Middle East Business News Review – 27 June

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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:

Dubai Drydocks World eyeing Asia joint venture

Dubai’s shipbuilder Drydocks World signed an agreement Kuok Group to set up a joint venture for its Asian operations. The new company will be named ‘DDW-PaxOcean Asia’ and be based in Singapore, reports said.

Earlier, Reuters quoted two sources as saying on Tuesday that a company linked to Malaysian billionaire Robert Kuok is about to reach a deal to buy a majority stake in the Southeast Asia operation of the Dubai shipbuilder, Drydocks, which is the shipbuilding and repair arm of Dubai World. The company is restructuring $2.2 billion of debt and sought insolvency protection in April. Shipping analysts are expecting it to announce a “global strategic alliance agreement” in Dubai on Wednesday.

UAE local businesses ponder premium credit cards refusal after usage fees hike

Local businesses in the UAE are rallying support to put pressure on credit cards such as Platinum, Titanium, Black and Infinite in retaliation to a rise in commission fees from Network International, Visa, MasterCard and banks. The current commission figure varies between businesses but the average is believed to be around 1.5%, equating to a rise of 0.75%.

Network International, a regional payments solution provider, has issued a letter warning businesses that fees on premium credit card payments will rise to 2.25% as of 1st July.

Holy Makkah witnesses rise in luxury accommodation for pilgrims

About 3 million pilgrims will arrive in Makkah for the annual Hajj pilgrimage in October, many of them coming from a wealthy background. To cater to their need for luxury accommodation, hotel investment companies, including InterContinental Hotels Group Plc, Hyatt Hotels Corp. and Starwood Hotels & Resorts Worldwide Inc., are lining up in Saudi Arabia and offering an exclusive life-time experience.

Such is the rush that Hilton Worldwide Inc., owned by Blackstone Group LP, announced plans to more than double the number of hotels it operates in the country to 14, including six in Makkah. UK-based InterContinental is also working to increase its room numbers by about 50% to 7,300 in the next three to five years. Hyatt, which opened its first hotel in the country in 2009, is eyeing to have eight more in coming five years.

Embattled Tunisia president fires central bank governor over policy issues

The President of Tunisia Moncef Marzouki announced on Wednesday the removal of Mustapha Kamel Nabli from his position as the Governor of the Central Bank in line with Article 26 of the Interim Law of Public Authorities from 16 December, 2011. The National Constituent Assembly will now have 15 days to ratify Nabli’s removal.

Reports coming from Tunis said the central bank governor was sacked due to disagreements over economic policy. Many analysts believe the move could alarm investors already jittery after last year’s revolution.

Venezuela OPEC oil band restoration proposal rebuffed

Venezuela’s proposal to set an oil price band of $80 to $120 a barrel came under immediate scrutiny from a Middle East OPEC official who dismissed the idea as a non-starter on Wednesday. Earlier, Energy Minister Rafael Ramirez urged the oil cartel to restore a price control policy that was tried 12 years ago by adjusting supply.

The Organisation of the Petroleum Exporting Countries (OPEC) in 2000 adopted a $22 to $28 price band, requiring its members to cut or raise output in an effort to keep prices in that range for an OPEC basket of crudes. However, differences over quotas and increased demand from China rendered the policy unworkable and pushed prices irreversibly through $30 in 2004.

Dubai property market region’s most transparent – study

Dubai has been ranked the Middle East and North Africa’s most transparent real estate market, but the region continues to lag behind others globally, according to a new report by Jones Lang LaSalle.

Transparency levels have increased in 80 percent of the region over the last two years, with the Lebanese real estate market showing the greatest improvement, the consultant said in its 2012 global real estate transparency index.

Arabtec-TAV group wins $2.9 billion Abu Dhabi airport deal

A consortium of Arabtec Holding ARTC.DU that includes Greek and Turkish firms on Wednesday won a 10.8 billion dirhams ($2.94 billion) contract from the Abu Dhabi government to build a mid-field terminal at the cash-rich emirate’s airport.

The contract was signed with the group that includes Turkey’s TAV Insaat, Athens-based Consolidated Contractors Co and Dubai’s Arabtec, a statement from operator Abu Dhabi Airports Co (ADAC) said.

Construction of the complex will begin in the third quarter and is expected to be concluded in 2017.

Qatar flexes muscle in shock Glencore move

Qatar Holding’s shock rebuff of Glencore’s (GLEN.L) offer in its $30 billion takeover bid for miner Xstrata (XTA.L) indicates a new, muscular stance by the sovereign fund which had long been content to be the quiet investor in its big-name portfolio.

Late Tuesday, Qatar, Xstrata’s second largest shareholder and a potential kingmaker for the deal, said Glencore should pay 3.25 of its shares per Xstrata share, rather than the 2.8 on offer.

The 11th hour move will make it difficult for Glencore and Xstrata to push the merger through on current terms, several sources close to the deal said, leaving only until Thursday evening for Glencore to sweeten the deal or be forced to delay shareholder meetings scheduled for mid-July.

Bahrain Investcorp signs $504 million debt refinancing deal: sources

Bahrain-based investment company Investcorp INVB.BH has signed up to a $504 million-equivalent loan aimed at refinancing debt due in 2013, with the final amount potentially being increased in the coming weeks as more banks join the lending syndicate, sources said on Wednesday.

The loan heads off any refinancing risk next year for the firm, which once owned luxury brands Gucci (GUCG.PK) and Tiffany & Co (TIF.N) but like other private equity houses in the Gulf has been hit in more recent times by unfavorable market conditions.

Investcorp wanted to secure funds ahead of its financial year-end on June 30 so the loan could be included in its full-year results, two banking sources said.

Iran acknowledges oil exports down 20-30%

Iran acknowledged for the first time on Wednesday that its oil exports have fallen sharply, down 20-30 percent from normal volumes of 2.2 million barrels daily.

A National Iranian Oil Company official in Moscow denied exports had been hit by sanctions against Iran’s nuclear programme, saying that oilfields were under maintenance and crude production was being diverted for refining.

But the admission that exports have fallen substantially is a change of tack from Tehran which until now has denied that the U.S. and European measures have had much or any impact.

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