18 February 26, 2016 Economy

Doha agreement pre-empts an oil price collapse

Walid Khadduri

Beirut

il prices nudged up on news from that major Organisation of the Petroleum Export- ing Countries (OPEC) Oand non-OPEC producing states had agreed to freeze production at January’s level, averting a major price collapse. Information from the Doha meeting indicated that some ma- jor producers, including OPEC’s , Venezuela and Qa- tar, along with non-OPEC Russia, had agreed to limit production to January levels. This agreement among adverse producers sent optimistic vibes through global oil markets.

The proposed Doha agreement follows record production by both Saudi Arabia and Russia.

The fact that the two major producers — Saudi Arabia and Russia — had come to an under- standing is a major breakthrough in the oil industry. There are still hurdles to cross. The markets are well aware of the tasks to be resolved before a com- prehensive and credible agree- Saudi Arabia’s Oil Minister Ali al-Naimi speaks to the media in Doha, on February 16th. ment is finalised. What the Doha accord accomplished, however, is kets. Zanganeh insisted, however, crude oil production. The Doha talks brought together The Doha talks put negotiations to stop the steep price deteriora- still planned to increase pro- Iraqi Oil Minister Adel Abdul the two most important produc- on track. Markets will continue to tion, even if temporarily, in which duction approximately 500,000 Mahdi said he was tentatively ers, Riyadh and Moscow, and the be nervous until a major and cred- some producers were discounting barrels per day (bpd) to reach pre- encouraged by the Doha accord Tehran meeting did not officially ible agreement is signed. Market prices to $20 per barrel. sanctions production levels. but did not lend his full support. refuse the accord. These initial re- observers are projecting a $50 The Doha accord met encour- Statements by Iranian officials Iraq’s January production level, sults would encourage Venezuela per barrel by early next year, if agement but not full support. Af- spoke of an increase of around 1 according to official figures, was to carry on its mediation, which an agreement is reached in 2016. ter the Doha meeting the Qatari million bpd overall in 2016. Market 4.3 million bpd. Mahdi has said started several months ago. Fur- Without an agreement, and with a and Venezuelan oil ministers trav- sources said it was more realistic Iraq planned to produce 4.4 mil- ther negotiations are expected as record 500 million barrels of com- elled to Tehran to meet with Ira- for Tehran to increase production lion-4.5 million bpd in 2016. announced by Venezuelan Presi- mercial storage available, prices nian and Iraqi oil ministers. There about 500,000 bpd of crude oil. The proposed Doha agreement dent Nicolas Maduro. would continue to dip. was no official statement from the Iran also has the capacity to in- follows record production by both Oil-producing countries’ econo- The main difference that the Tehran meeting, a signal that no crease condensates (very light Saudi Arabia and Russia in Janu- mies were hard hit in 2015. Major Doha talks have made is in raising agreement was concluded. oil produced in association with ary, with crude oil output of more projects were either cancelled or the possibility that a major agree- The Iranian oil news agency natural gas) production by ap- than 10 million bpd each. postponed. There is rising aware- ment could come in the not very Shana quoted Iranian Oil Minister proximately 400,000 bpd in the Iran and Iraq had been planning ness in these nations that an distant future. Bijan Zanganeh as saying the Doha next few months. The Doha accord to ramp up crude oil production agreement is necessary to stop agreement was supported by Iran would not condensate production. by around 500,000 bpd each dur- the price — and consequently their Walid Khadduri is an Iraqi writer as an effort to stabilise the mar- OPEC refers only to incremental ing 2016. economies’ — collapse. on energy affairs based in . Can tech start-ups save ’s foundering economy?

