Sunday, 9 November 2014
WHAT WE’RE TRACKING TODAY
A delegation of 66 US companies will visit Cairo today. Says AmCham Chairman Anis Aclimandos: “The delegation includes 26 American companies that have not yet invested in Egypt, and 40 other companies that have already invested.”
A new crackdown on traffic violations carries with it sharp new penalties, including up to six months’ imprisonment and EGP 10,000 for driving the wrong way on a one-way street.
LAST NIGHT’S TALK SHOWS
After yet another mass-casualty traffic accident left 15 people dead on the Red Sea–Sohag Road this weekend, talk show hosts continued to wage war against negligence, lax laws and rampant drug use amongst bus and truck drivers.
“When will the bloodshed on Egypt’s roads end?” demanded Magdy El-Galad last night as he devoted his full program to the state of chaos on Egypt’s roads. Photos of cars without license plates and cars driving the wrong way on one-way streets were shown as examples of the blatant violations that take place daily.
OCI chief Nassef Sawiris made a brief appearance on Lamees El-Hadidy’s show last night. In a recorded interview, Sawiris set the record straight about the resolution of OCI’s tax dispute with with the government. He made it clear that the unsubstantiated tax evasion claim against his company was initiated by “Morsi El-Ayyat” during a time when the country was unraveling.
“This chapter of Egypt’s history is now over and we are ready to start working and investing again. It is very important to us that OCI be seen as Egypt’s partner, and the partner of the Egyptian people. We hope to play an important role in rebuilding Egypt,” said Sawiris.
He claimed that now that all charges have been dropped, the money that has already been paid as part of the tax settlement will go to the Tahya Misr Fund. Sawiris also talked about the new contract that his company is about to sign to build a 3,000 MW coal power plant in the Red Sea. (See below for news of OCI’s plan to explore an Egyptian listing for its construction arm.)
Written in advance of the tripartite talks between Egypt, Cyprus and Greece concluded in Cairo yesterday, this brief analytical piece by Greek news site TOC explains some of the issues at stake in The geopolitical game over Mediterranean hydrocarbon reserves. Also be sure to take a look at our round-up of the talks and resulting communique in our Enterprise 5-Minute Guide after today’s On Your Way Out.
The EGX30 lost 0.8% on Thursday to close at 9,420 points, good for a one-week gain of 1.2% after strong performances on Monday and Tuesday. Thursday’s turnover was 24% above the 90-day average at about EGP 0.9 bn. Also on Thursday: The Tadawul advanced 0.2%, Kuwait shed 0.9%, Qatar added 0.5%, the DFM inched up 0.1% and ADX dipped 0.8%.
Internationally, US markets were essentially flat on Friday and the greenback slid slightly after the US government’s October jobs report fell just shy of expectations despite adding 214,000 jobs last month and sending unemployment to a six-year low of 5.8%. European shares fell on Friday, a day after Mario Draghi confirmed the European Central Bank would pump more liquidity into the economy to spur lagging growth.
The Sisi administration has postponed the economic summit planned for Sharm El Sheikh to March 2015 from February in a bid to avoid overlapping with Chinese New Year and other East Asian holidays, according to Finance Minister Hany Kadry Dimian. The announcement came as Dimian confirmed for the first time the total aid received from Egypt’s GCC allies in the last fiscal year, pegging the amount at USD 10.6 bn. The finance minister also noted the budget deficit had eased to 12.8% of GDP in 2013-14 from 13.7% the previous year.
The NY Times’ editorial board really wishes senior US business leaders weren’t visiting Egypt today. Shocking, we know. In the latest venting of its frustration with Egypt, the Grey Lady’s editorial board declares it “stunning that the State Department saw fit to help organize a large investment conference for American businesses in Cairo next week, coinciding with a deadline the Egyptian government imposed in a blatant effort to shut down independent groups that promote civil society and human rights. … American executives taking part in the Cairo business conference … should think long and hard about whether investing in Egypt now is worthwhile if it means strengthening a despotic system.”
The three-day visit will include high-level government and business meetings, andPresident Abdelfattah El-Sisi is expected to meet the delegation. The gathering is being organized by the US Chamber of Commerce’s US-Egypt Business Council and the American Chamber of Commerce in Egypt. US Secretary of State John Kerry has thrown his weight behind the meetings.
