Oman oil minister excited to be part of Sri Lanka oil refinery project

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Omani oil minister Mohammed bin Hamad Al-Rumhy, center, and Sri Lankan Prime Minister Ranil Wickremesinghe lay the foundation stone for the planned $3.85 billion oil refinery. (Reuters)
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A project plan board of the $3.85 billion oil refinery project at the groundbreaking site in the village of Mirijjawila in Hambantota, Sri Lanka on Sunday, March 24, 2019. (Reuters)
Updated 24 March 2019
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Oman oil minister excited to be part of Sri Lanka oil refinery project

  • Sri Lanka originally said Oman’s oil ministry planned to take a 30 percent stake in the refinery
  • The India-based Accord Group is the main investor in the refinery project

HAMBANTOTA, Sri Lanka: Oman’s oil minister said on Sunday he was excited to be part of a Sri Lanka oil refinery project, an indication plans for the sultanate’s involvement may be back on track.
The comments by Mohammed bin Hamad Al-Rumhy came after an Omani official last week had denied the Middle Eastern country had agreed to invest in the project.
Rumhy joined Sri Lankan Prime Minister Ranil Wickremesinghe at the laying of the foundation stone for the planned $3.85 billion oil refinery at Hambantota on the south coast, which would be the island’s biggest foreign direct investment.
Sri Lanka originally said Oman’s oil ministry planned to take a 30 percent stake in the refinery, which will be built near a $1.4 billion port controlled by China Merchants Port Holdings.
The India-based Accord Group is the main investor in the refinery project, through a Singapore entity it controls.
“We have Chinese investment, we have Indian investments, we have Oman interest for investment, and we have investment interest from many other countries,” Wickremesinghe said at the event. “It shows that Hambantota will become the multinational investment zone.”
A senior Sri Lankan minister, who declined to be identified because he is not authorized to talk to the media, said Oman had given a commitment to invest in the refinery and there would not be any turning back.
But on Wednesday, Salim Al-Aufi, the undersecretary of Oman’s oil and gas ministry, said “no one on this side” was aware of the investment.
Sri Lanka’s investment board said last week that another Oman entity, Oman Trading International, was willing to supply all of the refinery’s feedstock needs and take on the marketing of the oil products it would produce.
Sri Lanka, India and China have been vying for political influence in Sri Lanka in recent years, with investment a key part of the battleground.
China is the biggest buyer of Omani oil. In January it imported about 80 percent of Oman’s crude exports, Oman government data shows.
An investment zone is planned by China Harbor Engineering Corp. alongside the port.


Lufthansa profit warning spooks European airline sector

Updated 17 June 2019
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Lufthansa profit warning spooks European airline sector

  • Ryanair Chief Executive Michael O’Leary last month warned of the impact of what he called ‘attritional fare wars’

FRANKFURT: Germany’s Lufthansa sent shockwaves through the European airline sector on Monday as it cut its full-year profit forecast, with lower prices and higher fuel costs compounding the effect of losses at its budget subsidiary Eurowings.
The warning follows gloomy comments last month from Irish budget airline Ryanair, which vies with Lufthansa for top spot in Europe in terms of passengers carried. Air France-KLM also reported a widening quarterly loss last month.
In a statement issued late on Sunday, Lufthansa forecast annual EBIT of between €2 billion and €2.4 billion, down from the previously targeted €2.4 billion to €3 billion.
“Yields in the European short-haul market, in particular in the group’s home markets, Germany and Austria, are affected by sustained overcapacities caused by carriers willing to accept significant losses to expand their market share,” it said.
European airlines are locked in a battle for supremacy, with a surfeit of seats holding down revenues and higher fuel costs adding to the pressure. A number of smaller airlines have collapsed over the past two years.
Lufthansa cited falling revenue from its Eurowings budget business as a key reason for the profit warning.
“The group expects the European market to remain challenging at least for the remainder of 2019,” it said.
It also pointed to high jet fuel costs, which it said could exceed last year’s figure by €550 million, despite a recent fall in crude oil prices.
Ryanair Chief Executive Michael O’Leary last month warned of the impact of what he called “attritional fare wars” and said four or five European airlines were likely to emerge as the winners in the sector.
“No signs that anyone is prepared to reduce capacity, therefore we would anticipate the wave of consolidation in European short haul is not over,” said analyst Neil Wilson, analyst at London-based broker market.com.
Earlier this month global airlines slashed a widely watched industry profit forecast by 21 percent as an expanding trade war and higher oil prices compound worries about an overdue industry slowdown.
Lufthansa’s problems are centered on its European business, with a more positive outlook for its long-haul operations, especially on transatlantic and Asian routes.
Eurowings management is due to implement turnaround measures to be presented shortly, Lufthansa said, adding that efforts to reduce costs had so far been slower than expected.
Lufthansa’s adjusted margin for earnings before interest and tax (EBIT) was forecast between 5.5 percent and 6.5 percent, down from 6.5 percent to 8 percent previously, it said in a statement.
Lufthansa also said it would make a €340 million provision for in its first-half accounts, relating to a tax matter in Germany originating in the years between 2001 and 2005.