Saudi operations help to grow Shuaa earnings

Shuaa Capital has expanded operations in Saudi Arabia. (Supplied)
Updated 06 November 2018
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Saudi operations help to grow Shuaa earnings

  • Highest quarterly profit since 2008
  • Deal struck with Jabal Omar Development

LONDON: Dubai-headquartered investment house Shuaa Capital has posted its highest quarterly profit since 2008 as it continues to expand its operations in Saudi Arabia, UAE and Kuwait.
The company reported a 30.1 million dirham ($8.2 million) net profit for the third quarter this year, a 31 percent increase year-on-year, according to a filing on the Dubai stock exchange.
Year-to-date net profit stood at 56.4 million dirhams, slightly down on the 59.8 million dirhams recorded in the same period in 2017.
The increased profit has been driven by growth in the company’s asset management arm which oversees the development of real estate projects in Saudi Arabia and the UAE. The division reported a 8.5 million dirham profit in the third quarter, a 35 percent increase on the previous year.
Shuaa expanded its presence in Saudi Arabia earlier this year, signing a preliminary deal with the Saudi real estate developer Jabal Omar Development Company to jointly manage real estate investment funds in the Kingdom.
Jabal Omar’s existing flagship development is in Makkah, just walking distance from the Grand Mosque. Set to be delivered in phases, the project will feature high-rise towers, luxury apartments, residential units and shopping malls.
The investment house also worked with the hotel management firm Rotana on the Centro Waha Riyadh hotel which opened in the Saudi capital city in October last year. The hospitality project was funded by the Shariah-compliant Shuaa Saudi Hospitality Fund I.
Kuwait is another target market for the firm, said Shuaa chief executive Fawad Tariq-Khan, in a DFM statement, saying the company will build on its acquisition of Amwal International Investment Company and its subsidiary Noor Capital Markets, which was first announced in July 2017.
“Our recent acquisition of Amwal International Investment Company in Kuwait, and intended business affiliations are meant to help us benefit from synergies and capture inbound and outbound business prospects,” he said.
“Activating these investments and partnerships is imminent, and we expect the final quarter to be another game changing quarter for the group,” he said.
This quarter’s results continue the growth seen in the second quarter where profits rose by 21 percent to reach 14.6 million dirhams.
However, Shuaa’s profits more than halved in the first quarter compared to 2017, a decline which Shuaa’s management partly blamed on lower interest income from its lending arm following a reduction in bank debt at its lending subsidiary, Gulf Finance Corporation.


Angola battles to revive oil exploration as output declines

Updated 16 November 2018
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Angola battles to revive oil exploration as output declines

  • Without another mega-project like Total’s Kaombo on the horizon and fields getting old, Africa’s second-largest crude producer is facing a steep decline
  • Sonangol, the state oil company, is negotiating contracts for new blocks with oil majors and Angola plans to hold an auction next year

LUANDA: On Saturday, nearly two decades after securing the initial rights, Total’s CEO, Patrick Pouyanne, was in Luanda to snip the ribbon on a $16 billion oil project. It is not clear when he, or his peers, will be celebrating in Angola again.

Without another mega-project like Total’s Kaombo on the horizon and fields getting old, Africa’s second-largest crude producer is facing a steep decline unless it can revive exploration in what was once one of the world’s most exciting offshore prospects.
Sonangol, the state oil company, is negotiating contracts for new blocks with oil majors and Angola plans to hold an auction next year, the first tender for exploration rights since 2011.
It is a race against time for a country where oil accounts for 95 percent of exports and around 70 percent of government revenues. Luck will also play a part, as it always does in exploration where finding oil can never be guaranteed.
But without new projects, output could fall to 1 million barrels per day by 2023, according to the oil ministry. That is down from 1.5 million today and nearly half of what Angola was producing a decade ago. The country risks having its OPEC quota cut and is struggling to ensure the long-term feed for its $10 billion liquid natural gas plant.
President Joao Lourenco won an August 2017 election promising an “economic miracle” in Angola, which despite its oil wealth struggles to provide basic services to a mostly impoverished population that is growing at 3 percent a year. But falling oil production means a third consecutive contraction is expected in 2018, even while annual inflation runs at 18 percent.
To turn things around, Angola has asked international oil companies to the table, offering better fiscal terms and more collaboration.
With the time from exploration to first oil on new areas anything from five to 10 years, Angola is also offering tax breaks to encourage companies to link existing marginal discoveries to operating production platforms.
There are signs the measures are working, though some oil experts wonder at what cost for the southwest African country.
“The level of exploration activity in Angola is beginning to change,” Sonangol’s chairman, Carlos Saturnino, said at Saturday’s inauguration.
He expects between five and 10 new concessions to be signed next year.
Exxon, he said, had shown interest in some blocks in southern Angola’s unexplored Namib basin, while advanced discussions are being held with BP, Equinor and ENI for the rights to the ultra-deep offshore blocks 46 and 47.
BP and ENI declined to comment. Equinor and Exxon did not immediately respond to a request for comment.
Total, which operates 40 percent of Angola’s production, plans to drill its first exploration well in four years. Beneath 3,630m of water on block 48, it will be one of the world’s deepest.
“We hope it will be a play-opener for the ultra-deep in Angola,” said Andre Goffart, senior vice president for development. “We are seeing a new wave of exploration in Angola.”
These signs of fresh exploration come after a period of near-paralysis due to a lack of drilling success, a slump in oil prices and a deteriorating relationship between Sonangol and the oil majors.
Angola’s offshore reserves are expensive to explore and develop, making it a hard sell for shareholders when oil is at $40. The number of rigs operating off Angola’s shores dropped from 18 in early 2014 to just two in 2017, according to oil services company Baker Hughes.
The steep drop in prices from 2014 came just as companies were smarting from the failure to discover Brazil-like oil
reservoirs beneath a layer of salt on the African side of the Atlantic. The search for the “Angolan pre-salt” resulted in some of the most expensive dry wells ever drilled and sapped exploration appetite.
Critics say the situation was exacerbated by Isabel dos Santos, the former president’s daughter and previous chair of Sonangol, under whose leadership new projects ground to a halt. Dos Santos denies allegations of mismanagement, saying she helped turn around an almost bankrupt company.
“There are few places in the world right now where the oil majors are in as good a negotiating position as here,” said one international oil executive in Luanda on condition of anonymity.
Some local experts fear the deals Angola is striking are too beneficial for the companies, although details remain private.
“If Angola gives away too much it could create problems further down the line,” said Jose Oliveira, an oil specialist at the Catholic University in Luanda.
But the country has little choice given its imminent production decline and a lack of money or expertise to lead the drilling campaigns itself.