Business

AMMAN — Desmond Swayne, minister of the United Kingdom State for International Development, and Peter Millett, British ambassador to Jordan, visited the Business Development Centre (BDC) on Wednesday interacted in discussions with  some of BDC beneficiaries who took part in  trainings funded by the British Embassy in Jordan. According to a BDC press statement, graduates for Maharat Programmes for employability and entrepreneurship participated in the discussions. Swayne stressed the importance of focusing on young Jordanian entrepreneurs noting that the Jordanian economy depends largely on the job opportunities provided by them. He also underlined women's role and contribution in development. Participants were briefed on the most important achievements and programmes for Jordanian youth offered by BDC, which trained 14,000 Jordanian youth to enter the labour market, 90 per cent of them succeeded in keeping their jobs. The centre also trained 1500 entrepreneurs on starting their own business or on developing their current businesses. This centre reached youth from all around the kingdom in partnership with British Embassy's Arab Partnership Fund.

AMMAN – Amman Stock Exchange (ASE) downgraded Royal Jordanian's (RJ) listing from the second market into the third as of Wednesday. 

A circular issued by ASE Acting Chief Executive Officer Nader Azar on Monday,  attributed the relegation of Jordan's flag carrier to its financial difficulties as net shareholders' equity has dropped to less than 50 per cent of the company's paid-in capital. 

According to the circular, posted on ASE website, all purchase and sale orders  of RJ shares were to be cancelled by the end of Tuesday's trading sessions.

According to ASE regulations, there are several requirements for listing a company in the second market. 

Among these requirements, the net shareholders' equity in the company shall not be less than 50 per cent of its paid-in capital.

The percentage of the free float in the company shall not be less than (5 per cent) of the paid-in capital of such companies whose paid-in capital is less than JD10 million, excluding such companies whose capital equals or exceeds JD10 million.

According to financial results announced by RJ by the end of 2013, the airline's losses reached JD75.3 million last year, exceeding 75 per cent of its paid-in capital. 

RJ has been facing losses over the past years, which the company attributed to regional instability and high fuel prices. 

On July 27, the national carrier announced plans to stop its services to Delhi, Mumbai and Lagos, in light of the airline’s restructuring plan, including its route network.

 RJ will stop operating to Mumbai this week, to Lagos on October 10 and to Delhi on October 31, this year. With the closure of the three destinations, the RJ routes will count 51.

 RJ Chairman of the Board/President &Chief Executive Officer Nasser Lozi said the decision is part of a synchronised plan to turn around the airline covering operations and financial structure. The move comes at a time whilst RJ is facing difficulties due to the instability in the region and high fuel prices. 

MANAMA — Experts have urged wealthy Gulf states to pump billions of dollars into their Arab neighbours to fend off the kind of unrest that has engulfed Syria and Iraq.

Meeting at a conference in Bahrain, bankers, regional analysts and economists said massive development was needed to fight the poverty and lack of opportunities that are fuelling unrest. 

"We need a pan-Arab Marshall development plan financed by rich Arab countries" in the Gulf, Ibrahim Dabdoub, deputy chairman of the International Bank of Qatar, told a conference in Manama organised by the International Institute of Strategic Studies (IISS) that ended on Monday.

"At least a $100 billion (77 billion euros) is needed immediately to finance well-monitored development programmes over the next five years in a bid to contain Arab unrest," Dabdoub, a long-serving top banker, later told AFP.

A post-World War II US initiative, the Marshall plan helped revive Europe's shattered economy and bring long-term stability to the continent.

Fighting across the region, mainly in Syria and Iraq, has left thousands dead in the years since the mass demonstrations of the Arab Spring led to violent uprisings.

Following the outbreak of sweeping unrest in late 2010 in Tunisia and later in Egypt, Libya, Yemen and Syria, the Gulf Cooperation Council (GCC) states announced $10 billion aid packages to fellow members Oman and Bahrain to help them face increasing popular demands.

