Business

DHAHRAN, Saudi Arabia — Saudi Arabia's state-owned oil giant is finalising options for its partial privatisation and will present them to its Supreme Council soon, its chief executive said about the centrepiece of the kingdom's efforts to overhaul its economy.

The company has a huge team working on the proposals for the initial public offering (IPO) of less than 5 per cent of the company's value, which include a single domestic listing and a dual listing with a foreign market, CEO Amin Nasser said on Tuesday.

They will be presented "soon" to Aramco's Supreme Council, headed by Deputy Crown Prince Mohammed Bin Salman, who is leading an economic reform drive to address falling oil revenue and sharp fiscal deficits by boosting the private sector, ending government waste and diversifying the economy.

Nasser also said Aramco was seeking to expand globally via joint ventures in Asia and North America.

"We are looking at the current market status that, even though challenging, is an excellent opportunity for growth," Nasser said, adding that he was looking at opportunities in the United States, India, Indonesia, Vietnam and China.

The CEO was speaking to reporters during a rare media visit to the company's extensive, well-guarded Dhahran headquarters, located near where American oilmen first struck the Arabian Peninsula's enormous crude reserves at Well Number 7 in 1938.

Besides proposing to sell a stake in the company, which would require it to release sensitive reserves data, Riyadh has asked Aramco to play a big role in developing industrial projects aimed at stimulating non-oil economic sectors.

Last month, Prince Mohammed said he expected the IPO would value Aramco at at least $2 trillion, but that he thought the figure might end up being higher. Any valuation would account for both oil price expectations and the size of Saudi Arabia's proven oil reserves.

Company officials said Saudi Arabia had discovered a total of 805.6 billion barrels of oil, of which 141.5 billion had already been produced and 260 billion barrels were considered "proven", the industry term for reserves that can definitely be extracted.

Aramco also had 403 billion barrels of reserves it could probably extract, they said, adding that it hoped to add another 100 billion barrels to total reserves by 2025 by increasing the recovery rate by 50-70 per cent using new technology.

Growing demand

Aramco expects global crude oil demand to grow by 1.2 million barrels per day this year, he said, and has seen increasing demand in the United States and India.

"We will meet the call on Saudi Aramco," Nasser said, adding that the company will increase capacity in future if needed, but that for the time being its maximum sustainable capacity would stay at 12 million bpd, with total capacity of 12.5 million bpd.

Saudi Arabia produced an average of 10.2 million bpd of crude in 2015, he said, adding there had been a big drop in oil output among non-conventional and even other conventional producers.

The expansion of the Khurais oilfield will come on stream in 2018, he said, adding that the latest stage of its expansion project at the southeastern Shaybah oil field would be finished "in a couple of weeks".

The increased capacity of 250,000 bpd, taking Shaybah's total production capacity to 1 million bpd, is aimed at rebalancing Saudi Arabia's crude oil quality and at compensating for falling output at other fields as they mature.

The immense Saudi Aramco complex in Dhahran resembles a small city, with its large residential complex, its own hospital, sports stadium and parks.

Inside a sleek control room, technicians monitored huge screens that showed via digital graphics the core elements of the business, from the progress of oil tankers across the oceans to the available crude grades and refining facilities.

At Aramco's research centre nearby, officials showed reporters "the cave", a colourful virtual representation on wraparound screens of drilling operations under the Shaybah oil field.

Industrialisation 

Aramco's continued investment in downstream industry is seen as a crucial element of economic diversification plans. One example of this is its plans to sign an agreement soon with Saudi Basic Industries Corp. (Sabic), the state-run petrochemical and metals conglomerate, to jointly develop an oil-to-chemicals project, an official said in a briefing to reporters.

The project, likely to cost up to $30 billion, would chime with efforts to better integrate the kingdom's energy and industrial sectors. On Saturday, a new energy, industry and mineral resources ministry was created in place of the old oil ministry.

Another example is its huge ship repair and shipbuilding complex that it is developing at Ras Al Khair on the kingdom's east coast to be fully operational by 2021, Nasser said.

The first part of the shipbuilding complex will be ready by 2018, and it will eventually make oil rigs and tankers, Nasser said.

A presentation by the company said the complex would create 80,000 jobs and allow Saudi Arabia to reduce its imports by $12 billion, while increasing the country's gross domestic product by $17 billion.

LONDON – British budget airline easyJet  said strong demand for beach holidays was making up for a drop in travelling in the wake of recent attacks in Europe, and raised its dividend in a sign of its confidence.

Europe's No. 2 low-cost carrier is facing an increasingly competitive market as larger rival Ryanair and others add capacity and low fuel prices help all airlines to cut fares.