In still more business conference news, more than 1,000 business leaders (primarily from the Gulf) are expected to attend the 16th Arab Business Owners and Investors Conference in Cairo on 23-24 November. The conference, headlined “Investment in Egypt: Investment in the Future,” will take place under the auspices of President Abdel Fatah Al-Sisi and is backed by the Federation of Egyptian Chambers of Commerce, among other bodies. They don’t seem to have a website, so we’ll link to the latest agenda we’ve received in tomorrow’ Calendar section.
The long-awaited unified telecoms license package covering mobile and fixed-line services will be issued before year’s end despite concerns expressed by Mobinil, says Minister of Communications and IT Atef Helmy. The license terms would permit Telecom Egypt to enter the mobile space in return for a one-time payment of EGP 2.5 bn, while Vodafone Egypt, Etisalat and Mobinil could each begin offering fixed-line service by paying EGP 100 mn to state coffers for access to TE’s existing network. The license would also spin off a new company to develop national telecoms infrastructure, a function now carried out by TE and select military-owned companies.
Egypt will repay USD 2.5 bn to Qatar by the end of this month, bringing to USD 6 bn the total repaid since relations were strained in the wake of the 30 June 2013 Revolution.
The Interior Ministry announced on Saturday via its Facebook page the arrest of a US-Egyptian citizen accused of having posted on jihadi websites a threat to attack American and other international schools in Maadi and Jeddah. A 60-year-old dual US-Egyptian national who holds an international teaching credential and lived in the US for 27 years was arrested in Alexandria, according to Interior Ministry spokesman Hani Abdel Latif.
The World Bank’s country director for Egypt, Hartwig Schafer, covers everything from the Sisi administration’s target of 20% of energy from renewable sources by 2020 to the institution’s 2015-2019 country partnership framework in a wide-ranging interview with Daily News Egypt.
Egypt will have until March 2015 to respond to the 300 recommendations it received during its Universal Periodic Review by the United Nations Human Rights Council, as outlined in this draft report (PDF document).
Health Minister: Egypt’s population to reach 119 mn by 2030
Adel Adawy warned that Egypt’s population is expected to reach 118.9 mn by 2030 if the current birth rate of 3.5 children per mother remains unchanged. Adawy said Egyptians need to ask themselves how the government will manage the expected population increase and its impact on Egypt’s resources and economic development.
Libya’s high court rules elected parliament unconstitutional; Elected parliament says court made ruling at gunpoint; U.S. weighs sanctions on Libyan factions to halt proxy War: The US is considering imposing sanctions on Libya’s combative factions, as outside intervention has exacerbated the fighting. Qatar and, to some degree, Turkey are supporting Islamist-linked forces and Egypt and the United Arab Emirates are backing more secular rivals. US sanctions would be separate from potential United Nations-backed measures that aim to pressure Libyan factions and militias to take part in UN-backed political negotiations. US officials declined to say whom they might target with sanctions or why they felt it necessary to look at US penalties separate from the United Nations, nor would they detail what sanctions they would propose. Meanwhile, Libya’s Supreme Court on Thursday ruled the nation’s isolated but internationally recognized parliament is unconstitutional, a decision that threatens to plunge the oil-rich nation into further political chaos. The Supreme Court sits in Tripoli and supporters of the elected parliament in Tobruk said the court operated under intimidation by a coalition of armed groups there known as Operation Dawn, raising questions about its ability to rule independently. The court hasn’t responded to any of the accusations.
KSA’s National Commercial Bank IPO was 23x oversubscribed despite the “haram vs. halal” debate. About 1.25 mn private citizens bid for shares in the world’s second-largest IPO of 2014: The USD 6 bn listing of NCB. The bank offered 25% of its shares at SAR 45 (about EGP 86) per share; 15% of its shares were up for grabs to Saudi nationals, with the national pension fund taking the remaining 10%. Roughly 80% of the orders came in on the last day. After an earlier edict from conservative scholars claimed participation in the IPO was haram because the bank engaged in usury, NCB promised to transform itself into a fully Shariah-compliant institution within five years. Read more from Bloomberg or the WSJ.
Price of crude oil: how low can it go? The FT doesn’t really get around to answering the headline question in its weekend Big Read, but its look at the economic impact on oil exporters and importers of the USD 30 / barrel drop in Brent crude since June is definitely worth a read. Among its more interesting nuggets:
Egypt will host 26 African heads of state for trade talks on the launch of the Tripartite Free-Trade Area (TFTA) in mid-December, the State Information Service announced yesterday. The TFTA includes member states from COMESA, SADC and EAC. The free-trade zone would have a combined population of 625 mn, says Brookings, and an aggregate GDP of USD 1 tn covering 58% of the continent’s economic activity.
