Business

PARIS –– A global oil glut that has sent prices tumbling is set to "shrink dramatically" later this year, as wildfires have disrupted Canada's output and demand in India soars, the International Energy Agency (IEA) said on Thursday.

Demand for oil worldwide is set to grow at a "solid" rate in 2016, with India the "star performer" after making up nearly 30 per cent of the global increase in demand in the first quarter of the year, the IEA said.

"This provides further support for the argument that India is taking over from the China as the main growth market for oil," the 29-nation IEA said in its closely watched monthly report.

The oil market has for months been depressed by vast oversupply, badly hurting producers but meaning lower prices at the pump for consumers.

Oil prices surged to six-month highs this week and are well over $46 a barrel after plummeting below $30 early in the year. They are nevertheless far below the $100-a-barrel mark of mid-2014.

In Canada devastating wildfires near Fort McMurray forced a shutdown of 1.2 million barrels a day (mb/d) of production early this month.

The IEA said the events in Canada, however, had not sent oil prices sharply higher, as would have been expected some years ago, with crude having shown little reaction amid overall improved market sentiment.

Iran, the IEA said, had provided the other surprise. 

Its oil production and exports increased slightly faster than expected following Iran's return to the market after the lifting of sanctions in January under its nuclear deal.

'Dramatic increase' 

Iranian oil production in April was nearly 3.6mb/d, a level last achieved in November 2011 before Western sanctions against Tehran were tightened, the IEA noted.

"Even more important for global markets, oil exports reached 2mb/d, a dramatic increase from the 1.4mb/d seen in March," it added.

The rise in Iran helped push production within OPEC (Organisation of the Petroleum Exporting Countries) 330,000b/d higher in April, the group's highest level in more than seven years.

The flow out of Iran also offset concerns about falling production in Libya, Nigeria — which is facing pipeline sabotage and security issues — and Venezuela, grappling with power cuts and other shortages, the agency said.

All eyes will be on OPEC kingpin Saudi Arabia, which has just replaced oil minister Ali Al Naimi after two decades in the post, at the June 2 OPEC meeting for signs of major policy changes on its oil supply.

Riyadh held production steady, IEA said. 

Heading towards 'balance' 

Outside of OPEC, the IEA said it now forecasts a bigger fall in production, of 800,000 mb/d, from its initial estimate of 700,000.

The agency said the latest figures confirmed "the direction of travel of the oil market towards balance".

Global oil stocks are now expected to increase by 1.3 mb/d in the first half of 2016 with a "dramatic reduction" in the second half, to 200,000 mb/d. 

The Paris-based IEA said it was leaving unchanged its outlook for global oil demand growth in 2016, at 1.2 mb/d.

Furthermore, on prices, the IEA said further rises were likely to be "limited" due to plentiful stocks.

Stocks within the OECD countries grew at the start of the year at the slowest pace since the fourth quarter of 2014, the IEA said. They declined in February for the first time in a year.

"This lends support to our view that the global supply surplus of oil will shrink dramatically later this year," it added.

KILMACANOGE, Ireland –– Irish perfumier David Cox is preparing for a sales drive across the sea in Britain, but fears that if the country votes to leave the European Union next month the expansion will be thrown into disarray.

From small exporters like Cox to the central bank, Ireland is finding that uncertainty is the biggest enemy in trying to anticipate the consequences of a British exit or "Brexit".

Cox, whose Fragrances of Ireland business operates from a bustling warehouse south of Dublin, says any blow to the confidence of the British gift shop owners he supplies and their customers will frustrate his plans.

"For a small company like us, we need people to be willing to take a chance and that requires them to be confident that the end consumer has got 20, 30, 40 pounds in his or her pocket to spend on something new. If they're worried, they won't."

Ireland has the EU's fastest growing economy but also more to lose than any other member state when its nearest and largest trading partner decides in a referendum on June 23 whether to quit the union that both countries joined together 43 years ago.

Brexit, which Prime Minister Enda Kenny has called "a major strategic risk" to Ireland, could have far-reaching implications not only for trade and an economy still recovering from a banking collapse in 2008-09.

