Business

SINGAPORE – Crude prices rose in Asia Tuesday after Russia and Saudi Arabia pledged to work on addressing a global supply glut, but analysts said gains would be limited after the two sides provided scant detail about their plans.

Saudi Energy Minister Khaled Al Falih and his Russian counterpart Alexander Novak agreed to "act together" to steady the market but stopped short of agreeing to a production freeze.

On the sidelines of the G-20 summit in China, the ministers said they will act "together or in cooperation with other oil productions" and agreed to set up a "joint monitoring group" to offer recommendations to prevent price fluctuations. 

News that the two sides were about to make an announcement sent both contracts soaring Monday but the gains were all but wiped out after the statement.

At about 7:20 GMT, the US benchmark West Texas Intermediate (WTI) was up 78 cents, or 1.76 per cent, at $45.22 and Brent added six cents, or 0.06 per cent, to $47.69. With US markets closed Monday for a holiday, electronic transactions on WTI will be booked Tuesday for settlement purposes.

The comments come three weeks before Russia joins OPEC, of which Saudi Arabia is the kingpin, for talks in Algeria to discuss the supply crisis that has hammered prices for two years.

"Despite the rather nebulous language [of the statement] the market was clearly on the hope side of the equation," OANDA senior market analyst Jeffrey Halley said in a note.

"The longevity of the rally being how long before reality bites with the OPEC meeting still three weeks away."

The previous attempt at reaching a deal in April was scuppered by OPEC member Iran's refusal to agree to any output freeze, and there are worries about the chances of an agreement in Algiers.

HANGZHOU, China — The world's two biggest oil producers Saudi Arabia and Russia said Monday they had agreed to "act together" to try to stabilise oil prices, but failed to make headway on a production freeze. 

The two nations "noted the particular importance of constructive dialogue and close cooperation between the largest oil-producing countries with the goal of supporting the stability of the oil market and ensuring a stable level of investment in the long term," the energy ministers from both countries said.

Their comments came in a joint statement after a meeting at the G-20 summit in China. 

"To this end the ministers agreed to act together or in cooperation with other oil producers," the statement said, adding they had agreed to set up a "joint monitoring group" to offer recommendations aimed at preventing price fluctuations. 

Russia's Energy Minister Alexander Novak described the announcement as marking a "new era" in cooperation between Russia and Saudi Arabia and insisted it would have a "critical significance" for oil markets, news agency Interfax reported. 

But there were no details in the announcement on any elusive agreement to freeze oil output, just weeks before Moscow and OPEC meet in Algeria to discuss the crisis.

The globe's major oil producers have been unable to strike a deal on freezing output, due mainly to a dispute between Saudi Arabia and Iran over Tehran's desire to raise production levels after the lifting of sanctions. 

Saudi Arabia's Energy Minsiter Khaled Al Faleh told Al Arabiya television channel there was "currently no need to freeze production" after meeting Novak.

"A freeze is one of the preferred options but it is not needed for the moment," he said. 

President Vladimir Putin met Saudi Deputy Crown Prince Mohammed bin Salman on the sidelines of the G-20 on Sunday and said they would work to address a global glut and overproduction that has hammered prices for the past two years.

In an interview ahead of the meeting Putin — whose economy slumped into recession on the back of oil price falls — said that a freeze was "the right decision" and called for "compromise".

The oil market has been plagued by a stubborn supply glut that saw prices plunge to near 13-year lows below $30 at the start of 2016. While it has recovered recently, it is still well off highs above $100 seen in mid-2014.

AMMAN — Samsung Levant recently issued a statement in which it said "it is committed to producing the highest quality.

In response to recently reported cases of the new Galaxy Note7, the company said it conducted a thorough investigation and found a battery cell issue. 

“To date [as of September 1] there have been 35 cases that have been reported globally and we are currently conducting a thorough inspection with our suppliers to identify possible affected batteries in the market.

