CGI Gulf Insights of the Week (141)

ByCGI Gulf Insights of the Week
Tuesday, 28 January 2020
Published inJanuary 2020

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CRIF GULF WEEKLY INSIGHTS

Country Risk Update - Kuwait

Risk Indicator - DB3d
Risk Level - Slight
Ratings Trend - Deteriorating

Business opportunities should increase in Kuwait as the government targets a more diverse economy with its national development plan. A pending resolution of the Divided Zone dispute with Saudi Arabia will boost oil production capacity. Disputes with Saudi Arabia over the Divided Zone appear to be largely resolved, but a restart would require output cuts elsewhere to meet OPEC quotas.

Market Overview

UAE tycoon Al Habtoor sees 'thriving' investment potential in Egypt
Khalaf Ahmad Al Habtoor, founding chairman of Al Habtoor Group, has revealed he is keen to increase investments in Egypt but called for further legislative reforms and tax incentives to improve foreign direct investment in the country. Al Habtoor, who is a regular visitor to Egypt, said the country has "thriving investment potential". His comments came as he received MP Alaa Abed, chairman of the Egyptian Parliament’s Human Rights Committee, at the Al Habtoor Group HQ. Al Habtoor said he and Abed discussed investment possibilities in Egypt and its current economic climate. According to a statement, they deliberated over the present investment climate in Egypt, its economic trends, the problems faced by prospective investors, and the current government policies surrounding the investment. Al Habtoor expressed keen interest in an improved investment milieu, backed by proper legislative and structural reforms by the Egyptian government and private sector, it added.

Dubai retail giant signs deal to revolutionize Carrefour online orders
Dubai retail major Majid Al Futtaim has announced a partnership with Takeoff, a US-based technology company, that will revolutionize Carrefour’s online orders in the UAE and Saudi Arabia. The partnership will see several micro-fulfillment centers (MFCs) built by 2021, the company said in a statement. Located at select Carrefour stores, these automated small warehouses will process Carrefour’s online orders to replace the manual picking method currently used. Customers will be able to place orders through Carrefour online with Takeoff’s automated technology ensuring that robots within the MFCs fulfill the order in less than 5 minutes for pick-up or delivery. Hani Weiss, CEO of Majid Al Futtaim - Retail said: “We are pleased to announce this partnership with Takeoff which will bring another state-of-the-art technology in the retail sector to the region. Takeoff has a strong existing client list and brings a reliable tech solution that can significantly improve our customers’ experience – from faster order processing to an increase in capacity to deliver more online orders.

Kuwait's Jazeera Airways inks $1.3bn engines deal
Kuwait-based Jazeera Airways has signed an agreement with CFM International to support the LEAP-1A engines that power the airline’s fleet of Airbus A320neo aircraft. The agreement, which is valued at $1.3 billion, covers a minimum of 20 aircraft and five spare engines, with the option of including additional aircraft as Jazeera Airways continues to expand its fleet. Under the terms of the Rate Per Flight Hours (RPFH) agreement, CFM Services guarantees maintenance costs for Jazeera’s engines on a dollar per engine-flight-hour basis. Jazeera Airways became the first LEAP-1A-powered A320neo operator in the Middle East in May 2018 and the fleet has since logged more than 6,000 flight hours. “The LEAP engine is a real asset to our daily operations in harsh environments and we look forward to introducing more of these engines in the coming months." said Rohit Ramachandran, CEO of Jazeera Airways. “We have been really happy with the reliability and the best-in-class support provided by CFM over the years, so we are delighted to expand our relationship through this new agreement.”

UAE's US Ambassador says economic ties 'shifting' amid growing confidence
The economic relationship between the United States and UAE is “shifting”, with American firms increasingly willing to invest in the country amid growing confidence in its institutions and infrastructure, according to the UAE’s ambassador in Washington DC, Yousef Al Otaiba. Al Otaiba has served as ambassador to the US since July 2008. In an interview with Arabian Business at the UAE embassy in Washington DC, Al Otaiba said that, at an economic level, the relationship between the two countries is “very good”. “Of all the countries the United States trades with, the fourth-largest surplus is with us,” he said. “That’s one of the few situations where America has a trade surplus.” However, Al Otaiba said that he believes that the relationship is rapidly changing. This change, he added, is best exemplified by the Abu Dhabi National Oil Company’s (Adnoc) $4 billion midstream pipeline infrastructure partnership with US-based institutional investors KKR and Blackrock. As part of the transaction announced in February 2019, a new entity – Adnoc Oil Pipelines – will lease Adnoc’s interest in 18 pipelines for a 23-year period. Funds managed by BlackRock and KKR form a consortium to hold 40 percent interest in the new entity.

Samsung signs $1.85bn deal for Saudi Aramco gas project
Samsung Engineering, the engineering, procurement, construction, and project management company, announced on Tuesday, 28 January 2020 that it has signed a $1.85 billion contract in Saudi Arabia. The Aramco HUGRS (Hawiyah Unayzah Gas Reservoir Storage) project is located 260km east of Saudi Arabia's capital Riyadh and includes gas injection facility of 1,500 million standard cubic feet per day (MMSCFD) and a gas reprocessing facility of 2,000 MMSCFD. Samsung Engineering previously received a letter of intent and also signed a contract for initial work in November. A statement said it is a project to introduce surplus sales gas into existing well during winter and can reproduce gas to match an increase in gas demand in the summer, due to regional characteristics. Samsung Engineering said it will execute the whole engineering, procurement, and construction (EPC) process and expects the Aramco HUGRS to be completed in 2023. The scope of work includes gas injection facility with booster compressors and injection compressors, gas reproduction facility with reproduction compressors and slug catchers as well as utilities & offsite facilities.

Commodity Tracker

Business Updates

In this week’s Power Of Data podcast, was joined by Richard Lumb, Board Member at Finastra, who shares his perspective on the transformation of financial services.

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