Non-Opec consensus is crucial
Russias energy minister Alexander Novak (left) and Saudi Arabias energy minister Khalid al-Falih shake hands
Opec, which faced a hard task in late November in convincing its members to agree to reduce oil production to 32.5 million barrels a day (b/d), faces an even harder job of convincing non-Opec states to agree to help lower output in 2017 by 600,000 b/d. Russia has agreed to take on half the proposed non-Opec reduction targets. Oman has been the most amenable to production cuts, and Mexico, in the aftermath of the Opec decision, said it would lower output. Brazil said its plans to increase production would continue regardless of an Opec agreement.
Syrian government forces reclaim Aleppo
In a major turning point in Syrias civil war, government forces re-established control of the remaining rebel-held areas in the city of Aleppo, according to a Syrian military statement on 13 December. Following a major government offensive that was backed by the Russian air force, rebel groups are now understood to be awaiting evacuation from eastern Aleppo, said the statement. A UN summary on the operation in Aleppo said it had reliable evidence that in four areas 82 civilians were killed, adding that many more may have died.
A month of diplomacy in the GCC
Saudi Arabias King Salman bin Abdulaziz al-Saud, the UKs Prime Minister Theresa May and Egypts President Abdul Fattah al-Sisi all completed diplomatic visits across the GCC in December. King Salman made a full regional tour early in the month, which included a GCC summit in Bahrain that was attended by May. At the summit, the UK prime minister said she wanted to deepen defence cooperation with Gulf countries and work towards signing an ambitious trade agreement. Meanwhile, Al-Sisi completed a two-day visit to the UAE. The visit coincided with King Salmans meeting with the Abu Dhabi ruling family, although the two did not meet, raising questions about the state of the ties between the two countries. The Saudi kings GCC tour came at the close of a difficult year for the region, with growth weighed down by low oil prices and wars in Syria and Yemen. Mays visit signifies a strengthening of GCC trade ties with a post-Brexit Britain.
Iran budgets for 50 per cent increase in crude revenues
Saudi Arabias King Salman bin Abdulaziz al-Saud (left) with Irans President Hassan Rouhani
President Hassan Rouhani has submitted a national budget of IR10.85 quadrillion ($338bn) that assumes a 50 per cent increase in crude revenues. The budget for the fiscal year ending 20 March 2018 is based on a $50-a-barrel oil price and covers several reforms aimed at increasing tax revenues and reducing subsidies. Rouhani wants a 9.1 per cent growth in capital expenditure and a 10.6 per cent rise in current expenditures against budgeted spending for the current year.
BP increases footprint in Middle East
The UKs BP made two acquisitions in the region in December. Early in the month, the oil and gas company agreed to buy 10 per cent of Italy-based Enis offshore Shorouk concession in Egypt, which contains the giant Zohr gas field. Following this, the firm was awarded a 10 per cent stake in the onshore oil concession operated by Abu Dhabi Company for Onshore Petroleum Operations (Adco). As part of its interest in the Abu Dhabi concession, BP will become the asset leader for the Bab integrated asset group within Adco. BP has agreed to purchase another 5 per cent of the Shorouk concession from Eni before the end of next year, when the Zohr field is scheduled to start production, under the same terms.
Lebanon forms a new cabinet
Lebanons Prime Minister Saad Hariri has formed a government in a move that has seen several key ministers remain unchanged. The cabinet includes all political factions apart from the Christian Phalangist party, which rejected the role it was offered. The new cabinet keeps Gebran Bassil as foreign minister, Ali Khalil as finance minister and Nouhad Machnouk as interior minister. The cabinet will also include Yacoub al-Sarraf as the new defence minister and Cesar Abou Khalil as the new energy and water minister. Hariri was endorsed by 110 members of the 127-seat parliament in November 2016, with only Shia militant group Hezbollah, the Syrian Social National Party and the Lebanese Baath party all supporters of Syrias government declining to back him as premier.
Tunisia has $31bn-worth of projects for investors
Barbed wire entanglement on Avenue Habib Bourguiba in Tunis
Tunisia presented 146 projects worth about $31bn to international investors at its investment conference Tunisia 2020 in November. The schemes include 68 government-funded projects, 33 public-private partnership (PPP) schemes, and 45 private sector projects. The most important PPP scheme is expected to be the E600m ($626m) Enfidha deepwater port project. More generally, investment in smart grids, housing, mining and information technology is being sought. Tunis is also planning five 50MW solar projects and an 80MW wind project. A new PPP law was recently passed, as well as a simplified investment law. Executive regulations for the investment law were due in mid-December.
Terror attacks in Egypt and Jordan threaten stability
The jihadist group Islamic State in Iraq and Syria claimed responsibility for the Cairo bomb attack on 11 December. The attack, which took at least 26 lives, targeted St Marks cathedral in the Abassiya area of Cairo. It came just two days after a roadside bomb killed six police officers at a checkpoint in the Pyramids area of Cairo. Another assault was carried out in Jordan at a hilltop castle in the city of Karak. It is not clear if the gunmen belonged to a militant group. It is understood the attackers opened fire on two police points before fleeing to the castle and ambushing a police station there. Ten people were killed in the shootings and 27 were injured.
US to limit arms sales to Saudi Arabia
The US Navy
The US government has said it will cut back on the sale of weapons to Saudi Arabia as pressure rises over the growing number of civilian casualties in the military conflict in Yemen. Off-limits arms, however, will be confined only to precision-guided weapons. It is understood the sale of $1.15bn-worth of tanks and other land-based weapons to the kingdom, approved by the US Senate in September, will still go ahead. The US says it will also continue providing Riyadh with intelligence focused on border security, and will still provide training for pilots involved in the Saudi-led air campaign.
Contract awards: December 2016
Western companies re-enter Iran on the back of major deals
UK/Dutch Shell and Frances Total have signed agreements that pave the way for the oil companies to return to the Iranian market. Iran Air also recently signed an agreement with Frances Airbus for 100 planes.
Dubai signs power purchase agreement for 800MW solar project
Dubai Electricity & Water Authority has signed the power purchase agreement with a team led by Abu Dhabi Future Energy Company (Masdar) and Saudi Arabias Abdul Latif Jameel for the 800MW photovoltaic third phase of Dubais solar park.
Major deals see western companies reenter Iran
Energy firms Royal Dutch Shell and Frances Total have signed agreements with Iran to re-enter the country. The deals could see the companys focus on the South Azadegan and Yadavaran fields that lie on the western border it shares with Iraq, which Iran has been keen on developing. Iran Air also recently signed an agreement with Europes Airbus for 100 planes. The initial agreement was for 118 planes, but this number was later reduced, with the total deal expected to be approximately $10bn.
Petrofac picks up Iraq oil export contract
The UKs Petrofac has won a $75m contract on the Iraq Crude Oil Export Expansion Project. The one-year agreement, with an additional one-year option, will involve Petrofac continuing to facilitate oil exports 60 kilometres off the Al-Faw peninsula in southern Iraq.
Joint venture wins Dubai airport construction deal
A team of the US Lane and the local National Contracting & Transportation Company has won a $125m contract for work at the Al-Maktoum airport. The deal involves installing temporary fences and gates, utilities and site offices, as well as site security.