MANAMA — The first Shariah compliant bank focusing on the investment, financing and service needs of the energy sector is now being formed with a planned paid-up capital of $750 million, having obtained the “in principal” approval of the Central Bank of Bahrain.
First Energy Bank is the latest strategic business concept from Gulf Finance House (GFH) and is designed to capitalize on the anticipated demand for investment in the global energy industry.
According to the International Energy Agency’s World Energy Outlook 2007, the energy infrastructure for the MENA region alone will require approximately $56 billion per year from now through 2030. This means the region’s energy sector will need $280 billion in investment within the next five years. Gulf Finance House is a recognized global pioneer in 21st century energy projects with their visionary concept of a network of Energy Cities. Following the announcement of their latest Energy City project in Libya, after the launch of successful Energy Cities in Qatar and India, establishing a bank focused on the provision of tailored services to the energy marketplace is the logical next step in its continued commitment to the sector.
Commenting on the formation of First Energy Bank, Chairman of the Founding Committee for First Energy Bank, Esam Janahi said yesterday, “A great opportunity comes from the significant demand that is projected for investment in the global energy sector over the next 25 years. First Energy Bank is a response to this imperative and we’re proud to be associated with a Shariah banking concept that will be the very first to offer exclusively tailored investment, financing and service solutions to the energy industry. The establishment of First Energy Bank shows our commitment to the energy sector, building further on our concept of Energy Cities and energy focused business districts.”
According to IEA estimates, world energy demand will increase by 1.8 percent annually through 2030. Demand is anticipated to grow from 83.6 million bbl/d in 2005 to 91.3 million bbl/d in 2010 and to 116.3 million bbl/d in 2030. Natural gas demand is expected to rise by 2.0 percent per year over this time period, more rapidly than any other fossil fuel. To meet this demand, $4.3 trillion of new investment will be required globally in the oil sector through 2030, and approximately $3.9 trillion is projected to be invested in the gas sector. Approximately half of these investments will be in emerging market countries — in particular India and China. More than three-fourths of the investments in oil will be in upstream projects. In addition, upstream investments are projected to account for 60 percent of investments in the natural gas sector.
Peter Panayiotou, acting CEO of GFH added, “A substantial number of these new energy projects will be implemented by private developers who have a sound project concept, yet lack capital and extensive development expertise — two crucial elements that First Energy Bank can provide, thus adding significant value.
Regional companies that focus their business primarily on the energy sector, such as local oil services firms that lack the resources to fully capitalize on the current growth in the sector will also be targeted as potential acquisitions. This pipeline of business will help to grow acquired firms quickly. An ability to provide both capital and deep industry expertise, will create competitive advantages for First Energy Bank’s investments, thus boosting returns.”