Christine Lagarde, managing director of the Washington-based IMF
The Washington-based IMF is expecting to cut its 2016 global growth forecast again as weaker demand dims its economic outlook, according to managing director Christine Lagarde.
The fund is due to revise its World Economic Outlook forecasts in early October, ahead of its annual meetings. Another cut would be the sixth straight growth markdown in about 18 months.
The leader of the G20 countries should do a lot more to increase demand, fight inequality and build the case for trade and globalisation, Lagarde told international media.
Lagarde described the overall outlook as slightly declining growth, fragile, weak and certainly not fueled by trade, despite the fact that some of the major threats to the global economy have yet to materialise, such as a recession sparked by Britains vote to leave the EU or a possible collapse in Chinese growth.
Saudi Arabia and Russia have agreed to form a working group to monitor the global oil market and draft regulations to stabilise crude prices, according to a joint statement made on the sidelines of the G20 summit in Hangzhou, China.
Russias Minister of Energy Alexander Novak said a production freeze would be the only way to stabilise prices.
The task force will meet for the first time in October. The joint statement said stabilising oil prices would ensure steady investment in the industry.
Saudi Arabia and Russia, along with other Opec and non-Opec producers, attempted to agree a production freeze at a meeting in Qatar in April, but talks broke down without a decision.
Dubai government-owned Emirates National Oil Company (Enoc) announced on 19 September that it had awarded the main contract on its $1bn-plus refinery expansion project to Frances Technip, confirming a MEED report in August.
However, the deal represents the only major contract award in the GCCs refining sector in 2016, as a raft of schemes face delays at the pre-execution phase.
It is unclear to what extent delays in downstream projects in the region are linked to the drop in oil prices, which started to fall in the second half of 2014. While projects such as the Dubai refinery expansion are based on meeting domestic demand, others, such as the UAEs planned Fujairah scheme and Omans Duqm refinery project, are aimed at export markets.
Due to the scale of investment required to build new refineries and expand existing operations, uncertainty in the outlook for oil prices is likely to lead to further delays in final investment decisions for many GCC schemes.
Saudi Arabias energy minister Khalid al-Falih said the process will require sufficient time to allow the government to consider how to optimise Aramcos value for both the kingdom and potential shareholders.
We have to optimise, optimise for the kingdoms interest as the owners of the company and the owners of the resource today, optimise for the investors who have to enter into this, said Al-Falih.
The Oil Ministry said in a statement that Al-Luaibi had discussed the contract review with Michael Townshend, head of Iraq operations for UK-based oil major BP.
Crude prices have dropped significantly since many production-sharing agreements were signed between Baghdad and international oil companies (IOCs) toward the end of the past decade.
An Iraqi energy sector official told MEED in February that the contracts need to be changed significantly to reflect lower prices.
Saudi Aramco plans to invest $334bn over the next decade to sustain oil and gas production, an official from the firm has said.
Abdulaziz al-Abdulkarim, vice-president of procurement and supply chain management at Aramco, said 42 per cent of the total would be spent on drilling, with 31 per cent on surface facilities and 11 per cent on infrastructure. Thats $33bn annually that will be progressively spent in the Saudi economy, he told a conference in Bahrain on 26 September.
Aramco, the worlds largest oil exporter, plans to raise its oil well count to 1,000 by 2020, from about 850 in 2015. Wells producing gas will grow to 500 from about 300 during the same period.
Sheikh Mohammed bin Rashid al-Maktoum
Dubai ruler Sheikh Mohammed bin Rashid al-Maktoum has issued a decree forcing several government executives into early retirement.
The decree comes after Sheikh Mohammed carried out a surprise visit to several government offices across the city in late August.
It was reported in local media that several high-ranking officials were not present when the ruler, who is also prime minister of the UAE, carried out spot checks. The same reports have also said up to nine executive directors from Dubai Municipality have been relieved of their duties.
The director-general of the Dubai Media Office told local media that the ruler certainly wanted to send a message. Timeliness starts at the top, and we wont go after the employees when their bosses arent there.
The UAE Cabinet has approved the final draft of the federal bankruptcy law. The announcement was made by UAE Vice-President, Prime Minister, and Ruler of Dubai Sheikh Mohammed bin Rashid al-Maktoum.
We have adopted today the final version of the federal bankruptcy law, designed to enhance the investment attractiveness of our economy and facilitate businesses, Sheikh Mohammed said.
UAE Finance Minister Sheikh Hamdan bin Rashid al-Maktoum also issued a statement, saying: The law contributes in strengthening the financial, economic and legislative system in the UAE, through putting in place a separate and modern law to avoid bankruptcy cases, including financial restructuring, composition procedures, restructuring debts and liquidation funds. Companies and individuals are now able to restructure their debt while avoiding bankruptcy liquidation.