They also pledged several billion dollars of aid to Jordan and Morocco, the only Arab monarchies outside the GCC, and made pledges to impoverished neighbouring Yemen.

More recently, leading Gulf monarchies rushed around $20 billion in aid to Egypt after the military overthrew Muslim Brotherhood President Mohamed Morsi a year ago.

Growing Gulf divisions 

The six-nation alliance — grouping Bahrain, Kuwait, Oman, Qatar, Saudi Arabia and United Arab Emirates (UAE) — can afford to be generous with its neighbours.

Its members have amassed surpluses of around $2 trillion due to high oil prices in the past decade and most of the funds are invested in the West.

These funds have allowed them to become more involved in the region, with Saudi Arabia and UAE taking the lead, said Emile Hokayem, senior fellow for regional security at IISS.

"But being more active means taking more risks... Gulf states are engaged in other Arab countries thus attracting more risks," Hokayem added. "Before the Arab uprisings, Gulf states were very stable."

And as they become more involved, divisions have also been sown among GCC members. 

As the Muslim Brotherhood gained prominence in Egypt and several Arab countries following the Arab Spring, Saudi Arabia branded the group as "terrorist" while the UAE launched a campaign against it.

But Qatar continued to support the Islamist group, providing shelter to its leaders and infuriating other GCC members.

Hokayem warned of a "growing division between Gulf monarchies and their own people on foreign policy, especially involvement in Arab countries”.

Domestic spending needs will also limit the Gulf monarchies' ability to invest in the region, experts said, as they raise wages and benefits to appease citizens at home.

"Domestic spending in Gulf states increased substantially in the post-Arab Spring years because of salary and benefits' rises," London-based economist Alia Moubayed said.

But Moubayed stressed that long-term investment in regional stability was crucial, as massive changes in the neighbourhood will create a "volatile and unstable situation for a long time around the GCC”. 

AMMAN — Hyundai maintained its top spot in Jordan in 2013 and continues to do so during 2014, according to Tom Lee, head of Hyundai Middle East and Africa.

Even with a stronger Korean won and weaker Japanese yen leading to increased Japanese car sales, the Korean giant “maintained its number one position in Jordan in 2013, ahead of Japanese competitors, with a 47 per cent market share”, Lee said, citing the GCC-based Middle East Automotive Council data exchange’s new car sales figures. 

“One of our key strengths is the extensive vehicle range that we offer in Jordan,” he added. “Customer confidence… has increased significantly and this has been helped by Hyundai’s pursuit of its Modern Premium brand direction.”

Lee indicated that the Elantra and Accent proved to be the most popular models with Middle East and Jordanian customers noting that luxury “flagship Centennial and Genesis models… recorded an increase in sales last year in the Jordanian market”. 

Launched in the second half of 2013, the fuel efficient and good value Hyundai Sonata Hybrid has been met with a “tremendously positive reaction” in Jordan, with 800 sold in 2013 and 750 as of the first half of 2014.

With over 28,500 cars sold and accounting for 9 per cent of total Middle East sales in 2013 “Jordan is a key market for us regionally” Hyundai’s regional boss said, adding that Jordan is “the second biggest Middle East market for Hyundai, after Saudi Arabia”. 

He valued Hyundai’s Jordanian dealership’s role in ensuring the brand’s dominant presence in the Kingdom.

Though representing a relatively modest share of Hyundai’s 4.7-million sales in 2013, Lee  described the Middle East and Africa region as “a key growth market expecting it as the next driving force for Hyundai Motor Company on a global level”. 

The second best-selling car in the Middle East, Hyundai’s 328,856 unit sales represented an 8 per cent year-on-year sales increase and constituted a 16 per cent regional market share.

AMMAN — A trade delegation from South Korea's KangWon City will arrive in Amman next week to explore potential business opportunities with their Jordanian counterparts, according to a statement from the Korea Business Centre (KOTRA) in Amman. The delegation is composed of representatives of eight companies specialised in manufacturing and exporting of medical equipment materials. 