Martin Jay are sent to the United Kingdom to Bank already allocated,” Khawaja be mentored and trained on how to said. “And it’s a win-win situation attract investment for their projects. for the UK firms who are using the Beirut UK investors will be the first to Lebanese firms as ‘added value’ to profit from the project, which has what they have now.” rom the outside it looks sent its first group to London for the The Central Bank has pumped like just another trendy programme with hopes of them re- $64 million into equity-based in- Beirut coffee shop but in- turning to Lebanon with both inves- vestments in the start-ups. “What side the UK Lebanon Tech tors and customers. the UK Lebanon Tech Hub did in Hub, there are neither cof- Lebanon is bursting with clever one year was not expected to be Ffee shop punters nor university young people who can design and achieved until three years,” Kha- students. It’s more of tomorrow’s build apps and have the business waja noted. “Soon, it will expand to business leaders in a country that savvy to use the country as a busi- Cyprus as a base.” can barely provide essential ser- ness hub for the entire Arab penin- The programme is not even ex- vices such as water, electricity and sula — despite power cuts, garbage clusive to Lebanese citizens. Some trash collection, a county ravaged and car bombs. foreign companies that set up in by large-scale corruption with an The idea was inspired by a Leba- Lebanon are taking advantage of the economy only in name. nese investor who made a success- mentoring. ful business from importing genera- Transterra Media, an online con- Lebanon is bursting tors and their parts from the United tent firm that supplies broadcast Kingdom. His success was noted by Lebanese entrepreneurs from different internet start-up news outlets with raw footage, al- with clever young Fletcher who saw that, regardless of companies work in Beirut’s Hamra district. though not a benefactor of the Cen- people who can the problems in Lebanon, the inves- tral Bank equity, is taking advantage design and build tor had a network in Africa and the of the programme in London. Middle East of Lebanese business helps a person stop smoking; an- ups have to offer them. Barely six “Our principal focus in London is apps. operators who were ready and wait- other is a financial services search months after it kicked off, other on business development for both ing. engine aimed at consumers. countries in Africa and in Europe our publisher (CNN, BBC) and our It’s hard to imagine that in the “We noticed that Lebanese in- “We’re helping Lebanese compa- expressed interest in the United brand clients,” explained Transterra midst of this office, Lebanon’s prob- vestors imported UK goods, like nies internationalise through Lon- Kingdom extending the programme Chief Executive Officer Jonathan lems could be resolved by a group of whisky, salmon and cars and then don,” Zaazaa said. “We need to take to their areas. The United Arab Giesen. “So, we’ll be setting up an of- 30 or so start-up companies bent on re-exported them… and the biggest the best companies from Lebanon. Emirates and are believed to fice in London to drive business de- developing an app or a gadget that importers of UK goods in the region We offer them mentoring and access be mulling the project to replicate it velopment and we hope that we can will make their company a “uni- were the Lebanese,” explained Na- to the market through introducing in the Gulf. really expand our customer base corn”, reaping millions of dollars dim Zaazaa, who is part of the pro- them to clients. There’s also a lot of Paul Khawaja, Britain’s commer- through a newly launched London and putting Lebanon on the map as gramme but also heads up the Leba- marketing around them. cial attache in the British embassy operation.” a hub for cool ideas and investment non hub. “At the end of six months, they in Beirut, is a keen follower of the and a good starting point for edu- Zaazaa cited as an example of a should start developing business.” programme. Martin Jay is the Beirut cated youth who want to show the locally produced online Lebanese UK companies, Zaazaa explained, “I’m really encouraged by things correspondent for the Daily country is still ahead in the region. recipe that recently sold to Japanese are not good at accessing Arab mar- so far as now there are another 25 Mail and the founding editor Under the initiative, the brain- investors for $13 million. kets. Yet the programme itself might Lebanese firms who are waiting to of An-Nahar English (Lebanon) child of departing UK Ambassador One project in the programme is reach those Arab countries ahead of join the next phase, with $64 mil- newspaper. Follow him on Twitter: Tom Fletcher, Lebanon’s brightest a prototype cigarette lighter that the products that Lebanese start- lion from the (Lebanese) Central @MartinRJay.