild weather across Europe and LNG deliveries. “The underlying drivers are still bearish,” analyst Sanderson said, citing new LNG supply coming on line in Qatar and Trinidad, and prospects for more gas from Russia in the fall. “But Groningen has helped at least put a question mark over how bearish they will be,” he said. What is clear is the market is no longer counting on a return to higher production levels from the Netherlands. And without the Dutch acting as swing producers in a supply pinch, increased price volatility is likely. GasTerra has said it will sign no new contracts, nor extend current ones as they expire. With Dutch provincial elections set for March 18, parties across the political spectrum are demanding production be kept at current levels or reduced. Kamp has delayed any decision until July 1, saying he awaits more expert advice. In the journal Science last month, US scientists said a global increase in gas-related earthquakes appears mostly linked to modern exploitation techniques - not only hydraulic fracturing, but also underground waste-water disposal and injecting carbon dioxide into depleted reservoirs to improve production.




Indonisia:Lion Energy to Study Unconventional Assets Source Lion Energy + Newbase

Lion Energy has got green light from Indonesian oil and gas regulator to jointly study unconventional potential of two prospective areas in Indonesia’s North and Central Sumatra Basins.

In North Sumatra, Lion will lead a joint study covering an area of 4684km2 in the southeast of the basin. Under an agreement announced by Lion on 19 November 2014 the company will operate the study with a 55% interest; and the partners in the conventional Bohorok PSC, which partly overlaps the area of the unconventional joint study, jointly have 45% interest.

In Central Sumatra, Lion will conduct a joint study over an area of 2478km2 covering part of the Bengkalis Graben, a major oil province in the east of the basin. Lion is the operator of the study with 75%, and the conventional rights holder in the partly overlapping area, has a 25% interest.

The studies will be undertaken with assigned universities and will refine Lion’s understanding of the key unconventional plays and prospective unconventional resources in the areas. This is anticipated to take approximately 6 months to complete; and on completion the joint study participants will hold certain priority rights, including the right to match the highest bid, for any resultant unconventional production sharing contract (PSC).

Lion Energy Ltd is an ASX listed oil & gas exploration & production company focused on Indonesia, where it has been operating for over fifteen years. It has two existing conventional Production Sharing Contracts (PSC’s) – Seram and South Block A - and an early mover position in the fledgling Indonesian unconventional industry via four Joint Study Applications.




US: Gulf to Receive Flood of Oil From Midwest as Glut Grows Bloomberg + NewBase

The flood of oil inundating the U.S. Midwest is about to cascade down to the Gulf Coast. Bulging inventories at tanks in Cushing, Oklahoma, the country’s biggest storage hub and delivery point for U.S. benchmark futures, has made oil there the cheapest in more than a year compared with

crude in Louisiana.

Traders have more incentive to move crude to the Gulf as the price difference widens enough to cover the cost of transport. The Gulf Coast will be a more attractive destination as storage space in Cushing fills up and becomes more expensive, according to Genscape Inc.

“We’re reaching a rebalancing point here,” said Carl Larry, head of oil and gas for Frost & Sullivan LP in Houston. “We’ve had a huge

build of supplies in Cushing, and out of necessity it’s going to start coming to the Gulf Coast.”

West Texas Intermediate’s discount to Light Louisiana Sweet oil grew to $7.25 on Friday, the biggest since Jan. 24, 2014. It narrowed $1.10 to $6.15 on Monday in New York. WTI’s discount to Brent, the global benchmark, widened 49 cents to $10.44 a barrel at 12:10 p.m. Singapore time on Tuesday.

Uncommitted shippers would have to pay between $5.11 and $6.58 a barrel to ship on pipelines from Cushing to St. James, Louisiana, in addition to terminal fees, according to regulatory filings.

Oil inventories in Cushing have more than doubled since the beginning of October to 48.7 million barrels as of Feb. 20, according to data from the Energy Information Administration. That’s about 3.2 million barrels less than the record set in January 2013.

Contango Play

At that time, supplies built because there was only enough pipeline capacity to ship 150,000 barrels a day from Cushing to the Gulf Coast, not enough to handle surging crude supplies from




shale fields and Canada’s oil sands. Companies like Enbridge Inc. and TransCanada Corp. have since added to create more than 1.5 million barrels of daily capacity between Cushing and Texas.

The current supply build’s cause is financial, said Brian Busch, director of crude markets and business development for Genscape Inc., a Louisville, Kentucky-based energy information firm.

