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    Pacts worth over OMR 33 million signed to establish agricultural, fisheries projects

    Pacts worth over OMR 33 million signed to establish agricultural, fisheries projects

    Egypt’s food industries contribute 24.5% of GDP

    Egypt’s food industries contribute 24.5% of GDP

    $36mln contract for construction of Duqm fisheries complex

    $36mln contract for construction of Duqm fisheries complex

    Ministry signs agreement to support Oman’s honey industry

    Ministry signs agreement to support Oman’s honey industry

    Local, Italian companies partner up to establish food retail chain in Egypt

    Local, Italian companies partner up to establish food retail chain in Egypt

    Egypt’s agriculture minister stresses importance of boosting intra-regional trade cooperation among African states

    Egypt’s agriculture minister stresses importance of boosting intra-regional trade cooperation among African states

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      Aramco, DHL to build procurement and logistics hub for the energy sector

      Aramco, DHL to build procurement and logistics hub for the energy sector

      Second runway of Muscat airport to be ready this year

      Second runway of Muscat airport to be ready this year

      UAE-Oman rail network expected to bring about new era of collaboration and growth

      UAE-Oman rail network expected to bring about new era of collaboration and growth

      Saudi Arabia issues 124 licenses to industrial units in different sectors in January

      Saudi Arabia issues 124 licenses to industrial units in different sectors in January

      Qatar’s economic growth is strong: ICAEW

      Qatar’s economic growth is strong: ICAEW

      Egypt’s food industries contribute 24.5% of GDP

      Egypt’s food industries contribute 24.5% of GDP

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      Saudi Arabia real estate: PIF-backed firm signs largest deal valued at $1.5bn

      Saudi Arabia real estate: PIF-backed firm signs largest deal valued at $1.5bn

      Construction works of Egypt’s first eco-sustainable industrial complex kick off

      Construction works of Egypt’s first eco-sustainable industrial complex kick off

      Oman Construction Equipment Industry to 2028

      Oman Construction Equipment Industry to 2028

      $36mln contract for construction of Duqm fisheries complex

      $36mln contract for construction of Duqm fisheries complex

      What will Qatar do with its World Cup infrastructure after FIFA 2022 ends?

      What will Qatar do with its World Cup infrastructure after FIFA 2022 ends?

      Madayn working on major Oman industrial city projects

      Madayn working on major Oman industrial city projects

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        Oman signs $20bn hydrogen deals

        Oman signs $20bn hydrogen deals

        Suez Canal expects US$3.5 billion in revenues in H1

        Suez Canal expects US$3.5 billion in revenues in H1

        UAE and Egypt’s consortium to buy African renewables firm Lekela Power

        UAE and Egypt’s consortium to buy African renewables firm Lekela Power

        Fitch revises Saudi Aramco’s outlook to positive from stable

        Fitch revises Saudi Aramco’s outlook to positive from stable

        Investments in renewables in Egypt reach LE6 bn: Official

        Investments in renewables in Egypt reach LE6 bn: Official

        Egypt signs 8 gas exploration contracts worth $934mn over 15 months

        Egypt signs 8 gas exploration contracts worth $934mn over 15 months

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          Qatar has ‘solid’ line-up of infrastructure, hospitality projects to prepare for large influx of visitors in 2022: OBG

          Qatar has ‘solid’ line-up of infrastructure, hospitality projects to prepare for large influx of visitors in 2022: OBG

          Saudi to be among world’s big leisure tourism hubs by 2030

          Saudi to be among world’s big leisure tourism hubs by 2030

          Qatar’s hospitality sector peaks despite turbulent 2020

          Qatar’s hospitality sector peaks despite turbulent 2020

          Accor inks deal to manage first Swissôtel-branded hotel and residential project in Qatar

          Accor inks deal to manage first Swissôtel-branded hotel and residential project in Qatar

          Staycations to stimulate Qatar’s hospitality sector

          Staycations to stimulate Qatar’s hospitality sector

          Quarantine rule to give a boost to Qatar’s hospitality industry in Q3: CWQ report

          Quarantine rule to give a boost to Qatar’s hospitality industry in Q3: CWQ report