AMMAN — Prime Minister Abdullah Ensour on Monday met with representatives of some companies taking part in the 11th China Products Fair, which opened on Sunday. The premier spoke about the government's efforts to create a competitive investment environment, citing the impact of His Majesty King Abdullah's latest visit to China in fostering economic cooperation between the two countries. The participants stressed the importance of the fair in boosting bilateral cooperation. More than 1,000 companies are taking part in the two-phase exhibition. The first running until Wednesday features food products, auto parts, security equipment, plastic and packing machinery, new energy, electricity and food processing machinery, organisers said on Sunday. More than 450 suppliers of textiles, garments, home appliances, building materials, furniture, household items, gifts and lighting will display their products during the second phase of the exhibition, which will be held from September 15 to18.

DUBAI — Dubai has relaunched an ambitious project to develop its second airport, touted originally as the world's largest, to handle 120 million passengers a year, its airports chief said Monday.

The plan aims to expand Al Maktoum International Airport within eight years to shift the growing operations of Emirates Airlines from Dubai International, Paul Griffiths told AFP.

"We have now launched the first phase, which is for a 120-million-passenger capacity required to enable the Emirates' hub to relocate," to Al Maktoum International in Dubai World Central economic zone, he said.

Dubai ruler Mohammed Bin Rashid Al Maktoum has approved the $32-billion expansion project, with a timeframe of six to eight years to complete it.

This shows that the "strategic decision that was made some time ago of Dubai World Central being the airport for the future has been reaffirmed," the Dubai Airports chief said.

Al Maktoum International airport was launched before the global financial crisis hit Dubai in 2009, with plans to build the world's largest airport, featuring a 160-million-passenger capacity and six runways.

The ambitious plan appeared to have been put on the back burner due to the crisis, and the airport instead opened operations for cargo only in 2010, while small passenger operations began in October 2013 after repeated delays.

The final plan features five runways each stretching 4.5 kilometres, spaced wide apart in order to allow for simultaneous use.

The airport could ultimately expand to accommodate 200 million passengers annually.

The first phase includes two satellite buildings which could serve as many as 100 A380 superjumbo aircraft at any one time, Dubai Airports said.

"Work has got to start very quickly," Griffiths said, pointing out that a date for commencement is yet to be set.

Dubai International handled more than 66.4 million passengers in 2013, and is expected to host more than 100 million passengers by 2020, as it continues to build capacity.

Two-airport city

Ranked among the world's busiest airports for international travellers, Dubai International has established itself as a major stop on routes between the West and Asia and Australasia.

Al Maktoum Airport is built next to Dubai Jebel Ali Free Zone and its port, which is one of the world's largest man-made harbours, and a major containers terminal.

It is located some 40 kilometres away from Dubai International.

The emirate has no plans to close Dubai International and intends to be a two-airport city for the time being, Griffiths reiterated, though he pointed to limited airspace capacity.

"One of the big challenges is the airspace capacity," he said. "We might find that operating two airports gives us less capacity overall than operating one large airport."

"We don't have to make that decision at this point," he added.

AMMAN — Amman Chamber of Commerce (ACC) President Issa Murad on Saturday discussed with a delegation from Ajman's commerce and industry chambers means to develop bilateral trade ties. Murad acquainted the delegates on the ACC's work and investment opportunities available in Jordan.  

LONDON — Vast projects to expand the Suez and Panama canals are being talked up as the biggest upheaval for decades in global maritime traffic, but experts say they could be outflanked by a trade shift towards Asia.

In recent years, freight traffic travelling from Asia to the east coast of the United States has increasingly circumvented the Panama Canal and its restrictions on ship size in favour of the Suez route open to most big vessels.

Egyptian President Abdel Fattah Al Sisi has launched plans for a second Suez canal in parallel to the existing one at a cost of $4 billion (3 billion euros).

To attract business back, the board of the Panama Canal began work in 2007 to widen the channel to permit the passage of ships carrying a much greater volume of containers.

