SPOTLIGHT ON: Reuters Middle East Investment Summit 2016

Egypt is racing to speed up the development of major gas discoveries with a stated goal of achieving energy self-sufficiency by 2020-2021, Oil Minister Tarek El Molla told Reuters. Egypt is looking to boost natural gas production to 5 bcf/d by FY2017-18 as Eni’s offshore Zohr field and BP’s North Alexandria fields enter production. Gas consumption is set to spike in the same year, when the three Siemens power plants come online. Egypt has contracted a third floating storage and regasification unit (FSRU) for arrival in June 2017 to tackle the surge in demand, El Molla said. Notably: “Egypt’s import bill for LNG this year would be roughly USD 3 bn and that Egypt spends some USD 700-800 mn on both LNG and petroleum products monthly.” El Molla sheds no light on why Aramco cut off petroleum product deliveries in October.

(Elsewhere yesterday, El Molla is reported to have told the House Energy and Environment Committee that the Aramco contract has not been terminated. El Molla also reiterated that the Egyptian General Petroleum Corporation was not informed ahead of time that the October shipments would not arrive, according to Ahram Gate. The move should not be framed politically and is “normal”, the minister said, as the company must have encountered circumstances stopping it from shipping to Egypt. He reportedly told the committee the UAE provided fuel to compensate for October’s shipment at almost the same preferential terms, according to Al Borsa, adding that Egypt is not actively considering other offers. A ministry source tells the newspaper that Aramco had not officially confirmed that it would provide a shipment in November. The halt came prior to Egypt’s vote for a Russian-back UN Security Council resolution on Syria.)

Beltone could still make a run at CI Capital: Beltone Financial CEO Bassem Azab tells Reuters that the firm is still interested in acquiring CI Capital and re-open talks if granted regulatory approval by the EFSA, he added. The regulator has been blocking the acquisition until Beltone’s parent company OTMT resolves a dispute related to the 2011 demerger of Orascom Telecom Holdings.

Appetite for IPOs is on the rise with investors in a rush to buy before capital gains tax comes into effect in May 2017, Azab noted. Strong demand for fresh offerings means Beltone can “pick and choose” which ones to take on, he added, noting that “investment banking will do very well next year because of this rush." The company expects to manage three IPOs this quarter and two more in the first quarter of next year, with a total value of EGP 3.5-4 bn, Azab said. Beltone is looking to diversify away from money market funds, which represent 80% of the firm’s assets under management. (We’re a bit more cautious on IPO appetite: The FX overhang has muted appetite, and fears of how devaluation may impact consumer spending will see sentiment turn against consumer stocks. We’d expect sentiment to improve sometime after 1Q2016, presuming devaluation happens sooner rather than later and that there’s some flexibility in the exchange rate.)

UAE-based hospital operator NMC Health are planning to enter Qatar and Oman by the end of the year, as well as expand in Saudi, deputy CEO Prasanth Manghat told Reuters. While several sectors including construction and banking are hurt by shrinking oil and gas revenues, essential services like healthcare can benefit from the gap left by governments who’ve been forced to cut spending and state investment. “The penetration of private hospitals is low in these countries and governments are not spending on infrastructure,” he added.

The slump in Saudi’s retail sector may be coming to an end, Jarir Marketing Company chairman Muhammad Alagil told Reuters. Alagil attributes the slowdown in the decline to consumers dipping into their savings as well as new spending by millennials largely unaffected by debt or family obligations. The Saudi retail and wholesale sectors shrank 0.6% y-o-y in the second quarter of this year.