Global crude supply is outpacing demand, creating a market condition known as contango, in which prices now are lower than in the future. The premium for WTI futures delivered a year from now rose to $12.32 a barrel over those for nearby delivery on Feb. 26, the highest level in more than four years.

Traders have taken advantage by storing crude to help lock in profit from the future premium. As tanks fill, the remaining space is becoming more expensive. Busch said he has heard that storage owners in Cushing are asking for $1 per barrel per month now, up from 40 cents in the fall.

Rising storage costs would eat into potential profit margins from a contango play and turn traders’ attentions south.

“Is the cost of storage going up to the point where you’ve taken storage economics out of the equation?” Busch asked. “When that happens, then all the Cushing barrels are going to naturally flow to the Gulf Coast.”




Oil Price Drop Special Coverage

Oil Price falls and Oil market recoils on oversupply AFP + NewBase

Global oil prices fell on Monday, after bumper gains before the weekend, as many traders took profits and eyed plentiful world crude supplies, analysts said. European benchmark Brent North Sea crude for April delivery dropped $1.26 to $61.32 a barrel in London early afternoon deals.

New York’s West Texas Intermediate (WTI) for April shed 90 cents to $48.86 a barrel. Crude futures had rebounded sharply Friday at the end of a volatile trading week. WTI had advanced $1.59 while Brent gained a hefty $2.53. “Oil prices came under renewed pressure,” said Sucden analyst Myrto Sokou on Monday.

“Crude oil inventories continue to remain at fairly high levels following ongoing builds of crude stocks last week.” Oil has lost about 50 per cent of its value since June, largely due to a global supply glut partially caused by surging US shale production.

“Although there is still a global supply glut, oil prices are on a general increasing trend especially with the falling rig count numbers indicating that US shale is responding to low prices,” Ken Hasegawa, energy trading manager at Newedge Group in Tokyo, told AFP.

The weekly Baker Hughes US drilling rig count showed the number of rigs in operation fell by 33 to 986 in the week to February 27. The count is down 39 per cent since October, according to Bloomberg News.

Analysts said dealers will next be scrutinising a slew of US economic data to be released later Monday for clues on demand prospects in the world’s biggest crude consumer.




Oil stayed in the red on Monday on supply concerns despite partly recovering from earlier losses after a private business survey showed an improvement in China's manufacturing sector in February.

Brent and US crude futures fell about 1 percent early on Monday, after their first monthly rise since June, as surplus oil supply outweighed Beijing's efforts to support the world's second-largest economy.

"The key drivers over the next few months are going to come from supply dynamics more than demand dynamics," said Ric Spooner, chief analyst at CMC Markets in Sydney.

"The market is moving into a holding pattern while waiting to see more evidence that production is going to be reduced."

Brent, US crude down

Brent crude was down 38 cents at $62.20 a barrel by 0645 GMT after an 18 percent gain in February, the largest monthly rise since May 2009. US crude dropped 38 cents to $49.38 a barrel after rising 3 percent in February.

Manufacturing activity in China edged up to a seven-month high in February, HSBC's survey showed. On Saturday, the Chinese central bank cut key interest rates to support its economy.

"That should see a little bit more risk appetite coming back into the market over the next couple of hours," said Ben Le Brun, a market analyst at OptionsXpress in Sydney.

"We've seen a bottom and it's just how much prices will run up." Analysts said in a Reuters survey that oil prices have probably touched a bottom and should recover in the second half of 2015 as the collapse in the market over the last year begins to curb production.

Iraq's oil minister, Adel Abdel Mehdi, said on Sunday he expected to see a barrel of crude selling at around $65.

Supply disruption among members of the Organization of the Petroleum Exporting Countries (OPEC) in February also supported Brent, stretching its premium over US crude to the widest since January 2014 on Friday at $13 a barrel.

The spread narrowed on Monday following a recovery in Libya's oil production to more than 400,000 barrels per day (bpd). Still, technical charts pointed to a further widening of the spread to $16.98 in the next three months, Reuters market analyst Wang Tao said.

A rebound in prices in February may have slowed production cuts in the United States. The number of oil rigs fell 33 last week to 986, the smallest drop since the beginning of the year, a survey showed.




India's Iran oil imports fall to lowest since July 2013

India slashed its Iranian oil imports in February to a 1-1/2-year low to keep annual volumes from Tehran near the previous fiscal year's levels and within the limits allowed under a deal aimed at curtailing the OPEC nation's nuclear programme.