But the company said on Tuesday it remained confident about future growth, announcing plans to increase its dividend payout ratio by a quarter to 50 per cent of post-tax income, subject to approval at its annual shareholder meeting.

"Second half pricing guidance implies easyJet is much more confident on the peak summer quarter, citing beach routes in particular," Barclays analyst Oliver Sleath said.

For the 12 months to September 30, easyJet expects to post pretax profit in line with analyst estimates of £721 million ($1 billion), despite reporting a £24 million loss in the first-half, swinging into the red after making a £7 million profit in the period of last year.

Attacks in Paris in November and in Brussels in March hit demand for flights, prompting easyJet to cut prices to encourage bookings and weighing on the results.

Other European airlines including Ryanair, British Airways-owner IAG, Lufthansa and Air France-KLM have warned recently about the impact on tourism from the attacks.

EasyJet's first-half results also suffered from cancelled flights to the Egyptian resort of Sharm El Sheikh over security concerns and air traffic control strikes in France.

"This half has had external events that we haven't seen come close together in this way for over a decade," Chief Executive Carolyn McCall told reporters.

"April was particularity awful on yields because of Brussels and the tail-end of Paris, but there's an improving trajectory on that for May and June."

The airline was seeing strong demand for beach holidays in Spain, Portugal, Italy and Greece, McCall added.

Ryanair is due to announce results for the year ended March on May 23.

EasyJet said it would focus on keeping down costs, setting a target out to 2019 of flat unit costs at constant currency and excluding fuel.

As it grows, the airline is considering larger Airbus A321 jets for its fleet, which is currently focused on the A320. McCall said it was conducting a "rigorous review" to ensure the bigger plane would be compatible with its operations.

AMMAN — Minister of Industry, Trade and Supply Maha Ali on Tuesday invited Greek businesspeople to make investments in Jordan, which she said can be their gateway to regional and international markets. 

Jordan enjoys free trade agreements it signed with Arab countries, the US and Canada and other countries, she told a delegation of businesspeople visiting the Kingdom to participate in the Jordanian-Greek business forum, which commenced Tuesday. 

Ali briefed the delegates on investment opportunities available in the Kingdom, and discussed with them ways to enhance economic cooperation between both countries, the Jordan News Agency, Petra, reported. 

There are several investment opportunities in Jordan and Greece that can be utilised to increase economic cooperation through holding investment projects, Ali said. 

Dimitris Mardas, Greek deputy foreign minister for trade affairs and head of the delegation, expressed his country's keenness to develop economic cooperation with Jordan in various fields, particularly energy.

He also called for encouraging Jordanian and Greek businesspeople to benefit from available investment opportunities in both countries, Petra added.

In 2015, Jordanian exports to Greece stood at nearly $5 million, while exports of Greece to the Kingdom amounted to $41 million. 

At the business forum, organised by Amman Chamber of Industry (ACI) and Amman Chamber of Commerce (ACC), Mardas said that Jordan can benefit from his country's expertise in the field of renewable energy and infrastructure.

He said that reform programmes the Greek government has implemented over the past years paid off as Greece has gradually started to exit the economic crisis and started to regain investors' confidence in its economy.  

ACI Chairman Ziad Homsi said Greece can also play an important role in enabling Jordanian products reach European markets, particularly the Balkan region. 

He said that regional unrest has deprived Jordanian products from access to traditional markets in the Middle East, adding that the industrial sector is ready to remove obstacles that may hold back larger economic cooperation with Greece. 

ACC Chairman Issa Murad described trade exchange between Jordan and Greece as modest, indicating it represents less than 1 per cent of the overall trade volume with European countries. 

ATHENS –– Greek lawmakers passed unpopular pension and tax reforms on Monday that a European official said marked a major advance in negotiations towards unlocking more rescue funds from the country's creditors.

Eurozone finance ministers will hold talks on Greece's progress on economic and fiscal reforms later in the day, and assess if it has met terms of its multibillion-euro bailout.

A positive sign-off on the review will unlock more than 5 billion euros ($5.7 billion) to ease Greece's squeezed finances and cover debt repayments maturing in June and July.

Greece also hopes the sign-off will launch discussions on debt relief, and eurozone officials in Brussels said the finance ministers would discuss how to reprofile its debt to make future servicing costs manageable.

"We have an important opportunity before us for the country to break this vicious cycle, and enter a virtuous cycle," Prime Minister Alexis Tsipras earlier told parliament during a debate on the reforms, which opposition lawmakers voted against.