However, because our customers’ safety is an absolute priority at Samsung, we have stopped sales of the Galaxy Note7," the company said in a statement e-mailed to The Jordan Times on Monday. 

For customers who already have the Galaxy Note7 device in the Levant region, Samsung Electronics Levant said it will voluntarily replace their current device with a new one. 

Customers may proceed to the nearest official Samsung Electronics’ Service centre (Jordan, Lebanon, Iraq, Syria and Palestine) to have their units inspected and replaced within the coming short weeks.

"For more information, we kindly ask our customers to contact our service team in their country.”

Kuwait City — The earnings of Gulf-listed firms dropped 8 per cent in the first half of 2016 due to low oil prices and a lack of liquidity, a report said on Sunday.

Net profits of over 650 firms on the region's bourses reached $32.8 billion in the six months against $35.6 billion for the same period of 2015, said Kuwait Financial Centre Markaz.

All posted drops except those on the stock market in Oman, where net earnings rose by 7 per cent, the investment firm said in a report.

Stock exchanges in members of the Gulf Cooperation Council (GCC) were hit hard last year and in the first few months of 2016 as a result of the sharp fall in oil revenues.

They recovered some of the losses in the second quarter as crude prices rose to around $50 a barrel from under $30.

"Persisting lower oil prices, liquidity squeeze and sedate global growth led to decline in GCC corporate earnings during the first half period of 2016, compared with the corresponding period a year back," said the report.

"During the first half of 2016, corporate earnings in the GCC fell by 8 per cent over the same period in 2015."

The GCC groups Bahrain, Kuwait, Oman, Qatar, Saudi Arabia and the United Arab Emirates, which together pump around 18 million barrels of crude oil daily.

In its report, Markaz projected the earnings of companies in the GCC would end the year down 4 per cent.

Profits of companies with medium- and small-sized capitalisation fell by 38 per cent and 22 per cent respectively, while net earnings of large corporates dropped by just 5 per cent, it said.

The drop was attributed to the fall in earnings of commodities, real estate and construction sectors. Banks' earnings remained flat while telecoms and financial services increased, said Markaz.

Profits of firms listed on the Saudi stock market, the largest bourse in the Middle East, dropped 7 per cent with the real estate sector down by 50 per cent, it said.

Hangzhou, China — Chinese President Xi Jinping urged world leaders to avoid "empty talk" and confront sluggish economic growth and rising protectionism as their summit opened Sunday in the scenic city of Hangzhou.

Xi welcomed Group of 20 presidents and prime ministers with a handshake, and an extended clasp with Barack Obama, as both men smiled despite protocol stumbles around the US leader's visit.

The Chinese leader said the world economy "still faces multiple risks and challenges including a lack of growth momentum and consumption, turbulent financial markets, receding global trade and investment".

The rise of protectionism is challenging economic globalisation, imperilling multilateral trade arrangements, and despite regulatory reforms market volatility is gathering pace, he said.

"We hope the Hangzhou summit will come up with a prescription for the world economy and lead it back to the road of strong, balanced, comprehensive and sustainable growth," Xi said.

The G-20 brings together representatives of 85 per cent of the world's GDP and two-thirds of its population. 

But experts fear the gathering will be short on substance, with no acute crisis pushing leaders to defy rising populist sentiment and to take difficult steps such as liberalising trade.

In a circular conference hall in Hangzhou — the eastern city left deserted by a vast security operation — Xi told leaders the G-20 "should work with real action, with no empty talk".

China is hoping a successful meeting will portray it as an assured and powerful nation ready to assume a role on the international stage that befits its status as the world's second-largest economy.

Authorities shut thousands of factories to try to clear the skies of smog, and encouraged residents to leave town on free holidays, as well as detaining dozens of dissidents to prevent any hint of unrest.

VLADIVOSTOK, Russia — Russia hopes to fetch more than $11 billion for a minority stake in the Kremlin's flagship oil producer Rosneft before the end of the year to plug budget holes caused by low crude prices, an industry source told Reuters on Friday.