ENERGY, RENEWABLE ENERGY & SUBSIDY REFORM
KEPCO looks to build Korean nuclear plant in Egypt
Business Korea | 07 Nov 2014
Korea Electric Power Corporation (KEPCO) recently held the “Korean Nuclear Industry Roadshow” at Cairo, Egypt from 5-6 November. Korea Hydro & Nuclear Power, KEPCO Engineering & Construction Company, Doosan Heavy Industries & Construction, Hyundai Engineering & Construction, Daewoo Engineering & Construction, and Daelim Building participated in the event to promote the export of Korean nuclear plants to Egypt. The participants discussed ways for mutual cooperation with the topics of the excellence of Korean nuclear plants, workforce training, and localization. KEPCO said that South Korea signed an MOU with Arab Contractors, the leading builder in Egypt’s construction industry, gaining a competitive advantage over other nations in the Egyptian nuclear plant market. The Egyptian government is planning to give public notice of an international bid for building the second new nuclear plant at El-Dabaa early next year. (Read)
Enterprise Notes: This is the latest in a string of MOUs signed in the past few years between Egypt and South Korea regarding nuclear energy. The political transition had previously put progress on the issue on hold. Until further clarifications and confirmations of this agreement are issued, this story should be considered as developing, with more to follow in the weeks and months ahead running up to the March Sharm El-Sheikh economic summit.
Renewable energy is a necessity for Egypt – TAQA Arabia
Marcopolis | 07 Nov 2014
Executive Chairman of TAQA Arabia Khaled Abu Bakr recently sat for an interview with Marcopolis about renewable energy in Egypt in general and how TAQA is working to develop these projects in Egypt. “Renewable energy is of course becoming state of the art all over the world and in Egypt it is becoming a necessity not only for its environmental benefits but also because we need to diversify our sources of energy … So far, over the last few weeks in Egypt the government has become very serious about implementing a real national plan to develop renewable and green energy. There are now incentives that have been declared by the government and more are to come in the next few weeks.” (Read)
OIL & GAS
Apache swings to loss on tax changes associated with Egypt and writedowns of non-Egyptian assets
Apache earnings release, WSJ and Reuters | 06 Nov 2014
Apache Corp. reported a net loss after taxes of USD 1.3 bn for 3Q14, a sharp swing into the red compared with a net profit of USD 700 mn in the same quarter last year. Weighing on results were a USD 1 bn write-down of assets due to low oil and gas prices and the impact of a USD 249 mn income tax expense related to the repatriation of cash from its Egyptian operation, the company said in its earnings release. Apache’s Egyptian production 2% y-o-y in 3Q14 in BOE terms; production was flat q-o-q as rising natural gas volumes offset a 1% dip in oil production.
Apache is looking to divest assets in Canada, Australia and other countries under pressure from activist investors who are demanding more focus on what they believe are higher-potential US assets. The company reported “strong drilling results in Egypt” and signalled that it could look to divest those assets alongside others in Australia and the North Sea. The company previously sold a one-third stake in its Egyptian oil and gas assets to Sinopec in a USD 3.1 bn transaction. (Read Earnings Release or WSJ or Reuters)
Tamar partners extend Union Fenosa talks
Globes | 06 Nov 2014
The Tamar natural gas partners reported to the Tel Aviv Stock Exchange that they intend to extend negotiations with Spanish company Union Fenosa Gas, which has a natural gas liquefying facility in Damietta, Egypt. The negotiations concern the sale of 70 billion cubic meters of gas over 15 years. The Tamar partnership announced on 5 May that the parties had signed a five-month letter of intent designed to lead to the signing of a binding agreement. BG has a gas liquefying facility in Idku, Egypt. As a result of financial losses due to domestic gas diversion, Union Fenosa sued the Egyptian government last year, claiming that Egypt had violated the agreement between the two, thereby causing Union Fenosa large-scale financial damages. Last September, however, an international press agency reported that Union Fenosa was considering withdrawing its lawsuit against Egypt if Egypt allows it to import Israeli gas to its Damietta liquefying facility. (Read)
TAQA Gas signs protocol with oil ministry to connect 313,000 homes with natural gas
Al Borsa | 06 Nov 2014
TAQA Gas, a subsidiary of TAQA Arabia, announced that it signed a cooperation protocol with the oil ministry to connect 313,000 homes with natural gas over a 3-year period. The project is scheduled to start this year and is expected to cost EGP 780 mn. TAQA Gas Managing Director Tarek El-Hawary said that the the project will start with the governorates of Beni Suef, Minya, Assiut, Damietta and Kafr El-Sheikh, adding that connecting more homes with natural gas will reduce the government’s burden from subsidizing butane gas canisters. TAQA Arabia is one of the largest companies in Egypt operating in the energy distribution and infrastructure sectors with investments totalling EGP 1.2 bn.