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        • Agrofood
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          • Agriculture
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          Pacts worth over OMR 33 million signed to establish agricultural, fisheries projects

          Pacts worth over OMR 33 million signed to establish agricultural, fisheries projects

          Egypt’s food industries contribute 24.5% of GDP

          Egypt’s food industries contribute 24.5% of GDP

          $36mln contract for construction of Duqm fisheries complex

          $36mln contract for construction of Duqm fisheries complex

          Ministry signs agreement to support Oman’s honey industry

          Ministry signs agreement to support Oman’s honey industry

          Local, Italian companies partner up to establish food retail chain in Egypt

          Local, Italian companies partner up to establish food retail chain in Egypt

          Egypt’s agriculture minister stresses importance of boosting intra-regional trade cooperation among African states

          Egypt’s agriculture minister stresses importance of boosting intra-regional trade cooperation among African states

          Trending Tags

          • Business & Economy
            • All
            • Business
            • Economy
            • Finance
            • Industry
            • Technology
            • Trade
            • Transport & Logistics
            Aramco, DHL to build procurement and logistics hub for the energy sector

            Aramco, DHL to build procurement and logistics hub for the energy sector

            Second runway of Muscat airport to be ready this year

            Second runway of Muscat airport to be ready this year

            UAE-Oman rail network expected to bring about new era of collaboration and growth

            UAE-Oman rail network expected to bring about new era of collaboration and growth

            Saudi Arabia issues 124 licenses to industrial units in different sectors in January

            Saudi Arabia issues 124 licenses to industrial units in different sectors in January

            Qatar’s economic growth is strong: ICAEW

            Qatar’s economic growth is strong: ICAEW

            Egypt’s food industries contribute 24.5% of GDP

            Egypt’s food industries contribute 24.5% of GDP

            Trending Tags

            • CES 2017
            • Election Results
            • eSports
          • Construction
            • All
            • Infrastructure
            • Real Estate
            Saudi Arabia real estate: PIF-backed firm signs largest deal valued at $1.5bn

            Saudi Arabia real estate: PIF-backed firm signs largest deal valued at $1.5bn

            Construction works of Egypt’s first eco-sustainable industrial complex kick off

            Construction works of Egypt’s first eco-sustainable industrial complex kick off

            Oman Construction Equipment Industry to 2028

            Oman Construction Equipment Industry to 2028

            $36mln contract for construction of Duqm fisheries complex

            $36mln contract for construction of Duqm fisheries complex

            What will Qatar do with its World Cup infrastructure after FIFA 2022 ends?

            What will Qatar do with its World Cup infrastructure after FIFA 2022 ends?

            Madayn working on major Oman industrial city projects

            Madayn working on major Oman industrial city projects

            Trending Tags

            • Energy
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              • Oil & Gas
              • Power & Electricity
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              Oman signs $20bn hydrogen deals

              Oman signs $20bn hydrogen deals

              Suez Canal expects US$3.5 billion in revenues in H1

              Suez Canal expects US$3.5 billion in revenues in H1

              UAE and Egypt’s consortium to buy African renewables firm Lekela Power

              UAE and Egypt’s consortium to buy African renewables firm Lekela Power

              Fitch revises Saudi Aramco’s outlook to positive from stable

              Fitch revises Saudi Aramco’s outlook to positive from stable

              Investments in renewables in Egypt reach LE6 bn: Official

              Investments in renewables in Egypt reach LE6 bn: Official

              Egypt signs 8 gas exploration contracts worth $934mn over 15 months

              Egypt signs 8 gas exploration contracts worth $934mn over 15 months

              Trending Tags

              • Hospitality
                Qatar has ‘solid’ line-up of infrastructure, hospitality projects to prepare for large influx of visitors in 2022: OBG

                Qatar has ‘solid’ line-up of infrastructure, hospitality projects to prepare for large influx of visitors in 2022: OBG

                Saudi to be among world’s big leisure tourism hubs by 2030

                Saudi to be among world’s big leisure tourism hubs by 2030

                Qatar’s hospitality sector peaks despite turbulent 2020

                Qatar’s hospitality sector peaks despite turbulent 2020

                Accor inks deal to manage first Swissôtel-branded hotel and residential project in Qatar