The sale will be complicated by sanctions imposed on Moscow over its actions in Ukraine and by many investors' wariness of putting money into Russia as well as volatile commodity markets.

But Russia is hoping to repeat the success of Rosneft's initial share offering a decade ago when it raised $11 billion in one of the world's biggest such sales, despite concerns that investors would be spooked by Rosneft's purchase of most of the assets of oil firm YUKOS, bankrupted by the Kremlin.

On Friday, Economy Minister Alexei Ulyukayev said his ministry had received documents needed to kick start the sale of 19.5 per cent in Rosneft, including a valuation and proposals on terms of sale.

An industry source familiar with the sale process said the stake had been valued at over $11 billion. The documents were submitted this week by Rosneftegas, which controls Rosneft on behalf of the government. Italian bank Intesa is advising Rosneftegas on the sale.

In comments to Russian news agencies later on Friday, Ulyukayev said it estimates the stake would be valued at around $11 billion were close to reality.

After privatisation, the government will keep 50 per cent plus one share in Rosneft, the world's largest oil firm by reserves among listed companies.

Rosneft produces over a third of Russia's total output of 10.7 million barrels per day — a figure making Russia the world's biggest producer on a par with Saudi Arabia and the United States.

Russian President Vladimir Putin said the sale of the stake should take place before the end of the year and should involve strategic investors.

"I think we should be aiming precisely for that type of investment. We are getting ready and are planning to do it this year," Putin told Bloomberg News.

Oil major BP owns just under 20 per cent in Rosneft following the purchase of BP's Russian joint venture TNK-BP by Rosneft for $50 billion in 2013.

Rosneft's own market value has fallen to $55 billion since then as a result of low oil prices and sanctions imposed on Russia, Rosneft and its Chief Executive Igor Sechin, one of Putin's closest allies.

At its initial public offering (IPO), Rosneft was worth nearly $80 billion. Western majors will find it difficult to invest in Rosneft due to sanctions but their place could be taken by Asian investors, including from China and India, which have been seeking to develop resources in Russia.

Russia is effectively competing with many other resource rich countries for money from investors to compensate for low commodities prices.

The world's largest non-listed oil firm by reserves and output, Saudi Aramco, is planning to list up to a 5 per cent stake in the next two years, seeking an overall valuation of over $2 trillion.

The industry source said Rosneftegas was asking the government to issue a decree guaranteeing a stable tax regime during the sale of the stake and beyond.

"You cannot attract solid investors if the tax regime keeps changing," the source said.

SAN FRANCISCO — Hewlett-Packard Enterprise (HPE) is looking to sell its software division, perhaps for as much as $10 billion, according to media reports on Friday that cited sources close to the matter.

The move would include HPE shedding the operations of Autonomy Corp., a British software firm bought five years ago in an $11 billion deal that has since been branded a business blunder.

The former HP wrote off nearly $9 billion from the acquisition of Autonomy, which it accused of fudging financial results.

The Wall Street Journal reported that HPE was seeking from $8 billion to $10 billion for its software operations.

According to The Financial Times, a number of private equity funds are interested in the HPE unit.

“As a matter of policy, HPE does not comment on rumours and speculations,” the company said in an e-mail response to an AFP inquiry.

HPE, based in Palo Alto, California, was the product of the November 2015 split-up of computing giant Hewlett-Packard. 

The group divided in two: its enterprise unit, HPE, and the personal computer and printer business HP Inc. that became a household name but faced increasingly fierce competition.

HPE Chief Executive Meg Whitman has continued making moves to dismantle the company.

HPE in May announced plans to spin off its corporate services business.

The unit was to be merged with Computer Sciences Corp. to create a global corporate technology services giant with expected annual revenues of $26 billion.

Whitman at the time described the deal as the “right next step”.