The broader channel would allow for vessels carrying 12,000 TEU containers (TEU, or "twenty-foot equivalent unit", is the standard unit of measurement for containers) — a big increase from the current capacity of 5,000 TEU.

Work on widening the Panama Canal continues despite a dispute on cost overruns.

Meanwhile, Chinese interests are involved in a project still on the drawing board to link the Pacific and Atlantic oceans with a second canal through Nicaragua.

But while the channel through central America should attract an increase in business, "it will not be revolutionary" in terms of global traffic, said James Frew, an analyst with Maritime Strategies International.

He also highlighted the efficient overland distribution network from California to the US east coast, which gives shippers an alternative route.

Panama project to have 'some impact' 

The enlargement of the Panama Canal "should have some impact on container trades", according to Ralph Leszczynski, head of research at the Banchero Costa brokerage.

"However, for most shipping business such as dry bulk and tankers it's not really such a big deal," he said.

There are 4,500 container ships in the world compared to at least 10,000 dry cargo ships and more than 7,000 tankers.

"These days, most imports of coal, iron ore and oil are dominated by China, India, Japan and they do not require using any of the canals, as the main sources are Australia, Indonesia, Africa and the Middle East," Leszczynski indicated.

In addition, "the high cost of passing through the Panama Canal is such that it will become less and less attractive for transporting commodities whose prices have fallen — like iron ore," said Marc Pauchet, head of research on dry bulk carriers at the broker Braemar ACM.

Changing demands 

The Suez Canal remains "fundamental for all Middle East Gulf to Europe crude oil trades... but even there it's losing importance, as the main sources of growth in oil demand are China and India, and their imports do not cross any canal," said Leszczynski.

Sisi has said the canal through Egypt must be doubled with the second route to increase traffic flow within a year.

But "I see less economic requirement for an expansion of the Suez Canal than I do for the Panama Canal," Frew said.

The only real restriction, he added, "is that you cannot get a fully loaded VLCC (very large crude carriers) through the Suez Canal but there's no restriction on container ships at the moment".

These tankers must currently unload part of their cargo at the beginning of the channel and reload at the end in order to maintain the correct waterline to pass through.

Leszczynski believes that there is also no economic justification for the construction of a competitor to the Panama Canal in Nicaragua.

"If, magically, it turned out to be cheaper to use than the Panama one, then I'm sure shipowners would appreciate it, but again I'm afraid this will not be the case," he said.

"It is interesting to note that it is the Chinese who are responsible for building the canal in Nicaragua," added Pauchet. "Perhaps they do not want to submit to American hegemony for passing from the Pacific to the Atlantic."

The United States led the construction of the Panama Canal, and granted themselves the lion's share of concessions from its opening in 1914 until its surrender in 1999. 

An agreement still in force today allows them to intervene if they believe the neutrality of the channel is threatened.

ISTANBUL — Oil output in Iraq's Kirkuk has slumped to 30,000 barrels a day since June, 90 per cent down on earlier this year, and a federal pipeline to the Turkish port of Ceyhan may be out of action for over a year due to sabotage, Kirkuk's governor said on Friday.

Islamic State (IS) fighters have seized swathes of territory in lightning offensives in the arid but oil-rich north of the country, and have repeatedly attacked oil installations.

In February this year, Iraqi oil production hit record highs of 2.8 million barrels per day (bpd) nationwide, with an estimated 300,000 bpd coming from the northern province of Kirkuk.

"There have been no exports since March and the only production in Kirkuk has been the 30,000 bpd to a small refinery and enough gas to get our electrical grid going since June 8," Najmaldin Karim, Kirkuk's governor told reporters at an industry conference in Istanbul.

"I don't think there will be exports from Kirkuk to the Ceyhan pipeline any time soon. It has been sabotaged continuously and to get it all back would take at least a year or more," he said.

The federal pipeline from Kirkuk to Ceyhan has a capacity of 1.6 million bpd but has for years been operating at around a third of that, and recently even less, a Turkish official remarked.

