Business

ISTANBUL — Investment in the oil and gas industry will see a tentative recovery in 2017 after an "unprecedented contraction" in 2016 and 2015 in face of stubbornly low energy prices, the International Energy Agency (IEA) said in a report on Tuesday.

The IEA said upstream oil and gas investment — such as in exploration and production facilities — fell 26 per cent in 2016 in nominal terms to $434 billion (380 billion euros), similar to the decline seen in 2015.

IEA Executive Director Fatih Birol told AFP: "We do not expect a major rebound, as many hoped, in order to make up the difference."

Total global energy investment fell by 12 per cent in 2016, with spending on the electricity sector around the world for the first time exceeding the combined spending on oil, gas and coal, the IEA said.

The IEA, an inter-governmental group set up to ensure the reliable supply of energy, released the report at the World Petroleum Congress in Istanbul, where energy bosses are debating the consequences of the dramatic plunge in oil prices.

Participants have warned that the sharply lower investment levels seen in the last two years risk compromising security of supply for consumers, as discoveries and development of new oilfields falter. 

According to the IEA, investment in oil and gas in 2016 was little more than "half the peak level of 2014, when oil prices started to fall sharply".

It described the fall in investment in 2015 and 2016 totalling $345 billion as "an unprecedented contraction" and was partly due to reduced drilling activity. 

But asking whether there could now be "light at the end of the tunnel", it said that the oil industry has reacted to the price crisis by drastically ramping up efficiency.

This improved the financial health of companies and their cash flow, creating the chance of a slight recovery in investment in 2017.

It estimated, on the basis of company announcements, that global oil and gas upstream investment in 2017 is set to increase by almost 6 per cent to just below $460 billion in nominal terms. 

But it added: "Many of the largest oil and gas companies are still implementing a cautious approach in scaling up their spending plans."

It said that firms would be less ambitious in their planning were oil to fail to recover to above $50 a barrel.

Birol said that the investment was not evenly spread, with investments "very weak or flat in the Middle East, Russia, and Africa", but up sharply in the US shale sector.

"This shows a two-speed investment picture across the world," he told AFP.

AMMAN — Royal Jordanian (RJ)  President/CEO Stefan Pichler stressed the airline’s commitment to offer compelling ground and air services to its guests, according to a statement received by The Jordan Times on Monday.

RJ has long been known for its high-quality food and beverage offerings to its guests, the statement said.

Pichler asserted that “Royal Jordanian stays constantly in touch with our customers and listens to their suggestions, keen to accommodate their needs. In this regard, RJ has recently substituted the hot meals with sandwiches and snacks meals on short- and medium-haul flights of up to three-hour duration”.

The move follows the industry trend of regional and international full-service air carriers, which offer snacks on such flights while most low cost airlines are charging for food and beverages.

Pichler said: “Following our guests’ remarks and suggestions, RJ is currently coordinating with its catering partner, Dnata Company, to review the food and beverages offered.”

AMMAN — Inflation, measured through consumer prices, rose by 3.7 per cent in the first half of 2017 compared to the figure recorded at the same period of 2016, the Jordan News Agency, Petra, reported on Tuesday.

According to the Department of Statistics report, an increase in transportation charges was the main cause for the computed rise. 

Prices of vegetables, dried and canned legumes, tobacco and cigarettes, property rents, and charges for cultural and entertainment also went up, contributing to the rise, according to Petra. 

BEIRUT — Syria's six-year conflict has ravaged its infrastructure and caused losses to its economy of $226 billion, according to estimates published by the World Bank on Monday.

The devastating war has killed over 320,000 people and displaced more than half the country's population since it began in March 2011.

The World Bank said the destruction ran much deeper than death tolls or infrastructure damage alone could capture.

"The war in Syria is tearing apart the social and economic fabric of the country," World Bank Vice President for the Middle East and North Africa Hafez Ghanem said in a statement.

"The number of casualties is devastating, but the war is also destroying the institutions and systems that societies need to function, and repairing them will be a greater challenge than rebuilding infrastructure — a challenge that will only grow as the war continues," he said.

