Monthly Mena news roundup

22 September 2020
UAE, Bahrain and Israel sign Abraham Accords; Opec revises oil demand forecast for 2020; Lebanon appoints Mustapha Adib as premier; Libya’s rival governments announce ceasefire; US reimposes Iran sanctions

MIDDLE EAST 

UAE, Bahrain and Israel sign Abraham Accords

The UAE and Bahrain have signed agreements normalising relations with Israel. The agreements, known as the Abraham Accords, were signed in a ceremony led by US President Donald Trump in Washington on 15 September.

For its part, Israel has suspended declaring sovereignty over Palestinian areas outlined in Trump’s Vision for Peace.

Speaking at the ceremony, Trump said other countries will sign the Abraham Accords in the near future, adding that he expects Palestinian involvement in the peace deal at a later point.


OIL 

Opec revisits oil demand forecast for 2020

Opec has once again downgraded its global oil demand forecast for this year, predicting demand will average 90.2 million barrels a day (b/d) in 2020, down by 9.5 million b/d compared with 2019 figures.

Previously, the group had predicted demand would fall by 9.1 million b/d in 2020. 

In its latest monthly oil market report, Opec said “risks remain elevated and skewed to the downside”. The group has also downgraded its demand forecast for 2021 by 400,000 b/d, although it predicts demand will pick up by 6.6 million b/d from 2020 levels. 


LEBANON

Mustapha Adib named Lebanon’s prime minister

Lebanon’s President Michel Aoun has designated Mustapha Adib to take over as the country’s prime minister, after the previous government resigned in the aftermath of the Beirut port blast.

Adib said he has accepted the job based on the understanding that “all political parties” in Lebanon recognise the country’s narrowing economic prospects. 

The new premier is hoping to form a government in record time and to “start implementing reforms immediately [to confirm an] agreement with the [IMF]”.

Adib served as adviser to former premier Najib Mikati between 2000 and 2004, and was named Mikati’s chief of cabinet in 2011.


LIBYA 

Rival governments announce ceasefire in Libya

Libya’s two warring governments have announced a ceasefire, increasing hopes that talks will replace violence in the country.

Statements have been released by both the UN-supported government based in Tripoli and the House of Representatives, which is based in the east of the country.

Both administrations said they wanted an end to the ongoing blockade on oil ports that has been imposed by military commander Khalifa Haftar, who is allied with the eastern government.

Both statements called for the demilitarisation of Sirte and the Jufra area in central Libya, and for a joint police force to be responsible for security there.

Oil production in Libya is about 100,000 barrels a day (b/d), down from 1.2 million b/d at the start of the year. In August, the state oil company, National Oil Corporation, said lost revenues due to the blockade of oil ports stood at almost $8.4bn.


KUWAIT

State oil company slashes spending by $2bn

State oil company Kuwait Petroleum Corporation (KPC) has cut oil sector spending by $2.3bn for the 2020/21 fiscal year amid ongoing weak oil prices, according to local news sources. KPC has agreed with the Finance Ministry to cut its budget for oil and gas production to KD3bn ($9.9bn) from KD3.7bn.

The Finance Ministry decided that high oil sector costs were unjustified due to market conditions and the widening budget deficits, according to news reports.

In July, KPC subsidiary Kuwait Oil Company cut 25 per cent of the budget for its current five-year plan, with the objective of contributing to “state financial stability” amid the ongoing Covid-19 pandemic.


IRAN

US reimposes previously terminated Iran sanctions

Washington has said that it has reimposed “virtually all previously terminated UN sanctions” on Iran and it expects all UN member states to fully comply. 

In its statement on 19 September, the US Department of State described Iran as “the world’s leading state sponsor of terror and anti-Semitism”. 

Sanctions have been reimposed as part of the snapback process for terminating sanctions.

Washington initiated the 30-day snapback process on 20 August, which means sanctions became effective again on 19 September.

The US says it moved to re-impose sanctions due to Iran’s failure to comply with the terms of the Joint Comprehensive Plan of Action (JCPOA) agreement.

It added that the Security Council failed to extend the UN arms embargo on Iran, and that this “would have paved the way for Iran to buy all manner of conventional weapons on 18 October”.


SAUDI ARABIA 

Saudi Aramco reshuffles senior management

Aramco has reportedly reshuffled executives in senior management positions, appointing an acting head for the upstream business.

Nasir al-Naimi will become upstream senior vice-president. He was previously vice-president of petroleum engineering and development at Aramco. Al-Naimi replaces Mohammed al-Qahtani, who will now become head of the downstream business.

Earlier, Aramco announced it is creating an integrated corporate development organisation to optimise its portfolio, headed by Abdulaziz al-Gudaimi, who is downstream senior vice-president. 


BAHRAIN

Government raises debt ceiling to $40bn 

Bahrain has raised its debt ceiling to BD15bn ($40bn) from BD13bn to minimise the effects of lower oil prices and reduced economic activity resulting from the ongoing Covid-19 pandemic.

Access to additional funds will allow the government to finance general budget expenditures and to cover debt instalments that are due during 2020 and the next two fiscal years.

Despite the economic challenges caused by the Covid-19 pandemic and efforts to suppress it, the government has said it remains committed to the Fiscal Balance Programme it launched in 2018.


PETROCHEMICALS

Saudi petrochemicals firm to fully acquire subsidiary

Privately owned Saudi Industrial Investment Group (SIIG) has announced in a filing to the Saudi Stock Exchange (Tadawul) that it is due to start discussions to take full control of its subsidiary National Petrochemical Company (Petrochem). 

SIIG currently owns 50 per cent of Petrochem; the Public Pension Agency owns 13.68 per cent; the General Organisation of Social Insurance holds 11.3 per cent; and the remaining shares are traded on the Tadawul.

SIIG said in its Tadawul filing that the discussions are to determine the “economic feasibility” of a merger, and the move does not mean that an acquisition deal will take place.

In 2011, SIIG made a similar attempt to take 100 per cent control of Petrochem, but the talks fell through.

Apart from Petrochem, SIIG is a 50 per cent stakeholder in two other Jubail-based petrochemicals-producing joint venture companies, Saudi Chevron Phillips and Jubail Chevron Phillips, in which US firm Chevron Phillips Chemical Company owns the other half of the stake.


FURTHER READING

> Abu Dhabi’s recent $5bn bond issuance has listed on the Abu Dhabi Securities Exchange. The emirate completed the offering, which includes the GCC’s longest dated sovereign issuance, in early September. It comprises a $2bn three-year tranche, a $1.5bn 10-year tranche and a $1.5bn 50-year tranche.

> Saudi Arabia has started the privatisation process for its remaining flour mill firms. The National Centre for Privatisation & Public-Private Partnership started the bidding phase on 13 September. The second phase entails the divestment of the government’s full shares in milling companies 2 and 4.

> Turkey has announced a major discovery of 320 billion cubic metres of natural gas by state-owned Turkish Petroleum Corporation in the Black Sea. President Recep Tayyip Erdogan said the gas discovery is Turkey’s biggest ever and will provide a significant boost to the country’s economy.

> Kuwait is planning to rebuild the grain silos at Lebanon’s Beirut port that were destroyed in the 4 August explosion. According to a report by Lebanon’s National News Agency, Kuwait’s ambassador to the country, Abdelaal al-Qenaei, confirmed the move in an interview with Radio Lebanon in August. Kuwait has so far committed $41m of aid to Lebanon.

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