Peace in British-ruled Northern Ireland, security of energy supplies and freedom of movement for the large numbers of Irish citizens working in Britain might also fall into doubt.

Ireland may not spring to mind as a perfumer producer. But Fragrances of Ireland — like so many firms in a country of only 4.5 million people — has built up its business in export markets from its base in the small County Wicklow town of Kilmacanoge.

Seventy per cent of sales are in the United States, compared with only 10 per cent in Britain. But Cox aims to raise the number of small, independent British retailers that his firm supplies from 150 to 1,000 within the next two years.

Two years is also the period laid down in the EU's Lisbon Treaty for any country to negotiate an EU withdrawal.

No one knows what relationship Britain might hammer out with the EU should it leave, and Cox fears the country's economy and consumer sentiment will weaken during such a period. This would make it tough for his business to establish its name alongside global rivals such as L'Oreal and Estee Lauder.

"Our plans would definitely be stalled because it's easy to cut back on a bottle of perfume you don't know," said Cox, whose firm employs 25 full and part-time workers.

Evidence is growing that the British economy is already slowing before the referendum and the pound has weakened against the euro. Though not yet critical, Cox says this depreciation is hurting his profit margins.

Some larger Irish firms have hedged against the currency risks. However, Cox said there is little a company of the size of his can do to protect itself.

In a survey of members last month, the Irish Exporters Association said 60 per cent reported that the sterling weakness had already affected their business. Just 5 per cent were in favour of Britain leaving the EU.

Ireland's finance ministry warned last month that the level of uncertainty from abroad generally was higher than at any stage since the financial crisis. A further five percentage point depreciation of sterling against the euro would reduce Irish gross domestic product (GDP) by 0.8 per cent a year for the next six years, it estimated.

Ireland is vulnerable to any Brexit-related recession in Britain. Research by Davy Stockbrokers shows that a 1 per cent decrease in UK economic output has led in the past to a 0.3 per cent drop in Ireland.

The Irish economy is still forecast to expand by almost 5 per cent this year, but the country needs all the growth it can achieve to cut a public debt that at almost 90 per cent of the GDP remains a problem.

Contingency plans?

Historic and personal links between Britain and what is now the Irish Republic, which broke away in the 1920s after a guerrilla war of independence, are also strong. Many Britons have family roots in Ireland and Irish citizens resident in Britain can vote in the referendum.

Kenny used his re-election as prime minister last week to highlight the "profound importance" of the referendum and has told his British counterpart David Cameron, who is campaigning to remain in the EU, that he will do whatever he can to help.

Finance Minister Michael Noonan also said this week that Dublin would be urging the Irish community in Britain and Northern Ireland to vote to stay in.

Ireland acknowledges there are limits to its own contingency planning. A Brexit group of senior officials has been set up in Kenny's department, government sources have said. Dublin is "exploring the potential risks and planning accordingly", Noonan told parliament last month.

The central bank has warned that Irish banks, which have lent heavily to the British property sector, would be hurt by a Brexit and has been working with them on their preparations.

But generally advance planning is extremely difficult. "It's unambiguous that the economic effect on Ireland is negative — the question is how big," central bank chief economist Gabriel Fagan said last month. "That depends very crucially on the scenario you envisage regarding the relationship between Britain and the rest of the EU."

Long-term implications

Irish farmers and food producers, major suppliers to the UK, are also vulnerable, but the risks go beyond economics.

Dublin officials worry about the impact on Northern Ireland, which has the only land frontier between the United Kingdom and the rest of the EU. During three decades of violence, this was marked by military checkpoints until a 1998 peace deal.

The fear for many is that any new border restrictions could endanger peace by reenergising demands for a united Ireland which would raise tensions with pro-British unionists. Northern Ireland's nationalist deputy first minister, Martin McGuinness, has already called for a vote on unification if Britain leaves the EU.

Doubts also surround the right of Irish citizens to live and work in Britain, which long predates the EU.