While markets welcomed the vote, thousands of demonstrators protested outside parliament. Police used tear gas when isolated groups hurled petrol bombs in a central 

Under the measures passed early on Monday, a combination of social security reform and additional taxation aims to ensure Greece will attain savings to meet an agreed 3.5 per cent budget surplus target before interest payments in 2018, helping it to regain bond market access and make its debt load sustainable.

Greece's 10-year bond yield hit its lowest level in four months on Monday, and European Commission Deputy President Jyrki Katainen said the package was "a major step forward".

Eurogroup finance ministers would probably not release more funds right away but further discussions on debt relief would come before a new tranche was released, he told Finnish broadcaster YLE.

'Tombstone for growth'

During the debate, opposition parties argued pension cuts and tax hikes would prove recessionary, dealing another blow to a population fatigued by years of austerity.

"The measures will be a tombstone for growth prospects," said Kyriakos Mitsotakis, leader of the conservative New Democracy Party which leads in opinion polls.

Tsipras was re-elected in September on promises to ease the pain of austerity for the poor and protect pensions after he was forced to sign up to a new bailout in July to keep the country in the eurozone.

Monday's reforms are part of a package that aims to generate savings equivalent to 3 per cent of GDP, raising income tax for high earners and lowering tax-free thresholds.

It increases a “solidarity tax” and introduces a national pension, while phasing out benefits for poor pensioners.

Greeks could face a new bout of taxes within weeks.

Athens has been in talks with lenders over increasing value-added tax, introducing additional taxes on fuel and tobacco, hotel overnight stays and Internet use, officials said.

Finance Minister Euclid Tsakalotos said the reforms would affect the rich and not the poor. Greece had done what was expected of it and deserved debt relief, he said.

"Our word is a contract. We have done what we promised and hence the IMF and Germany must provide a solution that is feasible, a solution for the debt that will open a clear horizon for investors," Tsakalotos told lawmakers.

In Berlin, German government spokesman Steffen Seibert said the finance ministers needed to review the economic reforms before any additional debt relief could be decided on.

TAIPEI –– Taiwanese smartphone maker HTC said Monday its first-quarter revenue plunged by more than half, but that losses in its struggling business should end later this year as it banks on a new flagship product.

Revenue from January to March was down 64 per cent year-on-year to Tw$14.8 billion ($456 million), while net loss in the period was Tw$2.6 billion, the company said in a statement. 

The loss — compared with profit of Tw$360 million a year earlier — marked the fourth consecutive quarter of declines for HTC, once the star of the intensely competitive smartphone sector. 

Results were much worse than expected, according to Yuanta Securities, despite booking gains from selling some properties in the quarter. 

But Chief Financial Officer Chialin Chang was hopeful the recent launch of the HTC 10 in April would boost fortunes.  

"We are actually quite hopeful that the HTC 10 will bring back the momentum," he said. 

"From the internal management perspective, we are hoping the third quarter in the smartphone business we will be able to achieve a breakeven," Chang added. 

The homegrown Taiwanese brand has struggled to maintain its edge as Samsung, Apple and strong Chinese brands like Huawei expand their market share. 

But the company touts its new HTC 10 to have the best smartphone camera on the market. It carries a new feature that gives users more options to personalise home screens than many Android phones. 

HTC has also been cost-cutting to turn the ailing business around, slashing headcount and streamlining its product offerings to focus on high-end phones.

But analysts are still sceptical, with some observers saying the focus on cost-cutting may deter innovation. 

First-quarter results did not yet reflect the launch of its new virtual reality product HTC Vive, which also went on sale in April. 

HTC has been pouring resources into virtual reality, as have its rivals including Samsung and LG. 

The company is one of the early players to venture into virtual reality and has spearheaded an informal alliance to develop the sector — including Warner Brothers, Alibaba and Valve. 

Chang declined to comment on reports that HTC is looking to spin off its virtual reality business, only emphasising that it is a "very high potential market". 

"We're going to put in resources to make sure we have long-term success in this sector," he said. 

Research firm CCS Insight predicts the number of virtual reality devices sold will grow from 2.2 million last year to 20 million in 2018, with smartphone-based devices representing the vast majority.

LONDON –– The number of company bosses in Britain who want the country to stay in the European Union has risen slightly, but just over half think Britain would eventually prosper on its own, according to a survey published on Monday.

The Institute of Directors lobby group said 63 per cent of executives who took part in its survey wanted to stay in the EU, up from 60 per cent in a previous poll in February.

Twenty-nine per cent wanted Britain to leave the bloc, down from 31 per cent, while 8 per cent answered "don't know".

IoD director general Simon Walker said the importance of the EU's single market and the ability to hire skilled workers from across the bloc were making business leaders increasingly supportive of staying in the EU.