Damage to the pipeline is a further blow to the beleaguered authorities in Baghdad, but will not affect the Kurdistan Regional Government (KRG), which began exporting oil in May via its own pipeline, which links to the federal Iraqi pipeline at Turkey's border, and has not been sabotaged.

Kurdistan's oil production is expected to rise to 400,000 bpd in 2014 from 250,000 bpd, according to Tony Hayward, chief executive of Anglo-Turkish Genel Energy, the region's largest producer.

Baghdad has repeatedly expressed its anger at the KRG's agreement to export oil independently through Turkey and has launched a series of legal cases to try to halt its sale.

But the Iraqi authorities have been largely powerless to stop the flow of oil through Ceyhan, which has now exceeded 10 million barrels since May, according to Turkish Energy Minister Taner Yildiz. 

Some $188 million had been paid into Turkish Halkbank by the Kurdish authorities, Yildiz said in the Turkish capital, Ankara.

Kurdish protection 

Karim  suggested Kirkuk's oil could be channelled through the KRG pipeline, if both sides agree.

"We Kirkuk citizens, we want the oil production to continue and we can help to bring the two sides [Baghdad and Arbil] together," he said.

During recent fighting, IS has repeatedly tried to seize and hold Baiji Refinery, the largest in Kirkuk.

Damage to the facility, which was producing around 170,000 bpd before it was closed due to the violence, could take more than a year to repair, according to the KRG's Natural Resources Minister Ashti Hawrami, who was speaking at the same conference.

Separately, Iraq last week signed revised contracts with foreign oil companies for two southern oil fields that reduced their production targets and extended the life of the deals.

The revised deal with oil major BP for Iraq's giant Rumaila oil field cut the planned plateau level to 2.1 million barrels per day from 2.85 million bpd, Salah Mohammad, general manager of the Rumaila Operating Organisation, told Reuters.

Iraq also agreed with China's CNPC to slash the final output target from the Halfaya oil field to 400,000 bpd from 535,000 bpd, Adnan Noshi, head of state-run Maysan Oil Co., said.

Iraq had set an overall production capacity target of 12 million bpd by 2020, which would rival that of top oil exporter Saudi Arabia, after it signed service contracts in 2009-2010 to develop its southern oilfields.

Oil majors working in Iraq include BP, leader at Rumaila; ExxonMobil, in charge of West Qurna 1; and Royal Dutch Shell, operator of Majnoon.

But crumbling infrastructure, red tape and a lack of clear oil legislation have stunted investor interest. Iraq has repeatedly failed to reach its ambitious targets, and current output from the southern fields is around 3 million bpd.

Baghdad has reduced the overall capacity target to 8.5-9 million bpd and returned to the negotiating table to discuss revised plateau production rates with oil companies.

New goals

Rumaila, the workhorse of Iraq's oil industry which BP operates with CNPC, has estimated reserves of 17 billion barrels. It currently produces around 1.3 million bpd, Salah said, expecting that output level to remain steady for the rest of the year.

Officials from BP and Iraq's oil ministry signed the amendment to the existing contract, originally agreed in 2009, in a closed-door meeting at Rumaila on Thursday.

"Iraq and BP have reached an agreement to cut Rumaila's production target to 2.1 million bpd," Salah said. "It was [also] agreed to extend the time frame to reach the new final production of 2.1 million bpd to 10 years from seven years that had been agreed upon before." 

A BP spokesman said that under the amendment to the existing technical service agreement, the partners "plan to raise plateau production by about 800,000 b/d within the next decade to some 2.1 million b/d".

CNPC, operator of Halfaya, is developing the field with France's Total and Malaysian state company Petronas .

Maysan's Noshi said Halfaya's amended contract had been extended to 30 years from 20. Halfaya currently produces 200,000 bpd and it is expected to boost output to 230,000 bpd by the end of this year, he added.

Iraq's giant southern fields have not been affected by Baghdad's fighting with insurgents.