Middle East Business News Review – 2 July

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Middle East Business News Review – A look at today’s important financial news and business updates from the Gulf, Levant and North Africa:

Istithmar to turn Queen Elizabeth II ship into luxury hotel

DP World Chairman Sultan Ahmed Bin Sulayem on Monday announced Istithmar World PJSC will transform its vessel Queen Elizabeth II into a 300-room luxury hotel that will be operational in 18 months.

While speaking to reporters, the top Dubai shipping giant official reckoned many banks will jump to finance it, However, he said that DP World, owner and operator of Port Rashid in the emirate, nor its sister company Istithmar will finance the project. “This will not affect the financial commitments of Istihmar. There are plenty of resources available.”

The more than 40-year-old vessel was bought by government-owned Istithmar, part of the Dubai World group, in June 2007 from Cunard Line in the UK for $100 million. The company wants to turn it into a luxury hotel.

Abu Dhabi tourism maintains momentum in May

According to tourism data released on Monday, hotels and hotel apartments throughout Abu Dhabi continued their upward trend, receiving 12% more guests in May compared to same month last year.

The Abu Dhabi Tourism & Culture Authority’s monthly figures suggest some 192,374 guests stayed in tourist accommodations in May, accounting for 542,567 guest nights – a rise of 7% on May 2011. The report also disclosed that total hotel revenue rose 3% to AED360 million ($98 million).

Food and beverage sector registered a month-on-month rise of 14% and accounted for AED151.3 million ($41.2 million), while room revenue over the same period decreased 4% to AED167.32million ($$45.5 million).

UAE non-oil foreign trade registers 23% growth in 2011

Figures released by the top UAE statistics bureau said non-oil foreign trade grew 23% to AED 927.6 billion ($252.55bn) from AED 754.4 billion ($205.39bn) in 2010.

The National Bureau of Statistics (NBS) report noted imports surged to AED 602.8bn ($164.12bn) in 2011 from AED 485.4bn ($132.5bn) in 2010, registering an increase of 24.2%. Exports, on the other hand, witnessed a growth of 37.2% from AED 83.1bn ($22.6bn) in 2010 to AED 114bn ($31.04bn) in 2011. Re-exports soared 13.4% to AED 210.8bn ($57.39bn) in 2011 from AED 185.9bn ($50.61bn) in 2010.

Iraq revenues hit by dropping global oil prices

An Iraqi government spokesman said on Monday oil revenues dropped by 17.6% from May to June due to a decline in prices in the international market and soaring domestic needs. Oil revenues make up about 95% of the fragile government’s budget.

The country’s oil production levels are yet to reach the pre-US invasion. Some analysts believe Baghdad is expected to overtake Iran as the second-largest exporter in OPEC soon, thanks to the new EU sanctions took effect on Sunday.

Oil Ministry spokesman Assem Jihad said Iraq earned $6.453 billion in June, with an achieved average price of $90 per barrel. May’s revenues stood at $7.831 billion with an average price of $103.039 per barrel. Oil exports yielded $45.269 billion in the first half of 2012, including June’s figures.

EU sanctions on Iran risk oil price hike

Iran faces oil export loses after the EU sanctions entered into full force on Sunday, pushing up oil prices as some exemptions on contracts and insurance ended. There is also pressure on the Gulf nation to stop the nuclear-enrichment program.

The sanctions now restrict the supply of Iran after supply has been curbed from Libya and North Sea fields. Gordon Kwan, head of regional energy research at Mirae Asset Securities based in Hong Kong, expected Brent oil prices to soar in lieu of the sanctions. “The EU insurance ban on tankers carrying Iranian crude could drive up demand for Brent and Dubai crude,” he said.

Last month, the Brent oil prices fell below $90 which is now expected to rebound with the Iran embargo in effect and oil refinery workers on strike in Norway.

Dubai Airport passengers rise 10% in May

Passenger numbers at Dubai International Airport increased 10.4 percent year on year in May, its operator said on Monday.

Dubai Airports said passenger traffic at the world’s fourth busiest hub, reached 4,388,614 in May compared to 3,976,633 passengers in the same month in 2011.

In the first five months of the year, traffic reached 23.2 million, an increase of 13.2 percent over the 20.5 million using the airport during the corresponding period in 2011.

Etihad Airways smashes passenger record

Abu Dhabi-based Etihad Airways has set a new record for carrying passengers, with 158,500 travelling on the carrier between June 26 and June 30, an average of 31,700 per day.

“Etihad Airways continues to set records for passenger bookings and passenger numbers, and we expect this to continue throughout the northern hemisphere peak summer season in 2012,” said James Hogan, CEO.

To prepare for the summer peak travel period, the airline has hired 60 additional airport staff to take up roles in customer service.

Deleting zeros needs further deliberations, says Iraqi Central Bank

The Iraqi Central Bank (ICB) stated today that the deletion of zeros from the currency still needs further deliberations with relevant institutions.

The ICB added that it is seeking to make the Iraqi currency stronger and more stable through new mechanisms with regard to dealing with banks for hard currency.

Egypt allocates $850m for new cities infrastructure in 2013

The Egyptian finance ministry has decided to allocate EGP 5 billion (USD 850 million) for infrastructure projects in new cites in Egypt in 2013, a senior official in the New Urban Communities Authority (NUCA) told Zawya.

The housing ministry has targeted the completion of infrastructure including water desalination plants in New Cairo, Sohag and Akhmim, for which NUCA has allocated the EGP 5 billion from the budget for the fiscal year 2012-2013, which began on 1 July.

Jordanian tourism recovering

Instability and revolution in the Middle East have caused a decline in tourism throughout the MENA region. Although Jordan’s monarchy remained in place throughout the Arab Spring, it too saw the effects of turmoil in other countries, with declining tourism numbers for 2011. The country is now working to improve tourism in 2012 by taking advantage of the expected rise in global tourism.

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