LONDON — Iraqi state oil firm SOMO and Iraq's semi-autonomous region of Kurdistan have begun jointly exporting crude oil from the giant Kirkuk oilfield again after cutting a preliminary deal on revenue-sharing, trading sources said on Thursday.

The development signals a breakthrough in relations between Baghdad and Erbil, which have been disputing how to share oil and budget revenues for several years amid fiscal problems on both sides and their fight against the terror group, Daesh, militants.

The Kirkuk flows, usually amounting to 150,000 barrels per day and exported via the Turkish Mediterranean port of Ceyhan, had been suspended since March as Baghdad pushed Kurdistan to cut a new deal.

Before March, Kirkuk flows were unilaterally handled by Kurdistan. SOMO, the State Oil Marketing Organisation, had seen no cargoes exported on its behalf from Ceyhan since mid-2015, when Kurdistan began independent sales of its own crude and Kirkuk oil.

"Shipments on behalf of SOMO have resumed as of six o'clock this morning... While final details of the revenue-sharing deal are still being worked out, the current flows of Kirkuk are being split 50/50 between SOMO and Kurdistan," one shipping source familiar with the operations said.

Besides Kirkuk, Kurdistan produces around 500,000 barrels per day of crude from its own fields and those will still be marketed independently by the semi-autonomous region.

But the compromise over Kirkuk could be the first step towards a comprehensive deal involving all Kurdish oil.

Baghdad has insisted SOMO is the only entity that can market Iraqi crude. Kurdistan started independent exports after accusing Baghdad of not respecting a previous revenue-sharing deal and not transferring enough money from the federal budget.

Baghdad, which exports most of its oil from the Gulf, has said Erbil was not exporting enough crude under that deal.

Kurdistan urgently needed Kirkuk flows to resume because its own exports do not cover its budget needs, forcing the region to borrow billions of dollars from Turkey, oil firms and trading houses guaranteed by future oil sales.

Lost revenues from the halt in Kirkuk flows had been estimated at more than $1 billion since March.

Last week, Baghdad said that if a new revenue deal were not reached, oil from Kirkuk could be exported by truck via Iran. This week, SOMO blacklisted three ships involved in exporting Kurdish oil.

However, a meeting between Iraqi Prime Minister Haider Al Abadi and Nechirvan Barzani, prime minister of the Kurdistan regional government, seems to have broken the ice this week with a preliminary deal reached on Kirkuk oil.

The trading source said final details on how to split the Kirkuk flows could be worked out by mid-September.

Ezat Sabir, head of the Finance Committee in the Kurdish Council of Ministers, said his understanding was that the 50/50 split of Kirkuk oil would remain until the year-end, after which Baghdad and Erbil would try to return to full revenue-sharing.

Erbil has said it was ready to hand over all oil exports to SOMO if Baghdad agreed to transfer $1 billion to Erbil from the federal budget each month.

DOHA — Fly economy class, share an office, cancel journal subscriptions: these are some of the requests being put to government employees in Qatar, as low energy prices force austerity even among the world's wealthiest citizens.

With huge offshore gas reserves, a small population and billions of dollars of foreign assets, Qatar has weathered the global oil price slump since mid-2014 better than many of its Gulf Arab neighbours.

But the decline in state energy income comes at a time when Doha is pursuing a $200 billion infrastructure upgrade for the 2022 soccer World Cup and building ports and hospitals, squeezing finances and leading to budget cuts.

The foreign workers who make up the bulk of Qatar's 2.3 million population have borne the brunt of cutbacks; thousands have lost their jobs as the government has sought to shield its citizens from the impact of austerity.

But the world's top liquefied natural gas exporter faces a $12.8 billion budget deficit this year, its first deficit in over a decade, and has halved its forecasts for economic growth.

Now even the 300,000 citizens of the world's richest nation per citizen are feeling the pinch in a shake-up of state entities, which employ about nine out of 10 Qatari workers.

"Your responsibility in light of the falling oil prices is bigger," Qatar's Emir Sheikh Tamim said in a November speech that warned against "waste and extravagance", and said the state could no longer "provide for everything" as the country diversifies its economy away from oil and gas.