Egypt steel producers lower prices in November
Ahram Online | 07 Nov 2014
Egyptian steel producers have refrained from raising steel prices for the local market after the government introduced protective tariffs on imports. Some local producers — including Medisteel, Delta Steel and Beshay Steel— have lowered their prices by between EGP 20 and EGP 250 per ton, while others — including Ezz Steel, which holds a 55% market share, and Solb Misr — have kept their October prices intact, the supply ministry reported on Friday.
Last month, the government imposed a temporary 7.3% tariff on steel imports after local producers decried a growing influx of cheap steel imports from Turkey and Ukraine, which, at the time, were EGP 400 cheaper than the average local product. The government is currently deciding whether or not to extend the tariffs past the 200 day period for which they were decreed. (Read)
Regulator approves TVM Healthcare bid for 66.79% of Egypt’s Ameco Medical
Arab Finance | 06 Nov 2014
Egypt’s financial regulator has approved an EGP 37.47 mn bid by TVM Healthcare Acquisitions Ltd III for 66.79% of Egypt’s Ameco Medical Industries. The offer was EGP 17 per share for 66.79% of the company, EFSA said in a statement to the EGX. Private equity firm TVM Capital Healthcare Partners seeks a majority stake in Ameco Medical industries, TVM’s chief executive Helmut Schuhsler told Reuters in October. (Read)
NUCA offers 8 tenders in 4 new cities
Daily News Egypt | 08 Nov 2014
The New Urban Communities Authority will offer eight new public tenders in four new cities amid efforts to develop new urban areas. The tenders will include the construction of a primary school, street cleaning operations, garbage collection and transport to public dumps. New Urban Communities Authority Vice Chairman Kamal Fahmy said that four public tenders will be offered in Sadat City. The tenders will entail street cleaning operations as well as garbage collection and transport to public dumps between residential areas one through twelve next to the Ibny Baytak area and the first, second, fifth, sixth and seventh Mehwar neighbourhoods. (Read)
BANKING & FINANCE
NASDAQ Dubai to promote dual listings for Egyptian companies
Reuters, CNBC Arabia | 06 Nov 2014
NASDAQ Dubai has agreed with Egypt’s securities clearing house to promote cross-listings of Egyptian firms’ shares in Dubai, a sign of growing investment links between the two economies. The deal between NASDAQ Dubai, the smaller of Dubai’s two stock exchanges, and Misr for Central Clearing, Depository and Registry (MCDR) establishes technical ties that will facilitate dual listings, the two bodies said on Thursday. MCDR’s chairman Mohamed Soliman Abdel Salam said the agreement would also encourage portfolio investment flows from the United Arab Emirates into Egyptian markets, by allowing UAE investors to clear their trades via NASDAQ Dubai.Speaking on the agreement, Abdul Wahed Al Fahim, Chairman of NASDAQ Dubai, added that it represents a major stepping stone in integrating regional markets. (Read the news from Reuters, CNBC Arabia or The National)
OCI seeks listing construction business in Egypt and UAE
Bloomberg | 06 Nov 2014
OCI NV, the Dutch company controlled by billionaire Nassef Sawiris, said it plans to list its construction unit in Egypt and the United Arab Emirates. The new entity, Orascom Construction Ltd., will include all OCI’s construction assets, as well as its 50% stake in real-estate company developer BESIX Group, the company said in an e-mailed statement today. The listings are targeted for the first quarter, subject to regulatory, board and shareholder approvals, it added. Sawiris created OCI and listed it Amsterdam last year before using it to acquire his Cairo-based Orascom Construction Industries amid a tax dispute with Egypt’s former Islamist government led by Mohamed Mursi. OCI’s fertilizer and chemicals business will still be listed in the Netherlands, it said. (Read onBloomberg or Reuters)
SME portfolio at Banque du Caire reaches EGP 7 bn
