Moody's said to have junked Blue City Bonds
The only access I have to this news is a two-line snippet from Project Finance magazine. So if anyone has any more detailed factual, rather than speculative or judgemental information, they are welcome to share it.
The $399 million 'A1' tranche has been cut from Baa3 to Ba1 because sales of units are well below what is required.
The $399 million 'A1' tranche has been cut from Baa3 to Ba1 because sales of units are well below what is required.
MSM gets National Day present of RO150 million
World news agencies reported yesterday that Oman's minister of commerce and industry, Maqbool Ali Sultan, had announced a RO150 million (US$389 million) bail-out of the Muscat Securities Market (MSM), Oman's stock market.
The value of the MSM index has fallen from 11554.69 points at the end of May 2008 to 5,846.19 on November 17th.
In October, Mr Sultan had attempted to allay fears of a financial meltdown, reminding his listeners that Oman had one of the best-performing markets in the Gulf countries, even though it is the smallest bourse, and that the 'earning per share is slightly less than 9 per cent.'
Furthermore, "profits had grown by more than 42% in the third quarter of this year. Listed companies had achieved 54 per cent growth or RO411 million profits during the first half of this year against RO266 million in the same period last year."
At the end of March this year, 30% of stocks were owned by foreign investors. These investors have retreated and the loss of confidence has been contagious. Even successful companies such as Galfar Engineering and Renaissance Services have not been immune from selling.
The Omani government is putting in 60% of the bail-out funds while the private sector and pension funds are contributing the remaining 40%. The objective is to buy up shares that no-one else wants to buy, in a bid to stabilise the market.
Care will be needed in deciding when it would be appropriate for the fund to resell the shares it has bought back to the market, in order to avoid another downward spiral in prices. The question remains as to whether the move was in response to broad market conditions or as a result of pressure from small investors.
The market gained three percent once the news had been announced.
Oman's fund is modest. Kuwait's sovereign wealth fund is to pump at least 1billion Kuwaiti dinars into Kuwait's stock exchange over the next five years, while the "Qatar Investment Authority said last month that it would buy between 10 per cent and 20 per cent of banks’ shares on the Qatar bourse, at a cost of about $5.3bn."
The value of the MSM index has fallen from 11554.69 points at the end of May 2008 to 5,846.19 on November 17th.
In October, Mr Sultan had attempted to allay fears of a financial meltdown, reminding his listeners that Oman had one of the best-performing markets in the Gulf countries, even though it is the smallest bourse, and that the 'earning per share is slightly less than 9 per cent.'
Furthermore, "profits had grown by more than 42% in the third quarter of this year. Listed companies had achieved 54 per cent growth or RO411 million profits during the first half of this year against RO266 million in the same period last year."
At the end of March this year, 30% of stocks were owned by foreign investors. These investors have retreated and the loss of confidence has been contagious. Even successful companies such as Galfar Engineering and Renaissance Services have not been immune from selling.
The Omani government is putting in 60% of the bail-out funds while the private sector and pension funds are contributing the remaining 40%. The objective is to buy up shares that no-one else wants to buy, in a bid to stabilise the market.
Care will be needed in deciding when it would be appropriate for the fund to resell the shares it has bought back to the market, in order to avoid another downward spiral in prices. The question remains as to whether the move was in response to broad market conditions or as a result of pressure from small investors.
The market gained three percent once the news had been announced.
Oman's fund is modest. Kuwait's sovereign wealth fund is to pump at least 1billion Kuwaiti dinars into Kuwait's stock exchange over the next five years, while the "Qatar Investment Authority said last month that it would buy between 10 per cent and 20 per cent of banks’ shares on the Qatar bourse, at a cost of about $5.3bn."
Videos of His Majesty's speech to the Council of Oman
Thanks to a friend on Facebook, I became aware that two videos have been posted to YouTube, of His Majesty Sultan Qaboos' speech to the Council of Oman yesterday.
I would recommend viewing them, since the visual impact indicates the power of the speaker. The videos are good quality and have English sub-titles. Read a transcript of the speech on the Times of Oman website.
In Part 1, His Majesty highlights the need for education and training of Omanis, particularly in Information and Communications Technology. He exhorts institutions within the country to implement and/or upgrade their IT systems in order to provide services.
Part 2 of the speech shows His Majesty warning government officials that they are in office to serve the nation and not to seek power and influence for themselves, which can be interpreted as an injunction against corruption. He refers to the current global financial system but brushes over the impact this might have on development programmes. He does announce that the country is to look into alternative energy sources and food security.
