The National reports that recent increases in price of Diesel (up by 12%) and Petrol (up by 14%) is attributed to higher refining cost at ADNOC.  Fuel prices in the UAE have increased by 27% in total.

International Oil Daily reports that Iran is contemplating switching to UAE’s Dirham from Euro for its oil sales to Europe as a way of circumventing new sanctions on the country.  Large European customers are not familiar with AED.  (Bloomberg)

Sharjah,the third largest city in the emirates is seeing gas consumption soar even as the UAE is short net of Gas.  Sharjah is the first city in the emirates with network of municipal pipelines for distribution of gas to customers via its utility SEWA.  Last May, the emirate faced a series of power cuts due to insufficient gas supplies to local power stations. Sharjah can buy additional gas from neighboring emirates such as Abu Dhabi but would require sufficient advance notice to meet surging demand. In addition, gas piped from Iran (via Crescent Petroleum) never materialized.  ( The National Newspaper )

Abu Dhabi’s Crown Prince said that they are considering an investment into BP via one of Abu Dhabi’s Sovereign Wealth Funds (ADIA, Mubadala or IPIC).  This would be a loud voice of confidence for the embattled oil company. (Bloomberg)

One of the world’s renowned specialist in Turnarounds predicts economic revival in the Gulf. Dubai’s state owned entities and Kuwait investment companies have been hit the hardest.

Strong corporate governance and getting the right people are being enforced in Dubai’s state owned companies.  (FT)

Argus reports that Iranian aircrafts are refueling at airports in UAE.  Although some of the oil majors marketing companies in the UAE have stopped refueling Iranian Jets, ADNOC and ENOC continue to do so.  The Government has not instructed the companies otherwise.

The National Newspaper reports that CEO of BP has flown to Abu Dhabi to talk to ADNOC (their partner). Although BP downplayed the visit as normal, some view it as visit to preclude potential investment in the embattled company.

The National reports that Middle East Sovereign Wealth Funds may come to rescue of embattled BP.  BP which is facing potential $ 60 billion liability related to oil spill in the Gulf of Mexico, has seen its finances come under scrutiny and several of its counterparties have capped tenor of trades with the company.  The company’s share price has declined by 50% to 15 years low.  BP has in essence  become a political punching bag in the USA aided by its perception as penny pincher and cutting corners.

The Sovereign wealth Funds like ADIA in Abu Dhabi, QIA in Qatar and KIA in Kuwait might see this as an opportunity to repeat their sucess with investment in distressed banks back in 08/09.

BP’s US assets represent only 25% of its asset portfolio and the company still has sought after assets elsewhere. The Sovereign Wealth Funds may get competition this time from the Oil Majors such as Exxon, Shell and the Chinese Oil majors such as CNOOC and Petro-China.

In our opinion, BP may opt to attract friendly Sovereign Wealth Funds with convertible issues to shore up its balance sheet rather than become a sitting duck for the Oil Majors.

Related articles

• Kuwait Investment Office in talks to raise BP stake (guardian​.co​.uk)
• BP seeks investors, help with cleanup (msnbc​.msn​.com)

It seems that Masdar, Abu Dhabi’s US$ 22 billion giant renewable energy flagship company , is re-thinking its ambitious strategy  with the departure of two its key senior officers.   The idea behind Masdar is to make Abu Dhabi the first Carbon neutral city by investing in renewable energy as well as carbon capture and storage. It remains to be seen whether a project like Masdar will succeed instead of  promoting efficient use of energy on a micro scale and building infrastructure projects such as the Metro in Dubai that can one day replace car-centric culture in the UAE.   (Bloomberg)

Giant Rosneft and Crescent Petroleum have signed strategic co-operation agreement to invest in specific oil & gas projects in the MENA region. (RIGZONE)

Emirates Airline, Dubai’s national airline, reported revenue of AED 43.5 billion an increase of 0.4% for 2009 and net profit of AED 3.5 billion ($953 million). The Airline has $3.4 billion of cash on balance sheet.  Passenger numbers rose by 20% to 27.5 million.  Carriers in the middle east have been able to weather one of the worst financial periods globally with one of the highest growth rates of 11.2%.  (WSJ)

UAE listed Dana Gas reported its Q1 results :

• net profit after tax of AED33 million ($8.98 million) in the first quarter compared with a loss of AED32 million a year earlier but short of analyst expectations of AED 48 million
• Earnings for the period excludes an unrealized gain of AED140 million recorded on the company’s investment in Hungarian oil and gas firm MOL
• revenue for the period jumped 66% to AED411 million, from AED247 million in the year-earlier period. The increase in revenue was mainly due to higher hydrocarbon prices coupled with increased production, both in Egypt and Kurdistan Region of Iraq

The National Newspaper reports that ADNOC (Abu Dhabi National Oil Company) is planning to snuff out “flared” natural gas within 5 to 7 years with aim of reducing the emirates carbon footprint. Together with Masdar, ADNOC hopes to receive Carbon Credits on the projects to be completed by 2Q of 2012 reducing emission in the process.  Associated natural gas in Abu Dhabi is high in Sulphur. Recently, ConocoPhilips puled out of project with ADNOC to develop de-sulphurisation plant in the emirates to process Natural Gas.

Related articles

• ConocoPhillips Said to Pull Out From Adnoc Shah Gas (Update2) (businessweek​.com)

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The UAE  is stepping up its investment in the Caspian and in particular Turkmenistan. Protracted negotiations have been held between the two countries which would see the UAE via its Sovereign Wealth Fund Mubadala, invest billions to tap Turkmen gas reserves, the world’s fourth largest.

In 2008, Turkmenistan produced 68 billion cubic meters, equal to the UK’s total annual output.  With Finances in the country strained,Turkmenistan is seeking investment to tap its giant gas reserves. The major issue is transportation for land locked Turkmenistan. This would in effect and in absence of still to be constructed Nabucco pipeline, require transportation via Russia which would come at a political price namely allegiance to the Kremlin.  (Bloomberg​.com)

Iran may be calling off the Caspian swap arrangement after more than 10 years of operations. Under the swap, Kazakh, Turkmen and Russian crude across the Caspian was delivered to Iran’s Neka terminal in exchange for lifting better-quality Iranian Light out of Kharg Island. Reuters reports that Dragon‘s (majority owned by ENOC) swap is also under threat.

Asian refiners have slashed imports of Iranian crude in favour of cheaper and higher quality altenatives. Iran which is the world’s fifith largest oil producer is scrambling to find alternative supply outlets for its own production.  Reuters quote one industry source:

“Iran is struggling to find buyers of its crude under its own term contracts…so marketing crude for a third party doesn’t make sense for them right now”

Dragon’s 45,000 bpd production in landlocked Turkmenistan is dependent on export routes. Taking the alternative export route to the west rather than south will impact Dragon’s margin and increase volume risk.