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ALGIERS — Algeria’s energy minister will meet his Saudi counterpart and OPEC’s secretary-general in Paris on Friday as part of moves towards clinching a global deal on stabilising crude output to support oil prices, an Algerian official and OPEC sources said.

Algeria will host the informal meeting with Saudi Energy Minister Khalid Al Falih and OPEC’s Mohammed Barkindo, said the Algerian official, who asked not to be identified.

A source at the Organisation of the Petroleum Exporting Countries confirmed the meeting as part of a push for an output deal, with producers battered by a glut-induced halving of oil prices over the past two years.

“There is a strong move towards a deal between OPEC and non-OPEC to at least freeze production,” the source told Reuters.

“It seems we are going in this direction. But if we are going to freeze, we have to use secondary sources to gauge production levels. We can’t allow each country to use a different method,” the source said.

“Iran must agree to be in line with other producers and use secondary sources.”

Tehran says it supports any measures to stabilise the market. However, it has stopped short of indicating whether it would join a global deal before its production reaches 4 million barrels per day (bpd), the level at which it says it was pumping before the imposition of Western sanctions in 2012.

The sanctions ended in January this year.

Iran has been the main factor preventing an output deal between OPEC and non-OPEC Russia as Tehran has said it should be excluded from any such agreement before its production recovers.

The OPEC source said Iran’s production before sanctions had never exceeded 3.75 million bpd according to secondary sources, which include consultants and industry media that estimate output independently.

Iran has said it is producing slightly more than 3.8 million bpd. It signalled on Tuesday it was prepared to work with Saudi Arabia and Russia to prop up prices, although Tehran has begun to bargain with OPEC on possible exemptions from any output cap.

The OPEC source said major oil producers were trying to convince Tehran to come onboard, adding there was an initial understanding that only Libya could be offered an exemption.

“Now there is a push to smooth things out and solve any problem,” the OPEC source said, adding there had been no agreement yet on any level at which to freeze production.

“This will be discussed in Algeria,” the source said.

Algeria is hosting meetings of the International Energy Forum and OPEC on September 26-28. Energy Minister Noureddine Bouterfa travelled to Moscow on Thursday, following recent trips to Qatar and Iran.

OPEC and Russia are expected to revive talks for a global deal on production in Algeria. A similar initiative failed in April after Saudi Arabia insisted Iran join the pact.

DUBAI/RIYADH — The Saudi Arabian government has ended talks aimed at saving construction giant Saudi Oger, which is now facing the prospect of a multi-billion-dollar debt restructuring to stave off collapse, according to sources aware of the matter.

Oger, owned by the family of former Lebanese prime minister Saad Hariri, was one of two mega-contractors charged with implementing the grand infrastructure and development plans of the kingdom, building everything from defence installations to schools and hospitals.

The fall in oil prices since mid-2014, and the consequent sharp state spending cuts, have weighed heavily on the kingdom’s construction industry but in particular Oger, given its size and reliance on government contracts.

The numbers are stark: the government owes Oger about 30 billion riyals ($8 billion) for work it has completed, according to a Saudi-based source with knowledge of the matter, in a sign of the strain on state finances.

This huge backlog of payments has left Oger struggling to meet its obligations, including 15 billion riyals of loans, billions of riyals owed to contractors and suppliers, and 2.5 billion riyals to workers in back and severance pay, according to the source and a second Saudi-based source.

Oger and the Saudi finance ministry both did not respond to requests for comment for this story.

The sources declined to be named due to the sensitivity of the matter.

It is unclear why Riyadh might have ended the talks aimed at saving a company whose collapse would send shockwaves through the Saudi banking system and wider economy.

The 15 billion riyals of loans equate to around two-thirds of the combined profits of all Saudi banks in the first half of 2016 — though the lenders’ strong capital positions and low levels of non-performing loans would mean writing off this debt would not threaten the system.

A collapse of Oger could also trigger a wave of defaults among its huge network of sub-contractors and suppliers, which are also Oger creditors.

The humanitarian aspect of the company’s woes is perhaps most pressing: Oger’s pay backlog is affecting thousands of workers from South Asia contracted by the firm, many of whom have been left in desert camps. Several camps had stopped receiving food, electricity, maintenance and medical services from the firm, workers told Reuters last month.

Options discarded

Oger has had close links with Saudi authorities since it was established in 1978 by Hariri’s father Rafiq, a former Lebanese premier whose strong ties to the Saudi royal family helped make it the go-to construction firm for key projects, along with Saudi Binladin Group.

