Middle East Business News Review – 10 October

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Today’s top business and economy news from the Middle East and North Africa:

UAE bank giants lead China expansion march

Two of the UAE’s largest banks are leading an expansion drive into China as trade between the two countries continues its rapid growth. The National Bank of Abu Dhabi (NBAD) and Emirates NBD have both launched their first representative offices in China.

NBAD, which  has the largest international presence among all UAE banks, with more than 50 overseas business units located in 14 countries, said it has set up operations in Shanghai.

Emirates NBD said it has set up a Beijing office to underline its “commitment to businesses in China and the GCC countries that seek to expand their footprint across all markets where Emirates NBD has operations”.

flydubai, US bank ink deal for $117m loan

The Export-Import Bank of the United States said on Wednesday it has authorised a $117.5m loan guarantee supporting exports of Boeing aircraft to Dubai’s flydubai.

Ex-Im Bank said it is guaranteeing a 12-year loan from the Private Export Funding Corp. It is the Bank’s first authorisation supporting aircraft exports to Dubai’s low-cost carrier.

Fred P Hochberg, Ex-Im Bank chairman and president, said: “This financing is a first for Ex-Im Bank for this successful new carrier in the Middle East, and this export is a great opportunity for Boeing to expand its market reach in the UAE.

Ban on Iran’s natural gas exports to have limited intl impact – US agency report

A US report due to be released next week would suggest that a reduction in natural gas exports from Iran would not have much impact on world energy markets but could hurt Turkey and part of Azerbaijan.

The Obama administration is going to use the report to broaden sanctions on Iran over its controversial nuclear programme to include sales of natural gas.

Jordan awards power plant contract to Finnish-Korean consortium

A consortium consisting of Finnish giant Wärtsilä and Lotte Engineering & Construction of South Korea, has been awarded a contract by Amman Asia Electric Power Company to supply a 573 MW power plant to Jordan. The total value of the EPC (Engineering, Procurement, Construction) contract is said to be worth $552 million, of which Wärtsilä’s share will be $334 million.

Amman Asia Electric Power is owned by Korea Electric Power Corporation, Mitsubishi Corporation and Wärtsilä Corporation. When completed, the power plant will supply electricity to NEPCO to be fed to the country’s national grid.

Once completed, the facility will be the largest trifuel plant in the world and will be capable of running on natural gas, heavy fuel oil and light fuel oil. Initially powered by heavy fuel oil, it will switch to natural gas once the infrastructure is in place.

Middle East merger and acquisition activity up by more than 50% – report

A Thomson Reuters report on Tuesday said merger and acquisition activity in the Middle East during the first nine months of 2012 stood at $15.7 billion, more than double the activity seen during the same period in 2011 ($7.5 billion), and the strongest first nine months since 2008.

According to Russell Haworth, managing director, Middle East and North Africa at Thomson Reuters: “In respect to M&A activity during the first nine months of 2012, telecoms was the most targeted industry in the Middle East with $6.4 billion. The United Arab Emirates was the most active Middle Eastern country with $4 billion of the total M&A activity so far during 2012.”

He added that investment banking has seen strong activity across Middle Eastern markets during the third quarter of 2012.

Vivendi selling Maroc Telecom stakes – report

France’s Vivendi SA is selling its stakes in Maroc Telecom as part of the debt reduction plan by the Paris-based telecoms giant, reports suggested on Wednesday.

According to the North Africa Post, the sale is estimated to generate more than $5billion. Vivendi has contacted two potential investment banks but fears of political interference might have repercussions on the deal, a source revealed. Vivendi accounts for 53% of Maroc Telecom and the Moroccan government owns 30%, making it the second-largest shareholder.

Another source close the the Moroccan government hinted that meetings with potential buyers are being arranged before the introduction of interested buyers to the King. The source added that the government wants to be involved in the discussions to assure that investment guarantees will be part of the deal. “The two contacted banks by Vivendi will give their feedback to the company in November but it’s reported that they prefer a cash payment for their stakes,” the North Africa Post report said.

Iraq eyes 10 million bpd oil target despite IEA report

Iraq insisted on Wednesday its oil output could reach up to 10 million barrels per day by 2020, far higher than a prediction from the International Energy Agency which outlined several risks.

The latest forecast from Iraq’s deputy prime minister responsible for energy affairs, Hussein al-Shahristani, came as the IEA released its Iraq Energy Outlook report, forecasting Iraq’s oil production to increase to 6.1 mbpd by the end of the decade but warning of factors impeding output growth.

Saudi Arabia set to enforce shisha ban

Smokers of the hubble-bubble water pipe have until Saturday to indulge their fondness for sweet flavoured tobacco in Jeddah’s cafes as the Saudi city prepares to enforce a public ban on the habit.

A law against smoking the pipes, known in Arabic as shisha, in public places has been in place for years in some other Saudi cities, but it is only now being implemented in Jeddah, which is known as more socially liberal than the capital Riyadh.

English-language daily Saudi Gazette reported on Wednesday that more than 35 businessmen with investments in restaurants and cafes had complained to the city’s chamber of commerce about the ban, demanding it protect their interests.

Oman considers major oil storage outside Hormuz strait

Oman is considering building a facility to store up to 200 million barrels of crude safely outside the Strait of Hormuz, the head of a state-run oil investment company said on Wednesday.

The proposed facility would be larger than any other tank farm in the world. Working crude storage capacity at Cushing in the United States is around 62 million barrels.

Iran has repeatedly threatened to block the narrow shipping lanes between Oman and Iran through which over a third of all sea-borne traded oil is shipped each day, as tensions with the West over Tehran’s nuclear plans have intensified.

Mega EADS-BAE merger collapses

A merger to create the biggest aerospace group in the world between EADS and BAE Systems collapsed on Wednesday, with analysts saying Germany shot it down from fear of being sidelined.

The two groups issued a statement announcing failure, and a source close to the talks said they fell through because of opposition from Germany. It had looked late on Tuesday as if France had opened the way for an extension of the talks, with sources saying it had agreed to limit its shareholding, with France and Germany having equal shares making 18% together.

But analysts said Germany feared that if the deal to create a giant worth $45 billion (35 billion euros) went ahead, the power behind the civilian arm of the group would shift wholly to Toulouse in southern France where airliner maker Airbus is based. And Berlin feared that the military operations would be run from London where BAE Systems is based.

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