"However, more members than not think the UK could ultimately make an economic success of leaving the EU, in particular believing that it would have a positive effect on employment red tape," Walker said in a statement.

Previous polls of business leaders by various employers groups have shown strong support for remaining in the EU. But polls of the public show voters are narrowly divided ahead of the June 23 referendum.

The survey of 1,224 IoD members was conducted between April 13 and 28.

LONDON –– British finance minister George Osborne said on Sunday that homeowners would face a "significant hit" from lower house prices and higher mortgage costs if voters decided to leave the European Union in a referendum in June.

"This isn't just a big question about who we are as a country. This goes to the heart of people's financial security," Osborne said in an interview on ITV television.

"I am pretty clear that there will be a significant hit to the value of people's homes and to the cost of mortgages. That is one example of the kind of impact, economic impact, that we get from leaving the EU."

Osborne and Prime Minister David Cameron have put the economic risks of a so-called Brexit at the heart of their campaign to keep Britain in the EU before the referendum on June 23.

Opinion polls have shown that voters believe that staying in the EU would be best for Britain's economy but they are narrowly divided on how they intend to vote next month.

The Treasury, headed by Osborne, has already said the long-term impact of a Brexit could cost households 4,300 pounds ($6,200) a year by 2030 in terms of lost growth in the economy and earnings.

A new finance ministry report on the short-term effects of a so-called Brexit on Britain's economy will look at the implications of an "Out" vote on the country's housing market, Osborne said.

The report will be published in the next few weeks, he said.

The "Out" campaign says Britain's economy would flourish over the long term outside the EU as the country would be able to strike its own trade deals, spend its EU budget contributions at home and scale back on rules and regulations.

ISTANBUL — Turkish President Recep Tayyip Erdogan on Sunday came up with a novel scheme to rein in the country's high unemployment levels, saying that every company should take on one unemployed person.

Turkey's main private sector organisation, the Union of Chambers and Commodity Exchanges of Turkey (TOBB), has around one-and-a-half million members, Erdogan said in a speech to business leaders.

"If each member takes on one person... that would mean work for 1.5 million unemployed people" said Erdogan.

"Unfortunately, we cannot take our money to the grave. It remains here. In that case, let's give work to those who don't have any," he told a conference on health and work security in Istanbul.

"What would a company lose?" he asked rhetorically.

"Will it collapse if it hires one person? No, on the contrary, it will benefit. It's as simple as that, " he concluded, to measured applause from the assembled business leaders.

Regularly accused of populism, it is not the first time the business community the Turkish president's interventionist approach on economic issues has worried the business community.

He has already made repeated calls on Turkey's central bank to lower interest rates, at the risk of boosting inflation.

After a prosperous decade, the Turkish economy has dropped off since 2012, with economic growth slowing to 4 per cent last year, a high public spending deficit and unemployment at over 10 per cent.

The country has also been shaken by a series of bombings, attributed to Kurdish nationalists or the Daesh group, which have left its tourism sector in crisis.

Nonetheless Standard and Poor's on Friday upgraded its outlook for Turkey's credit rating, judging the prospects for the nation's economy to be stable despite political instability that may dampen growth and reform plans.

Erdogan's prime minister Ahmet Davutoglu announced on Thursday that he was quitting.

RIYADH – The new energy minister of Saudi Arabia, the world's biggest oil exporter, on Sunday pledged continuity in the kingdom's oil policy, after being named in a major government overhaul.

"Saudi Arabia will maintain its stable petroleum policies," Khalid Al Falih said in a statement a day after King Salman appointed him to replace longtime former oil minister Ali Al Naimi.

"We remain committed to maintaining our role in international energy markets and strengthening our position as the world's most reliable supplier of energy," Falih added.

King Salman placed Falih, the chairman of state oil giant Saudi Aramco, to head an expanded energy, industry and mineral resources portfolio.

His predecessor Naimi had led the now-defunct Ministry of Petroleum and Mineral Resources for about two decades.

Naimi oversaw a major change in policy towards the end of his tenure when the Organisation of the Petroleum Exporting Countries refused to cut production despite a price plunge.

Instead, OPEC kingpin Saudi Arabia focused on protecting its market share and driving out less-competitive players, including the developers of US shale oil.

Major oil producers failed to reach an agreement on freezing output in Doha last month as Saudi Arabia insisted any deal must include all OPEC members, including rival Iran which boycotted the talks.

The price collapse, from above $100 in early 2014 to less than $45 on Friday, has intensified Saudi efforts to diversify the economy away from oil which makes up the majority of its revenue.

Falih was appointed as part of a government shakeup that saw several ministries merged in what analysts said reflected the government's determination to diversify the economy.