Pro-Brexit campaigners want tougher controls on immigration from the EU. While these demands have been directed at Eastern Europeans, an Irish government-commissioned report said last year that a Brexit also opens the possibility of restrictions on the free movement of workers between Ireland and Britain.

Brexit may not be all bad. The report noted some companies keen to stay in the EU might move from Britain to Ireland.

AMMAN —Inflation rate in the first four months of 2016 was down by 1.2 per cent compared to the same period of 2015, the Department of Statistics (DoS) announced on Thursday.

Main item groups that contributed to the drop were transportation, which went down by 6.3 per cent, meats and poultry (7.6 per cent), fuel and lighting (8.2 per cent), vegetables and dried and canned legumes (4.4 per cent) and fruit and nuts (4.3 per cent), according to a DoS report sent to The Jordan Times.

An increase in prices during the January-April period was witnessed in rents (3.2 per cent), culture and entertainment (5.7 per cent), clothes (3.9 per cent), and education (1.1 per cent). 

DUBAI –– Middle Eastern and North African (MENA) states will need to invest $334 billion over five years to meet rising power demand in the region, a development bank said Wednesday.

The Arab Petroleum Investments Corporation (APICORP) said in a report that more than half the amount, $198 billion, will be needed to add 147 gigawatts (GW) of generating capacity until 2020, to the existing 315GW capacity.

The rest will go for transmission and distribution networks, said APICORP, the development bank of the Organisation of Arab Petroleum Exporting Countries (OPEC).

Electricity demand in the MENA region has been growing, driven by population growth, industrialisation and low power prices, the report said.

Despite projections for lower economic growth for the region, APICORP estimates that MENA demand for electricity will grow at an average of 8 per cent per year through 2020.

It estimated that 96GW of the required additional capacity are already in the execution stage.

The energy-rich Gulf Cooperation Council (GCC) currently has 47 per cent, or 148GW, of the MENA power generation capacity.

Still the GCC — Bahrain, Kuwait, Oman, Qatar, Saudi Arabia and United Arab Emirates — will need investments worth $136 billion to add a further 69GW until 2020, the report said.

OPEC kingpin Saudi Arabia is expected to account for $71 billion of the investments.

Non-Arab Iran is estimated to need $63 billion in investments to boost its power production by 23 GW to 93 GW over the next five years, the report said.

Iraq will need to spend $40 billion to double its electricity production to 29GW.

Egypt, the most populous nation in the region, is estimated to need $43 billion investments to raise its power production to 56 GW from 35GW.

APICORP however said several challenges and constraints face power investments in MENA states.

Oil-exporting countries, especially the GCC, are reducing expenditure and shelving capital investments, including in the power sector, due to the sharp decline in oil revenues, it said.

Financing power projects is becoming more challenging after rating agencies have lowered the credit worthiness of many MENA countries, APICORP said.

Price reforms are also expected to suppress demand for electricity in many countries.

NEW YORK — Internet giant Google said Wednesday it will ban all ads from payday lenders, calling the industry "deceptive" and "harmful".

Google's decision could have as much or even more impact on curtailing the industry than any move by politicians, as many payday loans start with a desperate person searching online for ways to make ends meet or cover an emergency.

Effective July 13, Google will no longer allow ads for loans due within 60 days and will also ban ads for loans where the interest rate is 36 per cent or higher. The industry will join Google's other banned categories of ads, such as counterfeit goods, weapons, explosives, tobacco products and hate speech.

"Our hope is that fewer people will be exposed to misleading or harmful products," said David Graff, Google's director of global product policy, in a blog post that announced the policy change.

Payday lenders have long been a target of criticism by politicians and consumer advocates, who argue the industry charges extremely high interest rates to customers, who are often the poor. Payday loans are often used to cover an unexpected expense or to make ends meet before the next paycheck. But for many borrowers, short-term loans wind up being difficult to pay off, leading to a cycle of debt that can drag on for months.