The decline in oil prices has changed this arrangement, with Saudi Arabia delaying infrastructure projects and payments for existing work: a development which has also caused Binladin severe financial difficulty.

One mid-level Oger manager said the ministry of finance had not made payments on his multi-billion-riyal government project for nearly a year.

In total, according to the first Saudi-based source, Oger is owed 10 billion riyals which the government has already approved payment of, but for which the money has not been transferred, and more than 20 billion riyals for work completed and subsequently billed to the state.

The situation facing Oger — one of the kingdom’s largest private-sector firms — reflects the complex and entrenched role the government plays in the economy, with problems partly caused by one part of the state apparatus being addressed by another.

Talks between the company and Saudi authorities to find a solution to Oger’s financial problems have been taking place this year, though the exact start date is unclear.

The discussions had explored and then discarded a number of options, including the government buying into the company and the sale of real estate assets or a stake in Oger to Nesma, another Saudi construction firm, according to the sources plus two other banking and industry sources.

It was not clear why the options were rejected and whether the decision was driven by Oger or Riyadh.

The first Saudi-based source said the last plan on the table had been for Oger to sell investments such as Oger Telecom — which owns majority stakes in Turk Telecom and South African operator Cell C — and a 20 per cent holding in Jordan’s Arab Bank, with Saudi state-linked entities likely buyers.

However, around the time of the holy month of Ramadan, Oger was informed by the government it was ending all negotiations, according to the first two Saudi-based sources. Ramadan lasted a month up to July 6.

No reason was given for why the government walked away, and some sources said there was still belief among creditors the state was open to further negotiations.

However, the government had been “aggressive” in its negotiations with Oger, according to one banking source, which would make striking a deal much harder if they returned with the same approach.

The relationship between Riyadh and the Hariris, and also the kingdom and Lebanon, is not as close as it was. The political deadlock in Beirut has allowed the Hizbollah political and militia movement — which is backed by Saudi Arabia’s arch-rival Iran — to wield increasing influence in the country.

Anxious creditors

While a deal may still be possible, the attention of company executives and creditors is increasingly switching to how the company can save itself, with sources indicating a debt restructuring seems the only viable option.

Should it go down this route, it is likely to appoint advisers and ask banks for a standstill agreement — which would protect it from new legal action to allow for debt talks to take place — later this year, according to the two Saudi-based sources.

Creditors are becoming increasingly anxious though.

Samba Financial Group in July became the first lender to seek a court judgement against Oger to reclaim its dues, according to the second Saudi source.

It has the second-largest exposure to Oger among lenders behind National Commercial Bank, according to the source and a separate banking source.

Samba did not respond to requests for comment.

Much of Oger’s bank debt is held by Saudi banks, although Lebanese, Gulf and international banks are also exposed — mostly through a $1.03 billion loan that is due to mature in February.

The move by Samba could precipitate further legal claims against Oger from banks, according to industry and banking sources, although laws governing companies in distress in the kingdom are opaque and largely untested, making enforcing such court actions tricky.

The only real precedents for Oger would be the debt woes of conglomerates Saad Group and Ahmad Hamad Al Gosaibi and Brothers (AHAB). In that case, bank creditors secured court judgements recognising their claims but a negotiated solution is still to be secured, more than seven years after the initial default.

Any Oger debt restructuring though would dwarf those of Saad and AHAB in magnitude, said the second Saudi-based source.

Despite its complexities, bank creditors would likely accept a formal restructuring process instead of forcing Oger’s liquidation, said banking and industry sources.

AMMAN – Forthcoming loans and grants facilitated by the Jordan Compact and the International Monetary Fund (IMF) Extended Fund Facility are aimed at strengthening the Kingdom's macroeconomic stability and enhancing resilience in the face of regional instability and the influx of refugees, Minister of Planning and International Cooperation Imad Fakhoury said. 

In a recent interview with Oxford Business Group (OBG), Fakhoury said the financial assistance also aims at keeping Jordan on its path towards sustainable development and increasing prosperity as outlined in the Jordan 2025 Vision. 

“Part of this programme emphasises home-grown, structural reforms focusing on promoting investment and employment by boosting the business environment, the competitiveness and productivity of our economy, and implementing structural reforms in the labour market and various sectors such as energy, water and financial,” he said, adding that the main item on the fiscal side is to bring the public debt ratio to the GDP to under 77 per cent by 2021.