Al Mal | 06 Nov 2014
The cumulative portfolio for Small and Medium Enterprises at Banque du Caire reached EGP 7 bn, the bank said last week, noting that the bank has inked 115,000 microfinance contracts this year. (Read in Arabic)
PM to inaugurate tourist sites today
State Information Service | 07 Nov 2014
Prime Minister Ibrahim Mehleb will inaugurate a number of freshly renovated tourist sites on Sunday. The sites include the Sphinx, Amenhotep II Museum and Menkaure Pyramid. Antiquities Minister Mamdouh el-Damaty and Tourism Minister Hisham Zaazou will attend the inauguration ceremony. “This move comes as part of the Antiquities Ministry’s ongoing endeavors to protect Egypt’s artifacts,” El-Damaty said. (Read)
EGYPT POLITICS + ECONOMICS
Egypt sets harsher traffic laws, special courts for violations after mass fatal accidents
Ahram Online | 06 Nov 2014
On Thursday, President Abdel-Fattah El-Sisi ordered the formation of special circuit court for traffic law violations, days after two mass road accidents killed 28 people, mostly minors, Ahram Online reports. El-Sisi also appointed a committee of experts to dig into the problem, with a two-week deadline for reporting back. Meanwhile, Cabinet has approved sharp hikes in fines and prison sentences for violations of the nation’s traffic laws. (Read)
Source: Kuwait transferred USD 1 bn. Int’l Co-Op’n Ministry: Nope.
Reuters Arabic and Daily News Egypt | 06 and 08 Nov 2014
The saga of the Kuwaiti billion continues after Reuters’ Arabic service reported Thursday that Egypt had received a USD 1 bn grant from Kuwait earlier this week. “Yes, we received a USD 1 bn grant from Kuwait last Monday,” the source told Reuters. Ministry of International Cooperation Mohamed Hassan countered on Saturday that no transfer has been received and that the last international assistance agreed was a USD 350 mn package from Saudi Arabia covering financing for electricity projects and petroleum imports. (Read)
Egypt’s budget deficit hit 12.8% in FY2013/14: Finance ministry
Ahram Online, Ministry of Finance | 08 Nov 2014
Egypt’s state budget deficit hit EGP 255.4 billion – 12.8 percent of GDP – in the fiscal year 2013/14, according to final figures announced by the finance minister. Hany Qadry Demian announced on Saturday that the budget deficit in the fiscal year ending on 31 June 2014 fell short of plans, largely because of a revenue shortfall. Revenues stood at EGP 456 billion, 24 percent lower than budgeted, due to overestimates based delays in the implementation of subsidy cuts and tax reforms. This was overcome by Gulf aid, said Demian. Egypt received EGP 95.8 billion in aid and grants from Saudi Arabia, UAE and Kuwait in the past year. On the other hand, the government spent a total of EGP 701.5 billion, almost 10 percent lower than budgeted, partially due to savings in wages. (Read on Ahram Online or Read Finance Ministry Press Release in PDF)
Egypt’s Net International Reserves slightly up in October
Al Borsa and Ahram Online | 06 Nov 2014
Egypt’s net international reserves grew slightly at the end of October to USD 16.909 bn, the Central Bank of Egypt said on its website. That is up from USD 16.872 bn recorded a month earlier. Reserves dropped after a 2011 uprising forced then-president Hosni Mubarak to step-down, but rose last year when Gulf Arab states provided billions of dollars in aid to Egypt after Islamist president Mohamed Morsi was deposed. (Read in English or in Arabic)
OTHER BUSINESS NEWS OF NOTE
EGP 50 mn invested in pen-systems for aquaculture industry
Al Mal | 06 Nov 2014
The Sisi administration has allocated EGP 50 mn to the development of marine pen systems to spur growth of Egypt’s aquaculture industry, according to an Al-Mal interview with Khaled Al Hosny, Head of the General Authority for Fish Resources Development (GAFRD). The pens added the pens would initially be installed along the Mediterranean coast. GAFRD has also approved a plan that looks to develop freshwater fisheries throughout Upper Egypt, Al Hosny said.