The World Bank report found that cumulative gross domestic product (GDP) losses since Syria's conflict erupted "have been estimated at $226 billion, about four times the Syrian GDP in 2010". 

The body estimated that the conflict had damaged or destroyed 27 per cent of Syria's housing stock and about half the country's medical and educational facilities.

Those calculations were based on cross-checked satellite imagery of certain cities and areas and extrapolated based on a conflict intensity model.

The World Bank found an average of 538,000 jobs had been lost annually between 2010 and 2015. It said more than three in four Syrians of working age — or about 9 million people — were neither employed nor enrolled in any form of school or training. 

"The long-term consequences of this inactivity will be a collective loss of human capital leading to a shortage of skills in Syria," it said.

The damage to the health sector has also had devastating effects, with the World Bank saying more people were estimated to have died from deficiencies in the medical system than directly from fighting in the war.

"The breakdown of the systems that organise both the economy and society, along with the trust that binds people together, has had a greater economic impact than the destruction of physical infrastructure," the World Bank said.

The report estimated that if the conflict were to end this year, GDP could regain 41 per cent of its pre-conflict level within four years.

That figure shrinks however for each year the conflict continues, the institution found.

AMMAN — The Jordan Securities Commission (JSC) issued 2017 instructions on corporate governance for listed shareholding companies which firms must abide by, according to a JSC statement received by The Jordan Times on Monday. 

Previously, companies did not have to abide by former JSC governance instructions, issued in 2009, as they only represented guidelines for them, according to the JSC statement. 

JSC Chief Commissioner Mohammad Hourani said the instructions, which he described as in line with international practices, would further protect investors and improve the investment climate in Jordan.

Hourani underscored the importance of the instructions issued, pointing out that previously, many shareholding companies faltered because such instructions were not there to assist them.

Currently, corporate shareholders might face some difficulties in applying all new governance provisions. Under the JSC regulations, companies would not have to adopt them in full until April 2018, Hourani indicated.  

DOHA — Qatar on Sunday announced it was establishing a committee to pursue compensation claims potentially worth billions of dollars over the country's "blockade" by Gulf states.

Attorney General Ali Bin Fetais Al Marri said the Compensation Claims Committee would deal with cases including major companies, such as Qatar Airways, and individual Qatari students who have been expelled from the countries where they were studying. 

"This committee will receive all claims, whether from the public sector, private sector or individuals," Marri told journalists at a press conference in Doha.

Potential plaintiffs such as Qatar Airways, banks or individuals will be able to file claims over what Doha has labelled a "siege" in courts at home and abroad, including in Paris and London, Marri said.

On June 5, Saudi Arabia, the United Arab Emirates, Bahrain and Egypt announced they had cut all ties with Qatar, accusing Doha of supporting extremists. 

The four countries pulled their diplomats from Qatar, suspended all flights to and from Doha and ordered all Qataris to repatriate within 14 days. 

Qatar has said thousands of its citizens have been affected by the isolation measures in what has emerged as the worst diplomatic crisis to hit the Gulf in recent years. 

Doha's National Human Rights Committee in June said the sanctions represented a violation of the rights of some 140 Qatari pupils studying in the UAE, Saudi and Bahrain.

Qatar Airways has made Doha a global hub in just a few years, but experts say neighbouring Gulf states barring it from their airspace threatens its position as a major transcontinental carrier.

On June 22, the four Arab states issued a 13-point list of demands, including downgrading ties with Iran and shutting down broadcaster Al Jazeera, as a prerequisite to lift the sanctions. 

Doha refused to comply with the demands and denies accusations of ties to extremist groups.

The Compensation Claims Committee will be overseen by Marri, as well as officials from the ministry of foreign affairs and ministry of justice.

HAMBURG — The World Bank on Saturday launched a public-private loan programme aimed at providing over $1 billion to support women entrepreneurs in developing countries, a project first initiated by US President Donald Trump's daughter Ivanka Trump.

