Turkey banking shares weaker, regulator dismisses Iran sanctions report

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Updated 24 October 2017
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Turkey banking shares weaker, regulator dismisses Iran sanctions report

ISTANBUL: Shares of Turkey’s banks and the lira currency fell on Monday as comments from the national banking regulator failed to erase investor concerns over a report that lenders could face substantial US fines for evasion of Iran sanctions.
The Haberturk newspaper on Saturday reported six banks potentially face substantial fines, citing senior banking sources. It did not name the banks. One bank faces a penalty in excess of $5 billion, but other fines will be lower, it said.
“It has been brought to the public’s attention that stories, that are rumors in nature, about our banks are not based on documents or facts, and should not be heeded,” the BDDK banking regulator said in a statement at the weekend, adding that Turkey’s banks were functioning well.
A spokesman for the US Treasury, which is responsible for US sanctions regimes, said: “Treasury doesn’t telegraph intentions or prospective actions.”
Two senior Turkish economy officials told Reuters Turkey had not received any notice from Washington about such penalties, adding that US regulators would normally inform the finance ministry’s financial crimes investigation board.
The report comes as relations between NATO allies Washington and Ankara have been strained by a series of diplomatic rows, prompting both countries to cut back on issuing visas to each other’s citizens.
“Given the level of tensions with the US, the market is still skeptical about this denial and they would want to hear a denial from the US to really calm down,” said Inan Demir, a senior emerging market economist at Nomura.
“The numbers mentioned are large ... the largest fine mentioned was $5 billion and that would be a very large fine in comparison to any bank’s equity in Turkey,” Demir added.
The Istanbul stock exchange’s index of banking shares declined 3.2 percent on Monday, underperforming the main share index, which fell 1.09 percent. The lira weakened nearly 1 percent to 3.7050 against the dollar during the day, while the cost of insuring Turkish debt against default spiked to its highest in 12 days.
US authorities have hit global banks with billions of dollars in fines over violations of sanctions with Iran and other countries in recent years.
US prosecutors last month charged a former Turkish economy minister and the ex-head of state-owned Halkbank with conspiring to violate Iran sanctions by illegally moving hundreds of millions of dollars through the US financial system on Tehran’s behalf.
Halkbank has said all its transactions have fully complied with national and international regulations.
President Tayyip Erdogan has said he told Washington that Turkey had never agreed to comply with its sanctions on Iran, and has called on the United States to review the indictment.
The US prosecutors’ charges stem from the case against Reza Zarrab, a wealthy Turkish-Iranian gold trader who was arrested in the United States over sanctions evasion last year. Erdogan has said US authorities had “ulterior motives” in charging Zarrab, who has pleaded not guilty.
Simon Quijano-Evans, emerging market strategist at Legal & General Investment Management, said US-Turkish relations were at the top of the list of issues investors were focused on. “Any negative or positive noise on that front can cause stronger market reaction in either direction.”


Adnoc signs deal with Eni on Ghasha concession

Updated 13 November 2018
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Adnoc signs deal with Eni on Ghasha concession

  • ADNOC grants Eni 25 percent stake in ultra sour gas project
  • Follows Adnoc award to France's Total

LONDON: The Abu Dhabi National Oil Company (ADNOC) has granted the Italian oil company Eni a 25 percent stake in an off-shore gas mega-project, in a move that will support the emirate’s efforts to become self-sufficient in gas.
The energy company is now in discussions with other potential partners for the remaining 15 percent of the available 40 percent stake in the concession earmarked for foreign companies.
The award covers the Ghasha ultra-sour gas concession just off the coast of the UAE, including the Hail and Dalma and other offshore fields. Eni will contribute 25 percent of the development cost of the project which is likely to cost billions of dollars.
The deal comes just days after ADNOC awarded a 40 percent stake to French oil firm Total on Nov. 11 to explore and develop its Ruwais Diyab unconventional gas concession.
The Ghasha gas fields are estimated to hold trillions of standard cubic feet of recoverable gas, according to a company statement.
Once on stream, the project is expected to produce more than 1.5 billion cubic feet of gas per day. This could provide enough gas to supply electricity to more than 2 million homes, said ADNOC.
The project is set to produce 120,000 barrels of oil and high-value condensate per day once complete, the company said.
“ADNOC is committed to ensuring a stable and economic gas supply to the UAE, which is a core component of our 2030 strategy,” said Sultan Ahmed Al-Jaber, UAE minister of state and ADNOC group CEO.
“Development of our Hail, Ghasha and Dalma ultra-sour gas offshore resources, at commercial rates, will make a significant contribution towards delivering that strategic imperative and bringing forward the day when the UAE will not only be self-sufficient in gas but also transitions to net exporter of gas,” he said.
Eni won its first concession rights in the emirate’s oil and gas sector earlier this year, with Adnoc granting the Italian firm a 10 percent interest in its Umm Shaif and Nasr concession and a 5 percent stake in the Lower Zakum concession in March.
“We are pursuing a strategy of growing in the Middle East and today’s signature is further confirmation of our willingness to root our presence in Abu Dhabi,
following the agreements signed last March, with Adnoc,” said Eni CEO, Claudio Descalzi, in a statement.
ADNOC is exploring opportunities beyond Abu Dhabi, having also signed a framework agreement with the Uzbek energy company, Uzbekneftegaz on Tuesday.
The agreement will see the Gulf company provide advice on Uzbekistan’s upstream and downstream operations.