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Middle East & African Monitor - 21 December 2016

  • Obama blocks Arctic oil exploration – US crude inventories fall
  • Libya’s rival governments debate access to offshore assets
  • Egyptian Pound weakens – World Bank approves 2nd loan tranche
  • Three Qatari banks begin merger talks
  • Ghana to miss deficit reduction target
  • Nigeria plans to shut Abuja airport for 6 weeks
  • Saudi Arabia may raise retail fuel prices again
  • Warba plans US$250 mio SUKUK issue

REGIONAL COMMENTARY

Obama blocks Arctic oil exploration – US crude inventories fall
President Obama has used a 1953 land law to effectively block oil and gas firms from drilling along the country’s North Atlantic coast and offshore Alaska for an indefinite period, in a joint-move with Canada and just ahead of an incoming Trump administration which has indicated its strong desire to open up previously protected areas of the US to energy firms. Of course President-elect Trump may attempt to reverse this action once he takes office but that would likely prove to be difficult as the law does not provide for such a withdrawal. The White House issued a statement on the decision which read; “These actions protect a sensitive and unique ecosystem that is unlike any other region on earth. They reflect the scientific assessment that, even with the high safety standards that both our countries have put in place, the risks of an oil spill in this region are significant and our ability to clean up from a spill in the region’s harsh conditions is limited. By contrast, it would take decades to fully develop the production infrastructure necessary for any large-scale oil and gas leasing production in the region at a time when we need to continue to move decisively away from fossil fuels. In 2015, just 0.1% of US federal offshore crude production came from the Arctic and Department of Interior analysis shows that, at current oil prices, significant production in the Arctic will not occur. That’s why looking forward, we must continue to focus on economic empowerment for Arctic communities beyond this one sector.” Meanwhile oil prices edged up overnight after the API estimated US crude inventories to have fallen by as much as 4.15 mio barrels last week, although we still await the EIA’s figures which will be released later today.  

Libya’s rival governments debate access to offshore assets
A boycotting member of Libya’s Presidential Council has reportedly called on both local and international institutions to ignore any decisions enacted by the Tripoli based entity, unless these are also endorsed by Tobruk’s parliament, adding that the Central Bank should continue to prevent the council from accessing the country’s frozen offshore assets and those belonging to the sovereign wealth fund. “We shouldn’t allow a government that is not legitimate and has not been approved by the House of Representatives to use Libyan money without having an approved budget for the state of Libya,” Omar al Aswad was quoted as saying by the Libyan Express newspaper yesterday. The Presidential Council was set-up following the signing of a UN sponsored political agreement at the end of last year, with a mandate to help bring all sides in Libya together and form a ‘Government of National Accord.’ This process however has been beset with problems since the start, as the two rival governments continue to argue over the make-up of the GNA and its authority.

Egyptian Pound weakens – World Bank approves 2nd loan tranche
The World Bank has agreed to release the second US$1 bio tranche of a US$3 bio development loan which has been earmarked to support job creation in the country. Meanwhile USD/EGP looks set to test the 20.00 level this week, after closing around 19.10/19.70 yesterday. There has been a spike in corporate demand for hard currency over the past few days, especially from international firms looking to repatriate their profits as year-end approaches.

Three Qatari banks begin merger talks
Masraf al Rayan, Barwa and the International Bank of Qatar announced yesterday that they have begun talks on a possible US$44 bio merger. These discussions follow a recent decision by the government to combine state-owned Qatargas and Rasgas in order to reduce costs and enhance efficiency.

Ghana to miss deficit reduction target
Ghana’s Finance Minister, Seth Terkper, said yesterday that the government was likely to miss its fiscal reduction target for this year due to lower than expected tax and oil revenues. "We are likely to miss the programmed fiscal deficit target of 5% of GDP by 2% due to the weak tax revenue performance and uncontrollable factors such as the crude oil price," the minister stated. Meanwhile the incoming administration of Nana Akufo-Addo is reportedly planning to try and re-negotiate the terms of an IMF bailout program once it assumes office.

Nigeria plans to shut Abuja airport for 6 weeks
Nigeria’s Aviation Minister, Hadi Sirika, has announced that Nnamdi Azikiwe international airport, which services the country’s capital, will be shut down for up to 6 weeks in February next year so that much needed repairs to its runaway can be initiated. “From start to finish of the runway, it will take six months. However, we will be using the runway almost throughout the period except for about six weeks when the runway will be closed,” Sirika stated. During its closure flights will be re-directed to the smaller Kaduna Airport and passengers transported to and from Abuja via shuttle bus. This has raised some safety concerns especially following violent riots in Kaduna earlier this year and ongoing threats in the area posed by militants, although the government has promised to take added security precautions along the shuttle route.

Saudi Arabia may raise retail fuel prices again
Saudi Arabia’s Energy Ministry is reportedly considering proposals to link domestic fuel prices to a benchmark crude level, or to an average global petrol and diesel price from next year, according to a recently published Bloomberg article. The Kingdom reduced its fuel subsides late last year leading to a price rise of up to 50%.

Warba plans US$250 mio SUKUK issue
Kuwait’s Warba bank has mandated 9 banks to arrange a US$250 mio Islamic bond issuance which a Reuters article suggests should take place during the 1st quarter of next year.

Middle-East-African-Monitor-21-12-2016

AND FINALLY…
Did you know that 65% of all the ‘green’ buildings in the MENA region are located in the UAE? Meanwhile Dubai has set itself a goal to rank amongst the world’s top 10 sustainable cities by 2020.

Glenn Wepener, Executive Director & Geopolitical Analyst Middle East & Africa
National Bank of Abu Dhabi
MarketInsights&Strategy@nbad.com
Tel: +971 2 6110 127

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NBAD Middle East & African Monitor - 21 December 2016

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