The event put a spotlight on the powerful political role Ivanka Trump plays in the White House, where she has a formal job as an adviser to her father, and has frequently met with world leaders, including German Chancellor Angela Merkel and Canadian Prime Minister Justin Trudeau.

The World Bank said initial funding of $325 million was coming from donors including Germany, the United States, Saudi Arabia and the United Arab Emirates, and would be matched by hundreds of millions of dollars in additional private capital.

"This is going to be what we hope will be a multi-billion dollar fund to support women entrepreneurs," World Bank President Jim yong-kim said at a launch attended by six of the 20 world leaders meeting at the G-20 summit in Hamburg and IMF Managing Director Christine Lagarde.

"This is not a cute little project. This is going to be a major driver of economic growth in the future... and it's going to drive gender equality at the same time," he said.

The programme, which aims to start awarding loans before year end, will work with governments "to improve laws and regulations that are stifling women entrepreneurs" and push banks to free up funds for female-owned businesses.

It will also create an online mentoring tool to match women business owners in developing countries with advisers such as Ivanka Trump, Kim said. 

Women business owners at the event said it was important to tackle legal barriers that prevent women from owning property and limit their access to funds.

"The empowerment of women is absolutely essential," United Nations Secretary General Antonio Guterres told participants, decrying what he called regression in women's rights even in industrialised countries.

Merkel said she was impressed how quickly the bank had realised the project, which was first initiated five months ago.

"If everything went as quickly at the World Bank — then we would be much more efficient," she said.

LONDON — Three of the West's biggest energy corporations are lobbying Qatar to take part in a huge expansion of its gas production, handing Doha an unintended but timely boost in its dispute with Gulf Arab neighbours.

The chief executives of ExxonMobil, Royal Dutch Shell and France's Total all met the Emir Sheikh Tamim Bin Hamad Al-Thani, in Qatar before it announced a plan on Tuesday to raise output of liquefied natural gas (LNG) by 30 per cent.

Company and industry sources told Reuters that the CEOs had expressed interest in helping Qatar with its ambition to produce 100 million tonnes of LNG annually - equivalent to a third of current global supplies - in the next five to seven years.

The companies already have large investments in countries on both sides of the dispute, and are keen to remain neutral after Saudi Arabia, the United Arab Emirates, Bahrain and Egypt severed ties with Doha on June 5.

Spokespeople from all three firms declined comment. However, a top executive from one energy major looking into expanding in Qatar said the huge business opportunity was worth the considerable political risk.

"There is only one policy here - you have to behave like a commercial corporation," the executive told Reuters. "You have to make your choices purely economically and be Qatari in Qatar, Emirati in the Emirates."

Energy sales have powered Qatar's rapid rise as a regional player since the late 1990s, and the oil majors' interest in the LNG expansion underline its longer-term economic muscle during the political row with its neighbours.

Chief executives Darren Woods of Exxon and Ben van Beurden of Shell both met the emir after the four Arab countries imposed the sanctions. Total chief Patrick Pouyanne has also visited Doha in recent weeks.

Qatar, the world's largest LNG supplier and second biggest gas exporter after Russia, has some of the lowest production costs. The plan was seen as an opening shot in a price war as Doha tries to defend its market share, especially against supplies from US shale deposits where costs are higher.

Willingness to invest 

The four Arab countries, which have demanded Qatar stop fostering terrorism and courting Iran, said after meeting on Wednesday that Doha's response to their grievances had been negative.

Saudi Foreign Minister Adel Al-Jubeir said the political and economic boycott would remain until Qatar improved its policies. Further steps would be taken at the appropriate time, he said. 

Doha denies aiding terrorism and its foreign minister, Sheikh Mohammed bin Abdulrahman Al-Thani, accused the four of "clear aggression" while adding that Qatar continued to call for dialogue to settle the dispute. 

Exxon, Shell and Total have already invested extensively in Qatar, particularly in projects to liquefy gas, allowing it to be shipped by tanker to consumer markets where transport by pipeline is not feasible. 

Woods met the emir on June 26, discussing "cooperation" with Qatar, where Exxon has been present since 1935, according to a statement carried by the state news agency. 