The full interview with Fakhoury will appear in The Report: Jordan 2016, OBG’s latest report on the country’s economy. The publication contains a detailed, sector-by-sector guide for investors, alongside contributions from leading personalities, including Minister of Finance Omar Malhas, Minister of Energy and Mineral Resources Ibrahim Saif and Chief Commissioner of the Jordan Investment Commission Thabet Elwir.

Fakhoury told OBG that the proposed holistic approach marked a paradigm shift that "moves us from mainly a refugee response to a resilience-based comprehensive framework" that bridges the divide between short-term refugee and long-term development responses, based on which the Jordan Compact was adopted at the London Donor Conference, held in February of this year.

“One of the pillars of the compact is to attract investment and open the EU market to the sale of domestically made products, which will in turn create jobs primarily for Jordanians and Syrians in areas that do not impact Jordanian jobs,” he commented. 

In the interview, Fakhoury also talked about the government’s new public investment management framework developed alongside the World Bank to create a unit in the ministry responsible for how future public capital expenditure should be implemented and funded with a focus on impact and efficiency, as well as maximising Public Private Partnerships schemes to deliver public infrastructure and expenditure. 

OBG is a global publishing, research and consultancy firm, which publishes economic intelligence on the markets of the Middle East, Africa, Asia, and Latin America and the Caribbean. 

AMMAN – Minister of Public Works and Housing Sami Halaseh on Wednesday chaired a meeting for the higher committee for the housing sector that was attended by representatives of the World Bank.

Halaseh said the committee will look at studies related to the housing sector to draft policies based on supply and demand, and to reevaluate the contribution of the sector to the national economy, according to a ministry statement.

He said an action plan will be prepared and presented to the Council of Ministers that aims at improving the performance of the housing sector.

The study, to be prepared in cooperation with the World Bank, will address issues related to financing in coordination with banks and building regulations in coordination with the Greater Amman Municipality. 

AMMAN — The fourth meeting of the Joint Jordanian-Kazakh Committee commenced on Wednesday in Astana with the participation of representatives of public and private sectors from both countries.

Secretary General of the Ministry of Industry, Trade and Supply Yousef Shamali said that Jordan and Kazakhstan should further develop bilateral economic cooperation through increasing the volume of bilateral annual trade which does not exceed $600 million, according to a ministry statement.

The meeting should result in mechanisms aimed at enhancing economic relations, especially in the trade, agriculture and investment fields, among others, he said.  For his part, the Kazakh undersecretary of the agriculture ministry said the meetings are important for developing bilateral relations, especially that the Kazakh president is scheduled to visit Jordan next month.

AMMAN — A delegation representing the Bursa Chamber of Commerce and Industry on Wednesday discussed means to develop cooperation with the industrial and commercial sectors in Irbid, through establishing joint projects with the private sector in the northern governorate.

The delegates visited the Irbid Chamber of Industry, where they met with board member of the chamber Mwaffaq Bani Hani, who briefed them on investment opportunities available in the city, the Jordan News Agency, Petra, reported.

The Turkish delegates expressed interest to establish investments in the Kingdom in general, and in Irbid in particular, noting that opportunities are good for investing in wood industries, renewable energy, food processing, garment and technology, according to Petra.  

SINGAPORE – Crude prices rose in Asia Tuesday after Russia and Saudi Arabia pledged to work on addressing a global supply glut, but analysts said gains would be limited after the two sides provided scant detail about their plans.

Saudi Energy Minister Khaled Al Falih and his Russian counterpart Alexander Novak agreed to "act together" to steady the market but stopped short of agreeing to a production freeze.

On the sidelines of the G-20 summit in China, the ministers said they will act "together or in cooperation with other oil productions" and agreed to set up a "joint monitoring group" to offer recommendations to prevent price fluctuations. 

News that the two sides were about to make an announcement sent both contracts soaring Monday but the gains were all but wiped out after the statement.

At about 7:20 GMT, the US benchmark West Texas Intermediate (WTI) was up 78 cents, or 1.76 per cent, at $45.22 and Brent added six cents, or 0.06 per cent, to $47.69. With US markets closed Monday for a holiday, electronic transactions on WTI will be booked Tuesday for settlement purposes.

The comments come three weeks before Russia joins OPEC, of which Saudi Arabia is the kingpin, for talks in Algeria to discuss the supply crisis that has hammered prices for two years.