India, Iran's top client after China, shipped in about 102,200 barrels per day (bpd) of crude and condensate from Tehran in February, the lowest since July 2013, and down 63 percent from January and 62 percent from a year ago, according to tanker arrival data from trade sources and ship tracking services on the Thomson Reuters terminal.

The cuts follow smaller but still sharp reductions in January. The two months of lower shipments came after New Delhi instructed Mangalore Refinery and Petrochemicals Ltd, Essar Oil and Indian Oil Corp to "virtually halt" Iranian oil imports in February-March.

Refiners in India had raised imports during April-December - the first nine months of this fiscal year - by more than 40 percent, leading U.S. authorities to raise an alarm with India's foreign ministry ahead of President Barack Obama's visit to New Delhi in January, a source involved in the talks said.

New Delhi wants to keep its average oil imports from Iran at 210,000-220,000 bpd or about 11 million tonnes in the year to March 31, 2015, to meet the terms of a temporary deal that asks buyer nations to retain purchases from Tehran at 2013 levels.

The deal brokered by six world powers and Iran in November 2013 eased some sanctions on Tehran in exchange for curbs to the Islamic republic's nuclear programme, capping its oil exports at around 1 million-1.1 million bpd.

The powers - the United States, Russia, China, Britain, France and Germany - are now working with Iran towards a final agreement on sanctions and its disputed uranium enrichment activities, aiming to reach a political understanding by the end of March and a lasting agreement by a June 30 deadline. Two earlier deadlines have been missed.

The West is worried that Iran's nuclear activities are aimed at making a weapon. Tehran says its uranium enrichment

programme is only for power generation. Over April-February India's oil imports from Iran averaged/sabout 240,000 bpd, or nearly 11 million tonnes, leaving little room for further imports in March.

The April-February imports from Iran were up 16 percent compared with 206,800 bpd imported in the same period of the previous fiscal year, the data showed. "So far there are no cargoes booked from Iran or Dalian in China for voyage to India (for March arrivals)," a trade source said. Iran has leased oil storage at Dalian in China from which it can supply regional clients.

MRPL had to buy additional oil from Kuwait and Saudi Arabia for February and March to make up for the reduced Iranian oil imports, said an industry source. MRPL has also booked Iraq's Basra light for March loading from spot markets to replace crude from Iran.




Oil price slump puts pressure on banking in oil-producing states SG/Agencies + NewBase The significant drop in oil prices could lead to higher credit losses and lower liquidity for some banking systems in oil-producing countries, Standard & Poor's Ratings Services (S&P) said. In a report entitled "How Will Lower Oil Prices Affect Banks in 10 Oil-Exporting Countries?" released Monday, S&P credit analyst Mohamed Damak said "while our base-case scenario assumes this drop will not significantly affect the performance of oil-exporting countries' banking systems, the systems of countries with low fiscal buffers, significant economic imbalances, and high dependence on oil-related bank deposits may come under pressure." Following the significant drop in oil prices over the past few months, reaching around $55 per barrel (/bbl) for Brent crude as of mid-February compared with more than $100/bbl a year ago, S&P has revised its price assumptions. It now expect Brent's price to stabilize around $55/bbl in 2015 and increase slightly to around $65/bbl in 2016. In light of this decline, the report looks at the banking systems in 10 oil-exporting countries, namely six Gulf Cooperation Council countries (Bahrain, Kuwait, Oman, Qatar, Saudi Arabia, and the United Arab Emirates), Brunei, Kazakhstan, Malaysia, and Nigeria. It selected these countries based on the oil sector's significant contribution to their exports, economies, and government budgets. Oil price decline could affect these countries' banking systems either directly through banks' exposure to and deposits from oil- or government-related companies or indirectly through lower investments and economic growth, which may weigh on banks' asset quality and profitability indicators. S&P expects Malaysian banks to show resilience because it thinks the government is unlikely to significantly cut its investments but will instead reduce operating expenses. The lower economic growth it expect for 2015 in Malaysia (to 4.6 percent in 2015 from six percent in 2014) will have some impact on banking system earnings through reduced new lending. However, the rating agency said it expects the overall risk to remain in check. The significant decline, the rating agency forecast in Brunei's real GDP growth (to -4.0 per cent in 2015 from 0 per cent in 2014) is underpinned by a very strong dependency on the oil and gas sector. It expects GDP growth to rebound in 2016, assuming an increase in oil prices. S&P expects banks' return on equity in most of these countries to drop in 2015. On a positive note, however, most of these banking systems display adequate profitability, with the exception of Kazakhstan, where legacy asset quality problems from the real estate correction that started in 2007 pressure profitability. Despite strained liquidity, lower growth and relatively good funding profiles will temper the pressure. S&P's believes low oil prices will result in decreased government revenues and exports, and will hamper banking systems' liquidity. It said government deposits account for 28 percent on average of total bank deposits for these 10 countries and range from three-quarters of total deposits for Brunei as of Sept. 30, 2014, to around 7 percent for Malaysia as of year-end 2014.




