Middle East Business News Review – 11 November

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

ADNOC to retain current UAE oil concession structure

Abu Dhabi National Oil Co (ADNOC) director general announced on Sunday the company will present the current structure of its oil and gas concessions in the United Arab Emirates to the Supreme Petroleum Council of Abu Dhabi by early next year at the latest.

According to the concession system, oil and gas producers are allowed to acquire an equity in hydrocarbon resources of the UAE. The first concession renewal will take place in 2014.

Abu Dhabi currently produces about 1 million barrels per day from its offshore fields, more than 40% of its total output.

BP’s CEO hopeful over UAE oil bidding

Oil major BP Plc, shut out of pre-qualification bidding to develop Abu Dhabi’s largest onshore oil fields, is hopeful it can be included in the process and is waiting to hear soon on the issue, Chief Executive Bob Dudley said on Sunday.

“I’m positive about it … I’m optimistic that cooperation will go on for a long time,” Dudley said on the sidelines of an oil and gas event in the UAE capital, adding that he hopes to hear about the concessions “in the next week or so”.

Industry sources had told Reuters in August that BP, which holds a 9.5 percent stake in the ADCO concession that is coming up for renewal in 2014, would not be allowed to participate in the pre-qualification process due to the United Arab Emirates’ irritation over UK policies.

Saudi Arabia happy with current oil price – minister

The global oil market is in a good shape and Saudi Arabia is happy with the current oil price, Saudi Oil Minister Ali al-Naimi said on Sunday, expressing satisfaction over a Gulf Arab effort which kept prices in check.

Sanctions imposed by the United States and Europe against Iran over its disputed nuclear programme had threatened to backfire by pushing up oil prices, hampering the global economy.

Other fuel options may dampen fossil fuel demand in 2013- Saudi Oil Minister

Other non-conventional fuel options, such as shale oil, may put pressure on demand for fossil fuels next year, Saudi Arabia’s Oil Minister Ali al-Naimi said on Sunday.

Naimi, speaking on the sidelines of an oil and gas event in the UAE capital, said shale oil, wind, ethanol, solar and nuclear energy would all have an impact.

Iran GDP shrinking due to currency crisis – IMF

The International Monetary Fund’s Middle East chief said on Sunday Iran’s economy may contract more than expected earlier this year because of weakness in the exchange rate.

“The most recent round of currency depreciation and the associated uncertainty will likely have a further negative impact on economic outcomes in the coming year,” Masood Ahmed, an economist told Bloomberg in an interview on Sunday, while adding that a contraction of 0.9% will take place this year based on data from before the currency declined.

The Iranian rial has lost about 40% against the dollar since August. Many economists rejected the central bank’s 24% inflation rate for September and insist it may be three times higher than the official rate. Iran has taken serious efforts to combat the fall of rial, including the raising of interest rates on deposits and opening of an exchange centre to stabilise the currency market.

IMF warns Arab Spring economies of slow growth in 2013

The International Monetary Fund issued a report on Sunday which said Arab Spring will have an impact on most Middle Eastern and North African economies which are currently grappling with high inflation and rising unemployment.

The Paris-based global lender said in its twice-yearly outlook for the Middle East and North Africa that economic growth and stability depended on improvement in political situation in Egypt, Jordan, Morocco, Libya, Tunisia and Yemen during 2013.

However, the report warned that weakness across the eurozone will affect the recovery of Arab Spring states where exports are shrinking and imports bills are piling up.

Egypt plans new deficit-reduction steps – media

Egypt’s government has proposed tax changes and reducing energy subsidies to cut a budget deficit running at about 11 percent of gross domestic product, Egyptian newspapers reported.

The austerity steps, certain to be unpopular, are part of an economic programme drawn up in part to help convince the International Monetary Fund that Egypt is serious about economic reform.

Egypt inflation up indicating rise in domestic demand

Egypt’s urban consumer inflation rose to 6.7 percent in the 12 months to October 2012, Egypt’s state statistics agency reported on Sunday, reflecting a modest uptick in domestic demand.

Urban inflation, the most closely watched measure of prices, was 6.2 percent in the year to September.

The rise in prices of non-food items accelerated in October. Investment bank Beltone Financial noted the rise in inflation was in line with its forecast that inflation would climb till the end of the financial year in June 2013.

EgyptAir to let crew wear Islamic headscarves

EgyptAir is allowing its stewardesses to wear Islamic headscarves if they wish on flights to Arab states and will expand the practice to the rest of the network, an official said on Sunday, ending a restriction imposed in Hosni Mubarak’s era.

It follows a similar move to allow presenters on state television’s flagship news broadcasts to wear the hijab, which covers the hair but not the face.

Although many Egyptian Muslim women wear the scarves, Mubarak’s administration had sought to restrict its usage in places such as on state television and the national carrier which were seen as the public face of Egypt.

Algeria to go ahead with controversial shale gas exploration

Algeria announced on Sunday it will go ahead with plans to develop its shale gas reserves which are thought to be around 600 trillion cubic feet (17 trillion cubic metres), around four times greater than its current known gas reserves. Environmentalists, citing long-term ecological damage, denounced the move.

According to the BP Statistical Review of Energy, Algeria was the world’s eighth-largest natural gas producer in 2011, but a surge in domestic consumption is denting its exports. Official forecasts suggest local demand will eat up all the country’s production by 2019.

Algeria remains almost totally dependant on hydrocarbons which account for 90% of its exports. The country’s lawmakers are working on introducing a new hydrocarbons bill in the coming weeks which will encourage the exploration of unconventional gas and oil resources.

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