Saudi Arabia’s sovereign wealth fund sees 9% asset growth since January
Asharq Al-Awsat | 05 Nov 2014
Total assets of Saudi Arabia’s main sovereign wealth fund, SAMA Foreign Holdings (SAMA), have jumped 9% since January, allowing it to maintain its position as the world’s third-largest, according to a report by the Sovereign Wealth Fund Institute (SWFI). In its most recent ranking of global sovereign wealth funds, the Washington-based SWFI said SAMA’s total assets had risen to USD 737.6 bn in October, up 9% from USD 675.9 bn dollars in January. However, Dr. Ali Al-Tuwati, an economics professor at the King Abdulaziz University in Jeddah, told Asharq Al-Awsat that SAMA’s position in the rankings would likely fall next year if global oil prices did not stabilize. The assets of the top-three largest funds in the world — Norway’s Government Pension Fund–Global, the Abu Dhabi Investment Authority’s (ADIA) fund, and SAMA — all deploy surpluses deriving from petroleum sales.
The Arab Bank terrorism case continues to wend its way through the US court system, with a Federal Court judge saying he will allow the damages phase of the trial to go forward despite his belief that the appointment of a special master to determine compensation would give quicker results. Arab Bank continues to appeal the September verdict that found it liable in a wave of Hamas-sanctioned attacks in the early 2000s that left several Americans dead or wounded. (Read on AP)
ON YOUR WAY OUT
In the latest sign of the Sisi administration’s engagement with East Africa, Minister of Trade and Industry Mounir Fakhry Abdelnour will attend the African Union Ministers of Trade Conference on 3-5 December in Addis Ababa.
British Airways plans to resume flights to Sharm El-Sheik starting next October, Tourism Minister Hisham Zaazou said on Thursday as the WTM 2014 trade fair drew to a close. Zazou, urged British Airways officials to consider creating flying routes to Luxor and Upper Egypt, as well.
In a piece headlined “In stark transformation, Egyptian rights activist dies fighting for the Islamic State,” the Washington Post’s Erin Cunningham tells the story of Ahmed al-Darawi, the latest Egyptian to apparently die fighting for Daesh in Syria and Iraq. What’s new this time: Al-Darawi was a 38-year-old father of two, former police officer (an officer, it would seem, not a conscript or non-commissioned officer) who became a sports marketer for Etisalat Misr and, later, a revolutionary who engaged with his former colleagues Ministry of Interior on behalf of the Tahrir set.
Custom single-speed commuter bikes — handmade, in Cairo: The Guardian’s Patrick Kingsley continues his exploration of other sides of Cairo with a spotlight on a hipster bike shop hoping to lead the capital city’s cycling revolution. In short: an Egyptian import-export guy learned bike mechanics in Canada before teaming up with a Dutch journalist to create Ain Bicycles, purveyors of custom, handmade single-speed bikes at insanely good prices (EGP 1,250 to EGP 2,650) with a nice mix of imported and domestic components.
Cheers, Arif: Abraaj takes stake in Southeast Asian wine-themed food chain. Regional private equity player Abraaj has paid an undisclosed sum for a majority stake in Wine Connection, a 55-location collection of wine shops and restaurants in Thailand and Singapore. It is the outfit’s fourth investment in the Southeast Asian food and beverage space and twentieth globally.
Another Egyptian squash champion: “Egyptian squash champion Mohamed El-Shorbagy, 23, climbed to world No 1, overtaking 31-year-old Frenchman Gregory Gaultier who dropped to world No 2, according to the PSA World Rankings of November 2014,” Ahram Weekly tells us in a profile.
Al Jazeera Live Egypt filed on Saturday an appeal against an Administrative Court ruling handed down in September that bans it from the airwaves.
Amal Clooney calls for release of Al-Jazeera English journalist Mohamed Fahmy. The high-profile human rights lawyer writes in a news release: “Mr Fahmy’s detention has become a great danger to his health,” saying he requires surgery for his shoulder and treatment for Hepatitis C. (Read the full statement here in PDF)
Are we (Enterprise) the only ones who feel slightly surprised that we (Egypt) export rather a lot of sea salt all over the world, including the US midwest? Brief mention in a Midwestern US Fox News story here, two examples of Egyptian salt exporters here (one with a very nice little website).
