NBAD Middle East & African Monitor – 27 March 2017
Extension of oil production cut agreement to be formally considered
A number of signatories to the six-month oil production cut agreement, which came into force at the beginning of this year, have reportedly agreed to formally discuss extending the deal to the end of 2017. A decision to review the current time limit was announced following a meeting in Kuwait yesterday. Earlier this month the Saudi Arabian Energy Minister, Khalid Al Falih, claimed that the agreement would likely be extended if global oil stocks remained above their 5-year average. Meanwhile his UAE counterpart, Suhail Al Mazrouei, was quoted as saying yesterday that the UAE was reducing its production levels further during March and April to 133% compliance of its agreed share, while Iraq has said it will achieve 115% quota compliance by the end of April.
Iran implements “reciprocal” sanctions on US
The Iranian Foreign Ministry yesterday announced a government decision to implement sanctions against 15 US companies, due to what it says is their alleged support of Israel’s occupation of Palestine, but also in response to the US sanctions inflicted on a number of Iranian citizens and firms following the country’s ballistic missile tests in February this year. The 15 US based companies affected by the Iranian step include; Raytheon, Re-Max Real Estate, Oshkosh Corporation, United Technologies, ITT Corporation, BENI Tal, and M7 Aerospace. It’s worth noting however that none of these firms currently do any business with Iran. Meanwhile the Iranian Central Bank has said it would appeal a recent decision by a Luxembourg court to continue to freeze US$1.6 bio of Iran’s foreign assets which had initially been seized before the P5+1 agreement was signed in 2015. The money is now being sought by US lawyers as part compensation for the victims of terror attacks with alleged Iranian links, such as the 1983 bombing of a US Marine barracks in Lebanon.
Morocco’s political deadlock ends
Morocco’s newly appointed Prime Minister, Saad Eddine El Othmani, announced over the weekend that an agreement has finally been reached with the country’s six main political parties over the establishment of a coalition government. As outlined in our previous commentary varied inter-party disputes had prevented the formation of a new administration since last October’s elections. The latest coalition includes the PJD who won the most electoral votes, the pro-market RNI and UC, the socialist USFP and PPS as well as the more conservative MP. Together these six parties control 240 seats in Morocco’s 395-seat House of Representatives.
Urgent economic reforms needed in Nigeria - IMF
The IMF has reportedly advised the Nigerian government that wide ranging reforms need to be enacted urgently to prevent the economy from deteriorating further. According to Reuters, a detailed IMF report will be released soon which concludes that Nigeria must actively begin reversing its overdependence on oil, low government revenues, rising inflation and debt servicing levels. The country’s FX regime is also criticised with the IMF quoted as warning that unless Nigeria lifts its current foreign exchange restrictions and unifies the exchange rates, it risked “a further deterioration in reserves and a disorderly exchange rate depreciation.” The full report is due to be released on Wednesday, but it comes at a crucial juncture as Nigeria is holding ongoing talks with the World Bank and the AFDB over US$1.4 bio in potential loans.
Libya’s NOC warns over rise in “illegal” oil contracts
The Libyan National Oil Corporation issued a statement yesterday in which it expressed its growing concern over an alleged increase in attempts by various groups and individuals within the country, to enter into independent oil supply contracts with foreign buyers. “The NOC has identified a group of individuals abusing the current status of political division in Libya by entering into illegal contracts with unknown or unqualified companies. These individuals, and others associated with them, have offered Libyan crude oil for sale at huge discounts below the official selling price," the NOC’s statement read adding that it was the only institution authorised by the UN to export oil from Libya.
Saudi Arabia to tighten foreign worker rules
Saudi Arabia is reportedly planning to implement tighter restrictions on the hiring of low paid foreign workers in an attempt to encourage firms to hire more local citizens. Under the ‘Nitaqat’ program the Labour Ministry grades firms according to the ratio of Saudis in their workforces. Companies with higher ratios get preferential treatment when obtaining visas for foreign workers or licenses, while those in lower categories face certain penalties. According to the new proposals as published in the Khaleej Times newspaper, construction firms with between 500 and 3,000 workers for example would have to have a 100% Saudi workforce in order to enter the top "platinum" category, but if citizens only account for 10% of their total employees then they would be rated "lower green". This compares to current Nitaqat levels of 16% participation to achieve platinum status and 6% for lower green.
Emaar bids for Souq.com
UAE based Emaar Mall Group has reportedly submitted a US$800 mio bid for Souq.com. The vice-chairman of Emaar, Ahmad Thani Al Matroushi, said the bid, which is yet to be accepted, was in line with their strategy “to align e-commerce with physical shopping."
Vendanta to invest US$1 Bio in its Zambian operations
The Indian mining firm, Vendanta Resources announced last Friday that it planned to invest up to US$1 bio into its Zambia unit, Konkola Copper Mines.
L&T wins Tanzania contract
India’s Larsen & Toubro Engineering Ltd has been awarded a US$100 mio water and effluent treatment contract in Tanzania.
Did you know that of Algeria’s total land area, only 12% is inhabited?
Glenn Wepener, Executive Director & Geopolitical Analyst Middle East & Africa
National Bank of Abu Dhabi
Tel: +971 2 6110 127
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