Dubai delays Jebel Ali port expansion
Dubai delays Jebel Ali port expansion
A plan to add 1.5 million 20-foot equivalent units (TEU) of annual capacity to Terminal 3 at Jebel Ali will be delayed into 2017, while expansion of Terminal 4 will also be slowed, DP World said without giving details.
The company had announced in July 2015 that it would invest $1.6 billion in Terminal 4, which was to be completed by 2018. Jebel Ali handles shipments not only for the United Arab Emirates but for much of the region.
Since last year, however, growth in the oil-rich economies of the Gulf has slowed because of low oil prices. Saudi Arabia’s imports, for example, shrank 20 percent from a year earlier in May, according to official data released this week.
“After the 2009 financial crisis, trade helped support Dubai in part thanks to government stimulus in the region,” said Dima Jardaneh, head of regional economic research at Standard Chartered.
“Now Dubai’s trade is feeling the impact of a contractionary economic environment and the absence of stimulus.”
DP World’s decision also reflected a subdued outlook for global trade flows. Expansion in the volume of world trade is expected to remain sluggish at 2.8 percent in 2016, unchanged from 2015, the World Trade Organization forecast in April.
“(The) global trade environment remains challenging including for Jebel Ali port,” DP World said, adding that the company handled 7.4 million TEUs of cargo in the UAE during the first half of 2016, down 6 percent from a year ago.
The company had previously disclosed that its consolidated throughput for the first half — volumes at ports which the company controls around the world — was 14.6 million TEUs, down 1.4 percent.
DP World’s decision may be a negative omen for several other ports in the region, which launched multi-billion dollar expansion plans when oil prices were high several years ago in efforts to become trans-shipment hubs for the Gulf.
Abu Dhabi has said it aims to increase the capacity of its new Khalifa Port, only about 50 km down the coast from Jebel Ali, to 15 million TEUs by 2030 from 2.5 million TEUs at present, depending on demand. Qatar and Oman are expanding their ports.
Also on Thursday, DP World reported a 50 percent jump in net profit attributable to shareholders during the first half to $608 million, helped by the acquisitions of Dubai’s Jebel Ali Free Zone and Canada’s Fairview Terminal.
DP World’s revenue for the first half was $2.09 billion, up from $1.90 billion a year earlier.
Potential SABIC deal would affect Saudi Aramco IPO time frame, says CEO Nasser
JEDDAH: A potential deal to buy a stake in petrochemical maker SABIC would affect the time frame of Saudi Aramco's initial public offering (IPO), the oil firm's president and CEO Amin H. Nasser said Friday.
The IPO of around 5 percent of Aramco, which was initially to take place this year but is now more likely to happen later, would be the world's biggest listing, raising up to $100 billion.
Nasser said that buying a stake in a chemical company like SABIC would positively affect Aramco's revenue, Al Arabiya reported.
“We are still in the very early stages of the discussion to buy a stake in SABIC,” the Aramco CEO said.
“Aramco is ready for the initial offer and the timing remains subject to the state's decision.”
Saudi Aramco said on Thursday it is looking at the possibility of buying a stake in SABIC, a move that could boost the state oil giant’s market valuation ahead of the planned IPO.
Aramco said in a statement that it was in “very early-stage discussions” with the Kingdom’s Public Investment Fund (PIF) to acquire the stake in SABIC via a private transaction. It has no plans to acquire any publicly held shares, it said.
In a separate statement, PIF also said talks about a sale were in early stages. “There is a possibility that no agreement will be reached in relation to this potential transaction,” it said.