Lower deposit growth may weaken the funding profile of the 10 systems we looked at and push some of the banks to increase their reliance on external debt. However, the relatively good funding profiles of these systems and the expected lower growth on the asset side somewhat mitigate this risk.

Twin deficits: GCC slowdown seen amid flat hydrocarbons and softer non-oil sectors Gulf Times + Newbase

The Gulf economies are expected to grow slower this year and show twin deficits on flattish

hydrocarbons and softer non-oil sector, according to Bank of America Merrill Lynch (BofAML).

“The GCC (Gulf Co-operation Council) macro story is likely to have peaked if oil prices stay low for

long. We expect twin deficits and weaker real GDP growth and softer non-hydrocarbon sector

growth on fiscal policy prudence,” BofAML said.

The global bank has forecast the real GDP (gross domestic product) growth of 2.8% in 2015 for the GCC, slowing from 4% in 2014 on account of flattish hydrocarbon production and softer non-hydrocarbon sector activity. In 2015, Saudi Arabia is expected to grow at 2.5%, the UAE at 2.9% and Qatar at 4.8%, it said. On the twin deficits, BofAML estimated the aggregate fiscal deficit to be 10.1% of GDP and current account to be 3% of GDP. Expecting capital expenditures to bear the brunt of the adjustment, based on historical experience, it said “we would expect GCC governments to attempt to maintain current spending programs. This should slow down investment growth and support consumption on a relative basis, in our view.” The bank kept the external debt of Dubai, Abu Dhabi and Qatar at market weight as it found Dubai to have “tight spreads” given the high leverage and potential refinancing challenges. “Abu Dhabi and Qatar’s savings cushion sovereign creditworthiness,” it said, adding “we remain underweight on Bahrain external debt as lower oil prices increase Bahrain’s fiscal strains given the still elevated fiscal breakeven oil price and with rating downgrades likely. Expecting Dubai to “soft land”, BofAML said tightening regional liquidity would make Dubai refinancing more challenging, but the imbalances are less pronounced than pre-2008. “The pace of growth has been more modest and the banking sector is better capitalised, more liquid, and improved its net external position versus Bank for International Settlement banks, while credit trends have been much more contained than pre-2008,” it said. However, the bank cautioned that leverage still remains high and the external sector is exposed to a slowdown.“As for 2015 refinancing, the Dubai World deal provides breathing room, and we do not view limitless debt difficulties as systemic. 2016 looks to be more challenging with roughly $6bn in restructured debt coming due, including at the Dubai Holding level,” it said.




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Khaled Malallah Al Awadi, Energy Consultant MS & BS Mechanical Engineering (HON), USA Emarat member since 1990 ASME member since 1995 Hawk Energy member 2010

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Khaled Al Awadi is a UAE National with a total of 25 years of experience in the Oil & Gas sector. Currently working as Technical Affairs Specialist for Emirates General Petroleum Corp. “Emarat“ with external voluntary Energy consultation for the GCC area via Hawk Energy Service as a UAE operations base , Most of the experience were spent as the Gas Operations Manager in Emarat , responsible for Emarat Gas Pipeline Network Facility & gas compressor stations . Through the years , he has developed great

experiences in the designing & constructing of gas pipelines, gas metering & regulating stations and in the engineering of supply routes. Many years were spent drafting, & compiling gas transportation , operation & maintenance agreements along with many MOUs for the local authorities. He has become a reference for many of the Oil & Gas Conferences held in the UAE and Energy program broadcasted internationally , via GCC leading satellite Channels.

NewBase : For discussion or further details on the news above you may contact us on +971504822502 , Dubai , UAE

NewBase 03 March 2015 K. Al Awadi