The austerity measures may be light compared with those felt by expatriate workers and poorer energy-producing countries, but they have nevertheless unnerved some locals for whom affluence and stellar economic growth have been the norm.

A merger of several ministries early this year did not affect the salaries or benefits of Qataris — which are still viewed as sacrosanct — but did entail sharp cuts in "discretionary" spending, according to three government ministry officials.

"We stopped receiving a daily paper," said one of the officials, who said colleagues had been encouraged not to fly business class and to cut back on trips abroad for overseas conferences.

"Journal subscriptions were cancelled. Some who had their own offices were moved into shared offices."

The economy, finance and labour ministries did not respond to requests for comment.

Overseas travel

Another official, from the labour ministry, said as a result of the merger hundreds of Qatari government employees had been left with no work since January as the government scrambled to find them new positions while continuing to pay their salaries.

Staff in the labour ministry were told that travelling abroad for further education while working for the government — an appealing aspect of the job for many Qataris — was now limited to those pursuing technical or vocational degrees, the official said.

He and the other officials declined to be named as they are not authorised to speak publicly.

Qatari authorities say the oil price slump provides an opportunity to curb the excesses of government agencies that have been plagued by inefficiencies for years.

An economic adviser to the government, who also asked to remain anonymous as he is not authorised to speak publicly, said there was a freeze on recruitment in some government departments and more scrutiny on spending. He said reducing inefficiencies, while painful, would benefit the state in the long run, even once oil prices rebounded.

Many Qataris are drawn to public-sector positions which typically involve more favourable working hours and better salaries and benefits than private companies.

It is not yet clear how successful the efficiency drive has been, although in the 2016 budget "minor capital expenditure", an area of discretionary spending that traditionally includes smaller building projects such as refurbishments, fell by 70 per cent year-on-year.

Salaries account for 50 billion riyals ($13.7 billion) — about a quarter — of Qatar's expenditure.

Previous austerity steps in Qatar, such as utility bill increases in late 2015 and a reduction in fuel subsidies earlier this year, have fallen hardest on poorly paid foreign construction workers — as will a 5 per cent sales tax on consumer goods and services planned for 2018.

This trend risks increasingly polarising the country between wealthy Qataris at the top and Asian blue-collar workers at the bottom.

However; Syed Bashar, a former economist with Qatar's central bank, said Qatari workers could increasingly feel the weight of austerity as the government targets state entities to narrow the deficit.

"The government will not be able to provide the vast majority of Qatari jobs indefinitely," he added. "Nor can it guarantee that salaries keep rising as they did. This will be upsetting for some nationals."

KARACHI — Chinese multinational Shanghai Electric is set to buy the utility serving Pakistan's biggest city of Karachi, in a $1.6 billion deal that will be the biggest private-sector acquisition in the country's history.

China is stepping up investment in its South Asian neighbour as part of a $46 billion project unveiled last year that will link its western Xinjiang province to Pakistan's Gwadar port with a series of infrastructure, power and transport upgrades.

"We have received the public announcement of intention for acquisition of up to 66.4 per cent of the shares of K-Electric Limited by Shanghai Electric Limited," a Pakistan Stock Exchange notification said.

The Karachi Electric Corporation, set up in 1913 as a public sector company, was sold to Saudi Arabia's Aljomaih Group in 2005, who in turn sold it to the UAE's Abraaj Capital.

"Chinese interest is tremendous in Pakistan and the new deal would be quite attractive to strengthen cooperation under CPEC," said Taha Javed, director of research at Alfalah Securities, referring to the China-Pakistan Economic Corridor.

"It is the largest ever private-sector acquisition in Pakistan," said analyst Zeeshan Afzal, executive director at Insight Securities.

Pakistan suffers from major power shortages that sap economic growth. Analysts hope the Chinese acquisition can improve the utility's efficiency and reduce blackouts.