THE ENTERPRISE 5-MINUTE GUIDE
to the Egypt-Cypus-Greece talks in Cairo yesterday
Tripartite talks with Greece, Cyprus could be significant to Egypt’s natural gas future — and have wide political ramifications far beyond the Eastern Mediterranean
Egypt, Cyprus and Greece issued a joint communiqué at the conclusion of their tripartite meeting in Cairo yesterday. The statement touches on a broad range of topics including uniting against terrorism, but is primarily concerned with confirming future hydrocarbon cooperation, particularly in offshore blocks coveted by Turkey. The joint statement appears directed to Turkey, Israel and the international community at large, and may be read here. A brief summary of the interests of the countries involved is offered to give context to elements contained in yesterday’s joint statement:
Egypt is exploring the possibility of importing gas from both the Cypriot Aphrodite gas field as well as through the Israeli Leviathan field through intermediaries. Marginalizing Turkey serves Cairo’s political and energy security interests.
Jordan likewise is interested in importing natural gas from both Cyprus and Israel.
Greece has yet to delineate its own maritime borders with regard to the Economic Exclusion Zone (EEZ). Negotiations between Greece and Egypt are complex, but are ongoing and amicable. Following the tripartite talks yesterday, both Greece and Cyprus promised to act as Egypt’s “ambassadors” to the EU.
Turkey does not recognize Cyprus and is a persistent objector to the UN Convention on the Law of the Sea (UNCLOS), which allows for the creations of EEZs. Under international law, countries are allowed persistent objections to treaties, but Turkey’s recent dispatch of a warship into Cyprus’ EEZ is beyond what is required to register its objection and is meant to intimidate Cyprus. Turkey’s claim to the Aphrodite gas field is through its tie to the TRNC, a state only recognized by Turkey. Turkey, the TRNC and Cyprus agree to an eventual reunification of both parts of the island in principle, but Turkey insists that reunification be completed before hydrocarbon exploitation, while Cyprus insists on the opposite.
Cyprus is not holding its breath to wait for reunification first, being home to the most expensive electricity rates in all of Europe due to their need to import the entirety of their demanded refined petroleum as feedstock to produce all of their domestic electricity. Cyprus is eager to switch over to natural gas feedstock for domestic use and to transform itself into a regional natural gas hub through a proposed liquefaction facility.
Israel has its own hydrocarbon resources to exploit and is evaluating its options to bring that gas to European markets, helping Europe to diversify away from natural gas reliance on Russia. Despite mutual antipathy, Israel and Turkey are open to having Turkey as both an importer of Israeli gas and as a route to Europe. Israel has two potential routes: LNG through Cyprus and a pipeline to Turkey, which has led Israel in the past to avoid involving itself in the Cyprus dispute. Any pipeline through Turkey, however, would have to pass through Cypriot waters, which Cyprus rejects, making a deal with Cyprus the safer of the two bets for the time being.
Two recent events, however, have raised the ire of both Egypt and Cyprus toward Israel, providing a possible explanation for the aggressive tone taken in the joint communiqué with regard to the Palestinian issue. Tensions flared-up recently at the Temple Mount, which has been attributed to right-wing Israelis calling on Jews to pray there, as well as Israeli police restricting access to Muslims as a result of rioting. Further, two Palestinian attacks have killed two Israelis, both by being hit by a car in the same attack, following the shooting of a far-right rabbi associated with the group Temple Mount Faithful. These attacks have prompted concerns over the possibility of a new wave of intifada, with a spokesman for the Al Qassam Brigades, the military wing of Hamas, telling AFP: “the people, arms and the tunnels are going well”. Israel’s recent conduct regarding the Temple Mount received a stern rebuke from Egypt and Jordan, who warn of a “regional deterioration”. Israel responded quickly to de-escalate, with the Chief Rabbi of Israel speaking out against Jews praying at the Temple Mount and against Jewish incitement by the far-right.
Cyprus is also furious at Israel for inviting the Turkish-Cypriot Foreign Minister as a keynote speaker at the Israel Energy and Business Convention last week: “Cyprus Hydrocarbons Company (CHC) head Toula Onoufriou, expressed her ‘shock’ at the participation of ‘a so-called official from a pseudo state, which is the result of the continuous occupation and invasion of Cyprus by Turkey,’” Haaretz reported. In response, Israeli Foreign Minister Lieberman said on 5 November in Cyprus that “We respect the integrity of Cyprus. We’re sure that you have your exclusive rights to explore in your economic zone of the gas and oil reserves.”
Last Thursday’s edition of Enterprise Morning Meeting incorrectly identified Misr Qena Cement as a “subsidiary” of ASEC Cement Holding (ACH). ASEC Cement is a substantial shareholder of Misr Qena Cement, but Misr Qena is not a “subsidiary” of ACH.
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