Industry sources close to the talks said that "the Exxon CEO was very keen to join the new gas capacity expansion and expressed willingness to invest".

Woods replaced Rex Tillerson, under whom Exxon helped to build Qatar's LNG industry until he left to become US Secretary of State earlier this year.

Exxon will be the largest foreign investor in Qatar in 2017, with most money going into LNG facilties, representing around seven per cent of its global portfolio, according to consultancy WoodMackenzie.

Shell's Van Beurden was among the first foreign company leaders to visit Qatar after the crisis broke out, meeting the emir on June 14. This was followed several days later by a new deal under which Qatar will supply Shell, the world's largest LNG trader, with 1.1 million tonnes annually for five years starting in 2019.

Shell's operations in Qatar include Pearl GTL, the world's largest gas liquefaction plant. Its overall investments in the state represent around six per cent of its global portfolio.

The three firms had been expecting Qatar to expand its LNG exports since it lifted a self-imposed moratorium on development of the North Field, the world's biggest natural gas field it shares with Iran, the sources said.

Oil and gas companies generally are no strangers to operating in risky areas. This week Total became the first Western energy firm to invest in Iran since the lifting of sanctions against the country. The project, phase 11 of Iran's South Pars development, draws gas from the same reservoir as Qatar's North Field. 

Total chief Pouyanne discussed new opportunities in the LNG sector as well as the company's plans to develop the Al-Shaheen oil field on his trip to Doha, according to a senior source.

Qatar's LNG capacity could be boosted by up to 10 million tonnes per year relatively quickly and cheaply by optimising existing facilities and upgrading a small number of units, a process known as "debottlenecking", according to a senior industry source.

Beyond that, the expansion would require building new liquefaction terminals involving significant investments, which the energy giants can offer. 

"Qatar LNG is really an important part of their overall portfolio, especially for Exxon but Total and Shell are also material LNG players there," Tom Ellacott, analyst at WoodMackenzie said.

"Qatar LNG is very competitive. Debottlenecking will be a relatively cheap option to increase capacity, but with the industry at a low point in the cost cycle, it may also be a good time to install new terminals."

BRUSSELS — The European Union and Japan reached broad political agreement on a historic free trade deal on Wednesday capping four years of negotiations, EU Trade Commissioner Cecilia Malmstroem said.

The hard-won deal marks a big win for free trade two days before a G-20 summit in Germany in which US President Donald Trump is expected to defend his “America First” protectionist stance.

“We’ve reached political agreement at ministerial level on an EU-Japan trade deal,” Malmstroem said in a tweet, after talks in Brussels with Japanese Foreign Minister Fumio Kishida.

The two sides “ironed out the few remaining differences” and will now “recommend to leaders to confirm this at summit” on Thursday, Malmstroem added.

Japanese Prime Minister Shinzo Abe is set to officially rubberstamp the outline of the trade deal at a meeting on Thursday with EU Council President Donald Tusk and EU Commission chief Jean-Claude Juncker.

The EU and Japanese economies combined account for a colossal 28 per cent of global output making the deal one of the biggest trade pacts ever attempted.

The “political agreement” on the trade deal covers some of the accord’s toughest aspects but leaves aside details that could still prove difficult.

At the heart of the accord is an agreement for the EU to open its market to the world-leading Japanese auto industry, with Tokyo in return scrapping barriers to EU farming products, especially dairy.

Left untouched for now are the controversial investment courts that have stoked opposition to trade deals in the EU nations, including Germany and France.

The deal could be seen as a provocation to Trump who pulled the United States out of the 12-nation Trans-Pacific Partnership this year, in favour of striking country-to-country bilateral deals, including with Japan.

The EU’s Malmstroem and Agriculture Commissioner Phil Hogan visited Tokyo last week to unblock the talks, with tariffs on European cheese a key sticking point.

Brussels wants Japan to eliminate its 30 per cent tariffs on some EU-made cheese, while Tokyo wants duties cut on cars which it exports to the 28-member bloc.