Oil ministers meet in Algeria to consider raising output

Oil producers are coming under pressure to increase output as oil prices remain high. Brent crude rose to above $80 a barrel in September as the markets showed increased concern about the impact of renewed US energy sanctions on Iran. Opec and non-Opec producers met in Algiers on 22-23 September to discuss their next moves as US President Donald Trump called for lower oil prices. Iranian oil minister Bijan Zangeneh boycotted the meeting. An Opec/non-Opec output reduction deal agreed in August cut output by about 2.4 million barrels a day.

IMF forecasts Saudi fiscal deficit will drop in 2018

The IMF forecasts Saudi Arabia’s fiscal deficit will decline to 4.6 per cent of GDP in 2018, down from 9.3 per cent in 2017. In its latest Saudi Arabia Article IV consultation, the IMF projects the kingdom’s fiscal deficit will decline further in 2019, dropping to 1.7 per cent of GDP due to increased oil exports and growth in non-oil revenues, which will more than offset additional capacity spending and compensatory payments to lower-income Saudi Arabians through the Citizens’ Account scheme. The IMF said it supports Riyadh’s goal of balancing the budget by 2023. Read more

Public Investment Fund closes $11bn loan

Saudi Arabia’s Public Investment Fund (PIF) completed an $11bn international syndicated loan on 17 September, marking its first borrowing. PIF said the loan was the “first step in its strategic, medium-term debt funding programme”. Yasir al-Rumayyan, managing director of PIF, revealed that the size of the loan was “higher than initially planned due to strong interest and favourable pricing”. He added: “This is the first step in incorporating loans and debt instruments into PIF’s long-term funding strategy.”

PIF’s first loan will be used for general corporate purposes. The fund announced in October 2017 that it was establishing corporate finance and treasury functions to manage its foray into debt markets. Read more

Russia and Turkey to create buffer zone in Syria

Russia’s defence minister says Syria will refrain from launching an offensive in Idlib Province, the last major rebel stronghold, after the presidents of Russia and Turkey agreed to establish a demilitarised zone there to avert a potential military confrontation.

The announcement by the two presidents, who support opposite sides in Syria’s civil war, appeared at least to delay what was expected to be a bloody assault on Idlib by the forces and allies of Syrian President Bashar al-Assad, which include Russia and Iran. It is not certain whether Syria will abide by the agreement between President Vladimir Putin of Russia and Turkish President Recep Tayyip Erdogan. Fears of an attack on Idlib have been building in recent weeks as Assad’s forces reclaimed large areas of the country.

Military parade attack prompts accusations from Tehran

An attack on a military parade in Iran’s southwestern city of Ahvaz on 22 September that left 29 people dead and 70 wounded led Iranian President Hassan Rouhani to blame an unnamed US ally in the Gulf.

Responsibility for the attack was claimed by both an anti-government Arab group and Islamic State militants Ahvaz National Resistance, an umbrella group that claims to defend the rights of the Arab minority in Iran’s Khuzestan Province.

The US and the UAE have expressly denied any involvement, while US State Department spokesperson Heather Nauert referred to the attack as terrorism. “We stand with the Iranian people against the scourge of radical Islamic terrorism and express our sympathy to them at this terrible time,” she said.

Iran separately summoned the UK charge d’affaires, together with the Dutch and Danish ambassadors, to protest the “hosting of some members of the terrorist group” by the three countries.

Iran on the brink of revolution says US president’s lawyer

US President Donald Trump’s attorney, Rudy Giuliani, has said US sanctions on Iran are causing economic pain that could lead to a “successful revolution”. Giuliani’s claim contradicts administration comments that regime change in Tehran is not a matter of US policy.

“I don’t know when we’re going to overthrow them,” Giuliani reportedly told an Iran Uprising Summit held in September by the Organisation of Iranian-American Communities, which opposes Tehran’s government. The US withdrew from a global deal on Iran’s nuclear programme in May and Trump’s sanctions on Iran’s energy sector are set to take effect from 4 November.

Emirates and Etihad said to be in takeover talks

Reports have emerged that Dubai’s Emirates Airline is in talks to take over Abu Dhabi’s Etihad Airways. News agency Bloomberg reported on 20 September that the talks between the two UAE airlines are at a preliminary stage, and would involve Emirates acquiring the main business of Etihad. Etihad would retain its maintenance arm. The report added that the talks may not result in a deal. Both airlines denied that any talks were taking place. In May, Emirates’ chairman and CEO told reporters: “A merger is easier said than done, and right now we are of the opinion that competition is good. However, there are ways we can work more closely.” Read more

Islamic finance on the rise in African countries

Credit ratings agency Moody’s says Islamic finance is expanding rapidly across Africa. Since the start of 2014, there has been $2.3bn of African sukuk issuance, providing new funding sources for both sovereigns and financial institutions – though African Islamic bonds still make up just 0.5 per cent of global sukuk issuance. The number of licensed Islamic banks in the African banking sector has also increased in recent years, says Moody’s. Although it estimates that Islamic banking assets still make up less than 5 per cent of total African banking assets. Moody’s expects both sukuk issuance and Islamic banking assets to grow quickly in Africa from their low base.

Public Investment Fund to acquire shares in Lucid Motors

Saudi Arabia’s Public Investment Fund (PIF) has agreed to invest more than $1bn in Lucid Motors, a US-based electric vehicle maker and competitor of Tesla. PIF says the investment will “provide the necessary funding to commercially launch Lucid’s first electric vehicle, the Lucid Air, in 2020”.

MEED understands the firm will use the funding to complete engineering development and testing of the Lucid Air, as well as to construct a factory in Arizona to enable the production and global rollout of the Lucid Air model, starting with the North American market. Lucid Motors is frequently referred to as the “only credible competitor” of technology firm and carmaker Tesla. Read more

French/Saudi team confirms Riyadh Metro contract award The Arriyadh Development Authority has awarded Capital Metro Company, the joint venture of France’s RATP Dev and local firm Saudi Public Transport Company, the contract to operate and maintain lines 1 and 2 of the $23bn Riyadh Metro. The contract is for 12 years. Adnoc LNG awards EPC contract for gas project The LNG arm of Abu Dhabi National Oil Company has awarded the engineering, procurement and construction contract for phase 2 of its integrated gas development on Abu Dhabi’s Das Island to a joint venture of Spain’s Tecnicas Reunidas and Abu Dhabi-based Target Engineering. Abu Dhabi to tender media free zone scheme Abu Dhabi-based developer Aldar Properties is expected to tender the contract for the Abu Dhabi Media Free Zone headquarters in Yas Island before the end of 2018. A source familiar with the scheme says the client could issue the tender as early as October. Abu Dhabi’s Twofour54 is expected to operate the media free zone. Eni acquitted but Saipem found guilty in Algeria corruption case Italian oil and gas contractor Saipem and a former CEO of the company have been found guilty of corruption by a local court in a long-running trial over bribes in Algeria. Saipem was fined €400,000 ($468,066). In the same ruling, Italian energy giant Eni – Saipem’s largest shareholder – was acquitted.

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