Apparently, the Omani Authority for Electricity Regulation published a report in June this year which concluded that "large-scale solar-thermal plants have the potential to provide sufficient electricity to meet all of Oman's domestic electricity requirements, as well as generating electricity for export, [as well as] significant wind energy potential in coastal areas to the south of Oman and in the mountains north of Salalah."
Food security? That's going to be hard without more water supplies. Unless taking over farms in other countries could guarantee food supply.
His Majesty finished by saying that "our international cooperation is in line with the Sultanate’s higher interests." He looked forward to the AGCC summit which would be held in Muscat "soon."
I would recommend viewing them, since the visual impact indicates the power of the speaker. The videos are good quality and have English sub-titles. Read a transcript of the speech on the Times of Oman website.
In Part 1, His Majesty highlights the need for education and training of Omanis, particularly in Information and Communications Technology. He exhorts institutions within the country to implement and/or upgrade their IT systems in order to provide services.
Part 2 of the speech shows His Majesty warning government officials that they are in office to serve the nation and not to seek power and influence for themselves, which can be interpreted as an injunction against corruption. He refers to the current global financial system but brushes over the impact this might have on development programmes. He does announce that the country is to look into alternative energy sources and food security.
Apparently, the Omani Authority for Electricity Regulation published a report in June this year which concluded that "large-scale solar-thermal plants have the potential to provide sufficient electricity to meet all of Oman's domestic electricity requirements, as well as generating electricity for export, [as well as] significant wind energy potential in coastal areas to the south of Oman and in the mountains north of Salalah."
Food security? That's going to be hard without more water supplies. Unless taking over farms in other countries could guarantee food supply.
His Majesty finished by saying that "our international cooperation is in line with the Sultanate’s higher interests." He looked forward to the AGCC summit which would be held in Muscat "soon."
China involved in an Iran-Oman gas deal?
Following HE Mohammed al-Rumhi's stonewalling on whether Oman had signed an agreement to import gas from Iran, the Iranian media was quick to issue confirmation from their side that such a deal had been agreed last April and that details were being negotiated with an end-date of March 2009. Stories appeared on Press TV and Fars News Agency websites. The stories were more cautious than earlier reports in September, quoting Rumhi's comments at the ADIPEC conference, and saying only that Oman was considering such a move.
Oman may be playing a waiting game, possibly dependent on the outcome of the US elections, although equally dependent on whether the charges that Iran will make for its gas are acceptable. Its cousin in the Gulf, Bahrain, has already stated that it will press ahead with negotiations to buy gas from Iran, despite any possible objections from the USA, with which, like Oman, it has a free-trade agreement. The Financial Times of 23rd October quoted observers as doubting that the deal would go ahead given Bahrain's reliance on both Saudi Arabia and the USA, neither of which have could be described as having good relations with the Iranian Islamic Republic. The article speculated that Bahrain might be trying to 'persuade' Saudi Arabia to intervene with Qatar which has put a moratorium on its North Field until 2010, by 'flirting' with the idea of importing gas from Iran.
Oman has already begun to receive gas from Qatar via the Dolphin pipeline , but needs substantially more to fuel its power needs and development projects .
More worryingly for Oman, speculation has appeared on a Texas-based ezine website called Energy Tribune that China is trying to obtain oil from Iran using Oman's LNG facility. I quote:
While this speculation may be too far-fetched, it's impossible to entirely refute it without more detailed information being published.
Oman may be playing a waiting game, possibly dependent on the outcome of the US elections, although equally dependent on whether the charges that Iran will make for its gas are acceptable. Its cousin in the Gulf, Bahrain, has already stated that it will press ahead with negotiations to buy gas from Iran, despite any possible objections from the USA, with which, like Oman, it has a free-trade agreement. The Financial Times of 23rd October quoted observers as doubting that the deal would go ahead given Bahrain's reliance on both Saudi Arabia and the USA, neither of which have could be described as having good relations with the Iranian Islamic Republic. The article speculated that Bahrain might be trying to 'persuade' Saudi Arabia to intervene with Qatar which has put a moratorium on its North Field until 2010, by 'flirting' with the idea of importing gas from Iran.
Oman has already begun to receive gas from Qatar via the Dolphin pipeline , but needs substantially more to fuel its power needs and development projects .
