Middle East & African Monitor - 16 February 2017

  • Major oil firm delays Iran investment as Trump criticizes nuclear accord again
  • Nigeria may halt amnesty payments to former militants - CB disputes fake currency claim
  • Libya’s oil production recovery may have peaked
  • Egypt announces cabinet reshuffle – Consolidation of Ministries
  • Saudi Arabia eyes Daewoo purchase
  • Uganda cuts interest rates
  • Fitch confirms Bahrain ratings
  • Kuwait to fast track construction of new airport


Major oil firm delays Iran investment as Trump criticizes nuclear accord again
The Iranian Oil Minister, Bijan Zanganeh, yesterday described Total’s decision to delay finalizing a US$2.2 bio investment contract covering the development of a gas field within Iran’s South Pars 11 project, as “unacceptable.” Total’s CEO had said late last week that the oil giant was awaiting a hoped for extension of the US sanctions waivers on Iran which are due for renewal this summer but that may now be under threat under a Trump administration. Before his sudden departure from office on Tuesday, the US national security advisor, Michael Flynn, had put Iran “on notice” over its missile testing last month, and following a meeting with Israel’s Prime Minister last night, President Trump again called the Iranian nuclear accord “the worst deal ever” adding that he would do more to prevent Tehran from “ever” developing an atomic weapon. Total was the first Western oil and gas firm to initiate a major commercial contract with Iran since the signing of the P5+1 agreement in 2015.

Nigeria may halt amnesty payments to former militants - CB disputes fake currency claim
Nigeria’s Central Bank has dismissed a recent claim made by a former senior official of the bank, Obadia Mailafia, who suggested that a large percentage of Naira currently in circulation was counterfeit. ‘‘Twenty percent of currency circulating in Nigeria is fake, you can’t bring down food prices if you have fake currency circulating,’‘ Mailafia was quoted as saying on Monday. In response the CB issued a public statement which read; ‘‘While we acknowledge that no currency in the world is immune from counterfeiting, the actual rate of counterfeiting in Nigeria has been very minimal due to appropriate policies put in place by the bank. Indeed our own records at the bank clearly indicates that the prevalence of counterfeit notes in Nigeria from January to December 2016 was less than one percent (0.0014%) or 14 counterfeit pieces out of one million notes. We find it rather curious that a former high-ranking official of the CBN would make such unauthentic claims calculated to destroy the confidence in our national currency and sabotage the collaborative efforts of the CBN and the Federal Government at ensuring enduring stability of the financial system. We, therefore, challenge the said former CBN official to make public the empirical evidence suggesting that 20% Naira in circulation is fake.” Meanwhile the country’s Petroleum Minister, Ibe Kachikwu, has stated that Nigeria is estimated to have lost between US$50-100 billion in oil related revenues due to militant activity in the Niger Delta region last year. The minister added the government was committed to solving this problem and that new plans would be implemented soon to try and establish permanent peace in the region, but he also warned that due to ongoing budgetary constraints they may soon be unable to continue paying a stipend to thousands of former militants who had laid down their weapons under a 2009 amnesty agreement.  

Libya’s oil production recovery may have peaked
The recent sharp recovery in Libya’s oil output which rose by over 350,000 barrels in 2016 to a reach a three year high of around 700,000 bpd last month, is welcome news from a country still badly riven by civil conflict. However this is still far below the 1.6 mio bpd Libya was producing back in 2010 and further strong gains appear unlikely. Aging fields, the lack of funds for fresh investment, infrastructure repairs and maintenance along with a general lack of security are the main reasons for this, a situation which will not improve until there is a proper political settlement and stability established across the whole country.

Egypt announces cabinet reshuffle – Consolidation of Ministries
Egypt’s state media announced a cabinet reshuffle and a consolidation of various ministries earlier this week. Nine new ministers have been appointed in the following portfolios: Agriculture, parliamentary affairs, local development, planning and administrative reform, education and transport. Meanwhile the ministries of trade and supply were merged together as well as those for investment and international cooperation. These moves are seen as an attempt to speed up the economic reform program, but also to improve the performance of these key ministries. Meanwhile Egypt’s unemployment rate dipped slightly to 12.40% during Q4 of last year compared to 12.60% in the previous quarter according to data released by the central statistical agency.

Saudi Arabia eyes Daewoo purchase
A South Korean media site ‘Pulse News’ has claimed in an article published this week that Saudi Arabia is considering a potential opportunity to purchase a controlling share in the Asian country’s 4th largest construction firm, Daewoo Engineering and Construction Ltd, which the Korean Development Bank currently owns a majority stake in, and which it reportedly plans to privatize by the end of this year. KDB’s 50.75% stake is estimated to be worth around US$1.1 bio.

Uganda cuts interest rates
The Ugandan CB lowered its prime lending rate by 50bp to 11.50% following its latest MPC meeting in an ongoing attempt to stimulate economic growth. As with a number of its neighbours Uganda’s important agricultural sector has been hard hit in recent months by a severe drought.

Fitch confirms Bahrain ratings
Fitch ratings agency yesterday confirmed Bahrain’s BB+ rating with a stable outlook. In a statement the agency said that it believes “material support from the GCC would be forthcoming in case of extreme political, financial, or fiscal instability, given Bahrain's small size and strategic importance,” adding that this view “continues to support Bahrain's market access and US dollar peg despite a low level of foreign exchange reserves.”

Kuwait to fast track construction of new airport
The Kuwaiti government has announced that the target date for the completion of a new terminal at Kuwait’s international airport has been shifted forward to 2020 from 2022. Turkey’s Limak Construction is the main contractor on the US$4.30 bio project.


The UAE recently unveiled its ‘Mars Project’ which aims at its final stage to establish the first human settlement on that planet by 2117.

Glenn Wepener, Executive Director & Geopolitical Analyst Middle East & Africa
National Bank of Abu Dhabi
Tel: +971 2 6110 127

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NBAD Middle East & African Monitor - 16 February 2017

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