Analysts have previously critised the UAE for its lack of a bankruptcy law, which has led to the criminalisation of defaulting. The new law is expected to encourage the creation of new companies, with many potential business owners having previously feared the risk of bankruptcy and its legal ramifications.
Dubais Roads & Transport Authority (RTA) is in discussions with local banks Emirates NBD and Dubai Islamic Bank (DIB) to borrow about $1.5bn to fund the construction of the Route 2020 metro link, according to sources familiar with the matter.
Export credit agencies will arrange a second tranche of about $1.5bn, the sources said, declining to be named.
The local bank tranche will have a 28-year tenor. The RTA is expected to secure preferential rates from its relationship banks. The funds will be lent to a blanket special-purpose vehicle, with sovereign guarantees.
The scheme, known as Route 2020, involves building a 15-kilometre-long line branching off the existing Red Line at the Nakheel Harbour & Tower station, between the Ibn Battuta Mall and Jumeirah Lake Towers stations. The line will also connect to Al-Maktoum International airport. About 11km of the line will be elevated, with five elevated stations and two underground stations.
Nakheel Palm Jumeirah
Dubai property developer Nakheel became a debt-free company in late August, when it paid its AED4.4bn ($1.2bn) trade creditor sukuk (Islamic bond).
It was a challenging period we went through, we achieved it in a quick manner and managed to deliver on all of our commitments ahead of time and to launch new projects, said Nakheel chairman Ali Rashid Lootah.
The firms journey to clear its debts began in January 2014, when it shocked many in the market by saying it would pay off its bank debt four years ahead of time.
This was made possible by outperforming the restructuring plan drawn up for the developer in 2010. The plan was created after Nakheel was forced to default on its debts following the crash of Dubais property market in 2008. We achieved the initial restructuring plan years ahead of time with significant savings of AED25bn, said Lootah.
Dubais Mohammed bin Rashid al-Maktoum solar park
Abu Dhabi is challenging Dubais regional solar crown after receiving world record-low bids for Abu Dhabi Water & Electricity Authoritys (Adweas) 350MW photovoltaic (PV) solar project.
The low bid from Japans Marubeni Corporation and Chinas Jinko Solar was just AED0.08888 ($0.0242) a kilowatt hour (kWh). This is 16.8 per cent below the previous world record tariff of $0.0291 a kWh received in Chile in August.
Frances EDF and the local Masdar were also below the previous world record offer, at AED0.09304. This was 15.4 per cent lower than the world record Masdar set in Dubai in May, although they cannot be directly compared as the Abu Dhabi project uses seasonally weighted levelised costs of energy.
That said, the speed with which solar tariffs are falling is incredible; so incredible that many analysts and financiers are questioning whether these prices are sustainable for developers. The decreases are based on falling PV solar panel prices, as well as savings in engineering, procurement and construction (EPC) costs.
The UAE has offered a deposit of $1bn to the Central Bank of Egypt.
The cash deposit has been offered for a period of six years, as the UAE continues its unwavering stand in support of Egypt and its people, said a statement published by UAE state-controlled Emirates News Agency (WAM).
The UAE has been a strong supporter of the current Egyptian government, and has offered several financial aid and investment packages to the country since President Abdul Fatah al-Sisi came to power in 2014.
During the Egypt Economic Development Conference in March 2015, the UAE pledged $4bn of financial support to the North African country.
Egypts President Abdul Fattah al-Sisi makes an air inspection of the new Suez Canal
Following meetings between the three countries at the G20 leaders summit earlier in September, the Washington-based fund released a statement saying Cairo has had very productive discussions with authorities in China and Saudi Arabia regarding this matter.
In August, Egypt and the IMF signed a staff-level agreement for a $12bn loan. At the time, it was agreed the loan would be subject to Cairos ability to press ahead with economic reforms as well as secure an additional $6bn in bilateral financing.
Egypt has already approved a new law to adopt a value-added tax (VAT) of up to 14 per cent by 2017. The authorities have also pledged to phase out large state subsidies and further devalue the currency.
The central bank also recently announced it has received the first $1bn installment of a $3bn loan from the Washington-based World Bank.
It is understood the World Bank loan and a $1.5bn loan from the African Development Bank do not count as part of the $6bn required.
Egypts foreign reserves have witnessed a drastic decline over the past few years as revenues from tourism, the Suez Canal and foreign investment fall. Foreign reserves were estimated at $16.6bn in August this year, compared with $30bn-plus in 2011.
Middle East contract awards to August 2016
August was marked by a noticeable drop in contract awards in the regions biggest projects market, Saudi Arabia. The kingdom awarded deals worth a total of $518m, compared with $1.8bn in July.