                Accor inks deal to manage first Swissôtel-branded hotel and residential project in Qatar

                Staycations to stimulate Qatar’s hospitality sector

                Staycations to stimulate Qatar’s hospitality sector

                Quarantine rule to give a boost to Qatar’s hospitality industry in Q3: CWQ report

                Quarantine rule to give a boost to Qatar’s hospitality industry in Q3: CWQ report

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              Petchem projects dominate Saudi Arabia's industrialization drive

              Arab News

              May 9, 2012
              in Business
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              Saudi Arabia’s project market is buoyant with a string of petrochemicals and minerals projects being rolled out. The authorities are keen to vertically integrate their petrochemicals industry with a view to producing materials for a nascent domestic automotive industry (among other sectors). Elsewhere, corporate output growth has cooled, though retail sales are growing at a record rate. Bank mortgage lending is also brisk, according to Samba Economic Monitor.

              The Saudi project market continues to thrive. Latest data from Meed put the value of projects “planned or underway” at $745 billion in mid-April, around 13 percent higher than a year earlier. These figures need to be treated with some caution: The topline number is some 30 percent larger than the nominal size of the entire economy ($580 billion), while the number of “planned” projects that might actually be rolled out is far from clear. Yet the trend is undeniably positive.

              The main drivers of project activity this year are likely to be utilities and petrochemicals. For the former, the Saudi Electricity Company is committed to at least one Independent Power Project (IPP) a year as it seeks to keep on top of domestic power demand that is growing by around 7-8 percent. This figure could well climb in the years to come as Saudi Arabia’s industrial development expands and deepens.

              Petrochemicals

              The Samba report said cornerstone of this industrialization will remain petrochemicals, and in particular the authorities’ efforts to develop the downstream product offering. This strategy is predicated partly on need: The scarcity of ethane feedstock (particularly in its non-associated form) is forcing producers to consider liquids such as naphtha. Ethane is the more profitable feedstock, at least for basic chemicals production, but naphtha has other advantages, most notably the diversified range of chemicals that can be produced. Naphtha can produce the same range of “building blocks” as ethane, but it can also produce xylenes, benzene and butadiene (“aromatics”). These in turn are the basis for products including polyurethane, solvents, nylon, styrene, polystyrene, synthetic rubber and polybutenes. These have far reaching applications, including for packaging, pharmaceuticals, construction and automotive.

              The most prominent example of the enhanced role of naphtha is the $20 billion Sadara joint venture between Saudi Aramco and Dow Chemicals. Sadara’s cracker will be the first Saudi plant designed to run on a mixed feedstock of ethane and naphtha, but there are currently around $50 billion worth of petrochemicals projects planned or underway in the Kingdom with a chemical mix that is aimed at nurturing domestic industries rather than simply serving export markets with base chemicals. Both Sadara and PetroRabigh on the Red Sea coast are encouraging downstream investment by building industrial parks next to their facilities. For investors, the close proximity to raw materials producers negates the need for large inventories; for the authorities, fostering these domestic industries opens up the possibility of significant job creation.

              Aluminum production

              A vertically integrated approach is also being adopted in the aluminum sector, where there are plans to harness the country’s bauxite reserves by constructing what will become the world’s largest aluminum complex at Ras Al-Khair. The $10.8 billion project, which is a joint venture between Maaden and Alcoa, is designed to attract a large number of conversion industries to cluster around the site.

              Aluminum clearly has a host of uses, but the authorities are most keen to foster a sizable automotive industry. Fluor has been awarded a contract for the engineering, procurement and construction management (EPCM) of a 100,000-t/y automotive sheet plant at the complex, which will be aimed at producing body panels for cars and commercial vehicles. This comes on top of other initiatives, such as Petrochemical Conversions Company’s plans to produce nylon 66, a product that could replace a number of metal components in automobiles, and SABIC (Saudi Basic Industries Corp.) and ExxonMobil’s $2 billion elastomers jv at the Kemya complex, which will produce about 400,000 t/y of carbon black, rubber and specialty polymers. Carbon black is used by the automotive industry to add strength to plastic and rubber products used in car production.