More worryingly for Oman, speculation has appeared on a Texas-based ezine website called Energy Tribune that China is trying to obtain oil from Iran using Oman's LNG facility. I quote:
China is now trying to get Iran’s energy supply in a roundabout way. CNPC is in talks with Oman to build or use its existing energy infrastructure to import Iran’s LNG. In so doing, CNPC hopes to dilute possible U.S. criticism. CNPC is also eager to secure a contract to develop the second phase of Iran’s Kish gas field. It is doing an independent study to build a pipeline to move the Kish gas to Oman’s Qalhat LNG plant for liquefaction, and then ship the fuel to China.Qalhat LNG did indeed sign a master sale and purchase agreement with China National Offshore Oil Corporation (CNOOC) in September with little in the way of detail on what the agreement involved. Reportedly, Oman has restricted exports of its own LNG in order to fulfil its domestic needs, so how is the country in a position to agree to further exports?
While this speculation may be too far-fetched, it's impossible to entirely refute it without more detailed information being published.
Oman's oil minister blames financial crisis for possible project slowdown
Oman's Oil and Gas minister, HE Mohammad bin Hamad bin Seif al-Rumhy, has conceded that Oman will have to slow down oil and gas development projects and possibly also the Duqm Refining and Petrochemical Complex as a result of the global financial crisis.
Rumhi was talking to a Reuters correspondent at the Abu Dhabi International Petroleum Exhibition and Conference at which Gordon Brown, the British Prime Minister, spoke at his first appointment in the UAE, on his four-day tour of the Gulf. Brown is seeking to raise funds at the conference on behalf of the International Monetary Fund (IMF) to assist countries badly hit by the crisis.
Although Rumhi's pronouncement might be thought to tally with the caution that could accompany drafting of next year's budget, (see my previous posting) , he stated that the problem actually lies with external project finance. It's far more difficult to raise funds now than even just six months ago. Even if foreign loans are to pay for these downstream projects, Oman has to guarantee the payback.
It doesn't help that the development costs are rising.
And while Iran remains ebullient about Oman's cooperation in development of the Kish oil field, Rumhi would say only that talks are still ongoing.
The UAE's oil minister announced this morning that the UAE had implemented oil production cuts agreed by OPEC. Kuwait and Nigeria were said to have informed customers that there would be cuts in supply from December. Iran is reported to have told the Indian Oil Corporation that supply would be reduced by 5% from this month. But there's no word yet of imminent production cuts by Saudi Arabia, the biggest oil producer.
Oman is not a member of OPEC, but keeps an interested watching brief. Read this very interesting background on HE Muhammad al-Rumhi, his plans for Petroleum Development Oman and Qalhat LNG, and the development of Oman's oil and gas industry. Rumhi's stated aim is to optimise oil and gas production as a long-term strategy in Oman.
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As a measure of the impact of inflation in Oman, the total cost of The Wave, a real estate project near Muscat has doubled from '$2 billion (Dh7.3bn) to $4bn since its launch nearly two years ago.' Nick Smith, the CEO, blamed inflation for 15-20% of the increase in project cost. The remainder is due to the increased construction costs for building 'new phases and hotels.' ie, amending the project spec.
Rumhi was talking to a Reuters correspondent at the Abu Dhabi International Petroleum Exhibition and Conference at which Gordon Brown, the British Prime Minister, spoke at his first appointment in the UAE, on his four-day tour of the Gulf. Brown is seeking to raise funds at the conference on behalf of the International Monetary Fund (IMF) to assist countries badly hit by the crisis.
Although Rumhi's pronouncement might be thought to tally with the caution that could accompany drafting of next year's budget, (see my previous posting) , he stated that the problem actually lies with external project finance. It's far more difficult to raise funds now than even just six months ago. Even if foreign loans are to pay for these downstream projects, Oman has to guarantee the payback.
It doesn't help that the development costs are rising.
And while Iran remains ebullient about Oman's cooperation in development of the Kish oil field, Rumhi would say only that talks are still ongoing.
The UAE's oil minister announced this morning that the UAE had implemented oil production cuts agreed by OPEC. Kuwait and Nigeria were said to have informed customers that there would be cuts in supply from December. Iran is reported to have told the Indian Oil Corporation that supply would be reduced by 5% from this month. But there's no word yet of imminent production cuts by Saudi Arabia, the biggest oil producer.
Oman is not a member of OPEC, but keeps an interested watching brief. Read this very interesting background on HE Muhammad al-Rumhi, his plans for Petroleum Development Oman and Qalhat LNG, and the development of Oman's oil and gas industry. Rumhi's stated aim is to optimise oil and gas production as a long-term strategy in Oman.
-----------
As a measure of the impact of inflation in Oman, the total cost of The Wave, a real estate project near Muscat has doubled from '$2 billion (Dh7.3bn) to $4bn since its launch nearly two years ago.' Nick Smith, the CEO, blamed inflation for 15-20% of the increase in project cost. The remainder is due to the increased construction costs for building 'new phases and hotels.' ie, amending the project spec.