Despite this, the overall value of contract awards in the region increased in August to $9.4bn, from $8.3bn in July. The number of contracts let rose in this period to 51 from 45 last month. However, Augusts contract awards value is still well below the $12bn recorded in June, when Iran, the UAE and Qatar signed multibillion-dollar single deals.
Qatar overtook the UAE, which had been leading the index for several months, in terms of contract awards in August, due mainly to the award of a $2.1bn construction deal for the Al-Khor Expressway project. The country awarded five deals, compared with the UAEs 21.
The award of the $900m contract for Emirates National Oil Companys (Enocs) Jebel Ali refinery expansion propelled the UAE to second in the contract awards ranking. This was followed by the $408m contract awarded by local developer Nakheel for the Al-Khail Avenue mall in Dubai.
Kuwait followed the UAE in the value of contracts awards, with a total of $2.4bn of deals awarded. The largest contract signed was for a $494m project on the Northern Regional Road. Kuwait has launched numerous road projects in the past year to address traffic congestion, particularly in Kuwait City, and to facilitate the smoother flow of passengers and goods by road across the country.
On 23 August, the government awarded a $2.1bn deal for the construction and maintenance of the 34-kilometre Al-Khor Expressway to Turkeys Tekfen Construction.
On 4 September, it awarded a joint venture of Turkeys Yuksel Insaat and Spains Ferrovial Agroman a QR2.87bn ($789m) design-and-build deal for the north section of Al-Bustan Road.
Unlike 39 of the 40 packages for the $15bn Expressway Programme, the Al-Khor package was a directly negotiated contract, which raised some fears Qatar might be taking this route for future schemes.
Excluding the Al-Khor Expressway package, some 18 packages of the Expressway Programme worth a total of $13bn are now under construction, according to regional projects tracker MEED Projects. Five packages, collectively worth $874m, have been completed.
China State Construction Engineering Corporation has been awarded an estimated AED1.3bn ($354m) contract to build a mixed-use development at Dubai Silicon Oasis.
Known as Silicon Park, the project will cover an area of 150,000 square metres and involves the construction of some 20 mid-rise buildings that will contain commercial, residential and retail space, a hotel, health centres, food and beverage outlets, and underground parking. Completion is scheduled for 2018.
Turkeys Tekfen has been awarded an estimated $300m contract to construct pipelines connecting Yanbu to North Jeddah on the kingdoms Red Sea coast, according to sources familiar with the matter.
The Saudi Aramco scheme includes two pipelines that will transport oil products including gasoline, diesel and jet fuel from the refining hub of Yanbu to Jeddah, the countrys commercial centre and its second-largest city.
Tekfen is also understood to have been selected for an estimated $300m contract to build a product pipeline that will connect the Qassim area to the northwestern region of Hail, according to people familiar with the matter.
The pipeline will run 220 kilometres to transport gasoline and diesel to Hail, reducing the need for tankers to supply fuel via road. Aramco, the state-run oil and gas giant, has selected Tekfen from five companies thought to be vying to win the engineering, procurement and construction (EPC) deal.
Local firm Saudi KAD was awarded four EPC contracts to build pipelines for Aramco.
The contractor did not disclose the size of the deal, but local industry sources told MEED in February that the awards were worth more than $1bn.
The scope of works includes installing pipelines for Aramcos phase two Master Gas System Expansion (MGSE) as well as the Fadhili Gas Programme.
The MGSE phase two will involve the installation of a 1,118km pipeline network to expand the capacity of the Master Gas System to 12.5 billion cubic feet a day (cf/d), Saudi KAD said.
Three consortiums have submitted bids to the Kuwait Authority for Partnership Projects (KAPP) for the Kabd municipal solid waste project.
The consortiums submitted bids on 8 September and include:
- Constructions Industrielles de La Mediterranee (France) / Gulf Investment Corporation (Kuwait-headquartered) / Al-Mulla Group (local)
- EVN Umweltholding and Betriebs (Austria) / International Financial Advisors (IFA) (local) / KCC Engineering & Contracting (local) / Steinmuller Babcock Environment (Germany)
- Suez Environnement (France) / Itochu Corporation (Japan) / Kharafi National (local)
The waste-to-energy (WTE) scheme will be developed under a design, build, finance, operate and transfer model. KAPP is tendering the project on behalf of the Kuwait Municipality.
The proposed facility will be located in the Kabd area, about 25 kilometres from Kuwait City, and will occupy an area of about 500,000 square metres. The project is planned to have an initial capacity of 3,275 tonnes a day (t/d) and will treat up to half of the countrys municipal waste.