A 2012 study by Pew showed the average payday borrower is in debt for five months, spending $520 in fees and interest to repeatedly borrow $375. The annual per cent rate on a payday loan is 391 per cent, according to Pew.

"There is nothing fair about triple-digit interest rates being charged on loans to working families," said Keith Corbett, executive vice president with the Centre for Responsible Lending, in a statement. Payday loan stores reap billions of dollars in interest and fees on a product designed to force borrowers into repeat loans. Google is to be praised for doing its part to limit use of these abusive loans."

In response to critics, the payday lending industry has long argued it provides a necessary financial service to people in need of emergency funds.

"These policies are discriminatory and a form of censorship," said Amy Cantu, a spokeswoman with the Community Financial Centers Association of America, the trade group representing payday lenders.

State legislatures have long looked for ways to target payday lenders, but the payday lending industry has often found ways around new regulations. When several states capped the interest rates on payday loans, the industry pivoted into loans tied to auto titles or moved their operations onto Indian reservations.

The Consumer Financial Protection Bureau is considering new regulations to further restrict the payday lending industry. The rules are expected to be released later this year.

In a way, Google's announcement will likely have more of an impact than any new regulation. The majority of Internet searches happen on Google and the company also controls the Internet's largest advertising platforms. Google generates most of its ads through keyword searches, showing ads that are related to the subjects that its users are searching for.

Under this ban, users searching for words like "loans" or "places to get money" will no longer pull up ads from payday lenders in the advertising section of the search results.

Google, and its parent company Alphabet, has had a history of corporate activism. The company's previous motto was "don't be evil" which was replaced with "do the right thing" last year.

TOKYO – Mitsubishi Motors said Wednesday that its years long cheating on fuel-economy tests did not affect cars sold overseas, potentially limiting the scope of a scandal that has plunged the automaker into crisis.

The company also said it was probing nine more models sold only in Japan, but ruled out a bailout from its top shareholders.

Vehicles sold overseas "were tested using methods appropriate to those markets", Mitsubishi Chairman Osamu Masuko told reporters.

"We believe the vehicles sold overseas are not affected."

The company was still investigating why cars sold in Japan were caught up in the scandal, he added. 

However, it said "overly optimistic" fuel-economy targets could be to blame for some employees fudging the tests.

In some cases, cars appeared to be about 15 per cent more fuel-efficient than they were in reality.

Mitsubishi is reeling after it admitted last month to the improper testing, and that unnamed staff manipulated data.

Despite fears about Mitsubishi's future, executives ruled out a bailout.

"As far as assistance is concerned, there have not been any concrete talks," Masuko said Wednesday, as the firm submitted a report on its internal investigation to the transport ministry.

"Our company's finances are relatively healthy. At this point, we think we can do this on our own."

Mitsubishi was pulled from the brink of bankruptcy a decade ago after it was discovered that it covered up vehicle defects that caused fatal accidents.

The vast Mitsubishi group of companies stepped in with a series of bailouts, saving the embattled firm.

But it is not clear if they would be so willing to help this time around as the automaker faces possibly huge fines, lawsuits and customer compensation costs.

Earlier Wednesday, Japan's Asahi newspaper said the under-fire company had cheated on tests for almost every model it sold in its home market over the past 25 years.

Citing unnamed company sources, the report said dozens of models sold in Japan have been affected since 1991, including sedans and sports utility vehicles (SUVs) such as the popular Pajero model.

So far, Mitsubishi has confirmed that four models and over 600,000 vehicles — all sold in Japan — were involved in the cheating scandal, but warned the number of cars affected would likely rise.

On Wednesday, it said it was probing nine more existing models for misstating their fuel efficiency, as well as those no longer in production.

Mitsubishi sold about 1 million vehicles globally last year.

The company has said it could not make financial forecasts for the current fiscal year in light of the potential damage from the scandal, including the possibility of big fines, lawsuits and compensation costs.

Mitsubishi's Tokyo-listed shares rose 2.27 per cent to 495 yen on Wednesday, but investors have lopped more than 40 per cent off the stock's value in the wake of the scandal.

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.