              Competing with established automotive manufacturers, such as China and India, might not be realistic, at least in the short- to medium-term. However, the Kingdom is keen to leverage its unique supply and product chain and already boasts truck assembly capability through the National Automobile Industry, which assembles Mercedes-Benz trucks. Investors are still likely to be cautious and will weigh up these advantages against the need to train up skilled production staff and develop a research and development base. The government’s establishment of a higher institute for plastic fabrication in Riyadh; SABIC’s 2011 investment in German automotive technology developer, Inpro; and Lotus’s establishment of an automotive testing center in the Kingdom are all positive steps in this regard.

              PMI falls back

              The considerable amount of construction that these and similar projects will entail should help to support the contracting sector, which is a mainstay of the nonoil economy. The “new orders” component of the latest purchasing managers’ index (PMI) declined in March, but at 66.9 it was still firmly in expansion mode, with 43 percent of respondents reporting an increase in orders and just 7.2 percent recording a decline (the overall PMI was at 58.7). Of some concern was the sharp downward move in the “new export orders” index, from 57.7 to 54.2 in March, with only a net 8 percent of respondents reporting an increase in export orders, the Samba report said.

              Received wisdom is that Saudi Arabia’s export profile will insulate it from the travails of the global economy: 55 percent of its exports head to East Asia, which remains the most buoyant region economically. It is unwise to read too much into one data point, but it may be that slumping demand in the euro zone is beginning to have an impact on Asia’s export sector. Certainly, China’s export growth has slowed sharply over the past 12 months, and this might be having an impact on Chinese demand for Saudi Arabia’s oil and petrochemicals.

              The PMI data also appear to indicate that profit margins remain tight for many firms. Despite some softening in the rate of expansion in March, input prices continued to climb, with a net 15 percent of respondents reporting higher input prices compared to February. Most of this was the cost of physical inputs, with higher cement and steel prices likely having some impact, at least for contracting firms, aggravated to some extent by a slightly stronger euro; staff costs remained subdued, with the rate of increase continuing to trend downward. However, output prices continued to track well below input prices, with only a net 6 percent of respondents reporting higher output prices. In general, this probably means that margins are continuing to be squeezed through increased competition, though for some (especially food producers) subsidization would also have played a role in keeping output prices down; it is also possible that some respondents are reluctant to confirm increases in output prices.

              Retail sales

              Monetary data show that retail sales have continued to surge. The volume of points of sale transactions in the twelve months to March was up 29 percent, following a 35 percent gain in February. This likely reflects the full impact of unemployment benefit, which was rolled out at the beginning of the year.

              Meanwhile, bank lending has seen less spectacular, but steady growth. The value of commercial bank lending to the private sector was up almost 13 percent in the twelve months to March. New data are available showing the direction of this lending, though only to end-2011. In terms of corporate credit, the three dominant sectors-commerce, manufacturing and construction-all saw nominal growth during 2011. However, there were sharp variations between them, with manufacturing and construction growing by a brisk 24 percent and 26 percent, respectively, while commerce managed just 0.5 percent. The strong growth in credit to manufacturing and construction is no surprise given the rollout of industrial projects discussed above. The comparatively weak performance of commerce is a surprise given the buoyancy of retail and wholesale trade, though it might reflect the overhang of capacity in the commercial real estate space.

              Mortgage lending

              In terms of personal lending, there was a notable 27 percent increase in mortgage lending during 2011, following 29 percent growth in 2010. Mortgage lending is now equivalent to 12 percent of bank personal lending, up from around 8 percent at end-2009. Lending has picked up despite the absence of a mortgage law: Banks have instead concentrated on lending to the upper income segment, where large deposits are the norm.

              There is no sign of the law being approved, notwithstanding the priority that housing has been given by the authorities. It might be that the authorities are keen to expand the supply of housing before inducing fresh demand, in order to keep a lid on prices. Construction, especially of small villas on the outskirts of major towns and cities, has been stepped up.

              If legislation were to reduce the lending risks for banks, it should increase mortgage supply to lower-income borrowers and reduce mortgage borrowing costs (currently the average APR is some 6 percent for a 15 year loan). Record low interest rates may limit any fall in mortgage rates, however.

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