Building shares move higher ahead of Saudi budget

A view shows the construction of the King Abdullah Financial District in Riyadh. Saudi construction and cement stocks have gained in anticipation of higher infrastructure spending from the budget. (Reuters)
Updated 18 December 2017
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Building shares move higher ahead of Saudi budget

DUBAI: Middle Eastern stock markets edged up in quiet trade on Sunday, with construction and building materials stocks boosting Saudi Arabia ahead of the release of its 2018 state budget this week.
Saudi Arabia’s index added 0.3 percent as builder Khodari surged 7.6 percent in its heaviest trade since January. Najran Cement gained 4.5 percent and in addition to Khodari, the 10 best-performing stocks featured six cement producers.
The state budget, to be announced on Tuesday, is expected to be modestly expansionary and include a rise in infrastructure spending after two years of austerity.
Real estate firm Dar Al-Arkan, the most heavily traded stock, fell back 3.6 percent after soaring in the last several weeks.
The Dubai index edged up 0.3 percent as construction firm Drake & Scull, which operates in Saudi Arabia, was the most heavily traded stock, rising 1.4 percent.
The Kuwait stock index added 0.4 percent after surging 1.5 percent on Thursday. Kuwait Finance House climbed 0.7 percent.
Other Gulf Arab central banks, whose currencies are pegged to the US dollar, raised interest rates in the wake of the US Federal Reserve’s hike last Wednesday.
But Kuwait, citing a desire to boost economic growth, did not tighten monetary policy; it manages its dinar against a dollar-dominated basket, which gives it more flexibility in policy.
In Egypt, the index climbed 0.3 percent as Egypt Gas, which handles natural gas engineering and maintenance work, soared 10 percent.
The company is expected to benefit from work related to Egypt’s giant Zohr gas field, where pilot production of gas started this month.
At the end of last week Egypt Gas forecast 2018 revenues of 2.61 billion Egyptian pounds ($146 million) and net profit of 24.6 million pounds, compared to revenue of 1.10 billion pounds and a net loss of 57 million pounds in the first nine months of this year.
Markets in Qatar and Bahrain were closed for national holidays.
— Reuters


Undersea gas fires Egypt’s regional energy dreams

Updated 18 November 2018
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Undersea gas fires Egypt’s regional energy dreams

  • In the past year, gas has started flowing from four major fields off Egypt’s Mediterranean coast
  • Gas production has now hit 184 million cubic meters a day

CAIRO: Egypt is looking to use its vast, newly tapped undersea gas reserves to establish itself as a key energy exporter and revive its flagging economy.
Encouraged by the discovery of huge natural gas fields in the Mediterranean, Cairo has in recent months signed gas deals with neighboring Israel as well as Cyprus and Greece.
Former oil minister Osama Kamal said Egypt has a “plan to become a regional energy hub.”
In the past year, gas has started flowing from four major fields off Egypt’s Mediterranean coast, including the vast Zohr field, inaugurated with great ceremony by President Abdel Fattah El-Sisi.
Discovered in 2015 by Italian energy giant Eni, Zohr is the biggest gas field so far found in Egyptian waters.
The immediate upshot has been that since September, the Arab world’s most populous country has been able to halt imports of liquified natural gas, which last year cost it some $220 million (190 million euros) per month.
Coming after a financial crisis that pushed Cairo in 2016 to take a $12 billion loan from the International Monetary Fund, the gas has been a lifeline.
Egypt’s budget deficit, which hit 10.9 percent of GDP in the financial year 2016-17, has since fallen to 9.8 percent.
Gas production has now hit 184 million cubic meters a day.
Having met its own needs, Cairo is looking to kickstart exports and extend its regional influence.
It has signed deals to import gas from neighboring countries for liquefaction at installations on its Mediterranean coast, ready for re-export to Europe.
In September, Egypt signed a deal with Cyprus to build a pipeline to pump Cypriot gas hundreds of kilometers to Egypt for processing before being exported to Europe.
That came amid tensions between Egypt and Turkey — which has supported the Muslim Brotherhood, seen by Cairo as a terrorist organization, and has troops in breakaway northern Cyprus.
In February, Egypt, the only Arab state apart from Jordan to have a peace deal with Israel, inked an agreement to import gas from the Jewish state’s Tamar and Leviathan reservoirs.
A US-Israeli consortium leading the development of Israel’s offshore gas reserves in September announced it would buy part of a disused pipeline connecting the Israeli coastal city of Ashkelon with the northern Sinai peninsula.
That would bypass a land pipeline across the Sinai that was repeatedly targeted by jihadists in 2011 and 2012.
The $15-billion deal will see some 64 billion cubic meters of gas pumped in from the Israeli fields over 10 years.
Independent news website Mada Masr reported that Egypt’s General Intelligence Service is the majority shareholder in East Gas, which will earn the largest part of the profits from the import of Israeli gas and its resale to the Egyptian state.
Kamal said he sees “no problem” in that, adding that the agency has held a majority stake in the firm since 2003.
“That guarantees the protection of Egyptian interests,” he said.
Ezzat Abdel Aziz, former president of the Egyptian Atomic Energy Agency, said the projects were “of vital importance for Egypt” and would have direct returns for the Egyptian economy.
They “confirm the strategic importance of Egypt and allow it to take advantage of its location between producing countries in the east and consuming countries of the West,” he said.
The Egyptian state is also hoping to rake in billions of dollars in revenues from petro-chemicals.
Its regional energy ambitions are “not limited to the natural gas sector, but also involve major projects in the petroleum and petrochemical sectors,” said former oil minister Kamal.
Minister of Petroleum and Mineral Resources Tarek El Molla recently announced a deal to expand the Midor refinery in the Egyptian capital to boost its output by some 60 percent.
On top of that, the new Mostorod refinery in northern Cairo is set to produce 4.4 million tons of petroleum products a year after it comes online by next May, according to Ahmed Heikal, president of Egyptian investment firm Citadel Capital.
That alone will save the state $2 billion a year on petrochemical imports, which last year cost it some $5.2 billion.
Egypt is also investing in a processing plant on the Red Sea that could produce some four million tons of petro-products a year — as well as creating 3,000 jobs in a country where unemployment is rife.