"Despite the rather nebulous language [of the statement] the market was clearly on the hope side of the equation," OANDA senior market analyst Jeffrey Halley said in a note.

"The longevity of the rally being how long before reality bites with the OPEC meeting still three weeks away."

The previous attempt at reaching a deal in April was scuppered by OPEC member Iran's refusal to agree to any output freeze, and there are worries about the chances of an agreement in Algiers.

HANGZHOU, China — The world's two biggest oil producers Saudi Arabia and Russia said Monday they had agreed to "act together" to try to stabilise oil prices, but failed to make headway on a production freeze. 

The two nations "noted the particular importance of constructive dialogue and close cooperation between the largest oil-producing countries with the goal of supporting the stability of the oil market and ensuring a stable level of investment in the long term," the energy ministers from both countries said.

Their comments came in a joint statement after a meeting at the G-20 summit in China. 

"To this end the ministers agreed to act together or in cooperation with other oil producers," the statement said, adding they had agreed to set up a "joint monitoring group" to offer recommendations aimed at preventing price fluctuations. 

Russia's Energy Minister Alexander Novak described the announcement as marking a "new era" in cooperation between Russia and Saudi Arabia and insisted it would have a "critical significance" for oil markets, news agency Interfax reported. 

But there were no details in the announcement on any elusive agreement to freeze oil output, just weeks before Moscow and OPEC meet in Algeria to discuss the crisis.

The globe's major oil producers have been unable to strike a deal on freezing output, due mainly to a dispute between Saudi Arabia and Iran over Tehran's desire to raise production levels after the lifting of sanctions. 

Saudi Arabia's Energy Minsiter Khaled Al Faleh told Al Arabiya television channel there was "currently no need to freeze production" after meeting Novak.

"A freeze is one of the preferred options but it is not needed for the moment," he said. 

President Vladimir Putin met Saudi Deputy Crown Prince Mohammed bin Salman on the sidelines of the G-20 on Sunday and said they would work to address a global glut and overproduction that has hammered prices for the past two years.

In an interview ahead of the meeting Putin — whose economy slumped into recession on the back of oil price falls — said that a freeze was "the right decision" and called for "compromise".

The oil market has been plagued by a stubborn supply glut that saw prices plunge to near 13-year lows below $30 at the start of 2016. While it has recovered recently, it is still well off highs above $100 seen in mid-2014.

AMMAN — Samsung Levant recently issued a statement in which it said "it is committed to producing the highest quality.

In response to recently reported cases of the new Galaxy Note7, the company said it conducted a thorough investigation and found a battery cell issue. 

“To date [as of September 1] there have been 35 cases that have been reported globally and we are currently conducting a thorough inspection with our suppliers to identify possible affected batteries in the market.

However, because our customers’ safety is an absolute priority at Samsung, we have stopped sales of the Galaxy Note7," the company said in a statement e-mailed to The Jordan Times on Monday. 

For customers who already have the Galaxy Note7 device in the Levant region, Samsung Electronics Levant said it will voluntarily replace their current device with a new one. 

Customers may proceed to the nearest official Samsung Electronics’ Service centre (Jordan, Lebanon, Iraq, Syria and Palestine) to have their units inspected and replaced within the coming short weeks.

"For more information, we kindly ask our customers to contact our service team in their country.”

Kuwait City — The earnings of Gulf-listed firms dropped 8 per cent in the first half of 2016 due to low oil prices and a lack of liquidity, a report said on Sunday.

Net profits of over 650 firms on the region's bourses reached $32.8 billion in the six months against $35.6 billion for the same period of 2015, said Kuwait Financial Centre Markaz.

All posted drops except those on the stock market in Oman, where net earnings rose by 7 per cent, the investment firm said in a report.

Stock exchanges in members of the Gulf Cooperation Council (GCC) were hit hard last year and in the first few months of 2016 as a result of the sharp fall in oil revenues.

They recovered some of the losses in the second quarter as crude prices rose to around $50 a barrel from under $30.

"Persisting lower oil prices, liquidity squeeze and sedate global growth led to decline in GCC corporate earnings during the first half period of 2016, compared with the corresponding period a year back," said the report.

"During the first half of 2016, corporate earnings in the GCC fell by 8 per cent over the same period in 2015."

The GCC groups Bahrain, Kuwait, Oman, Qatar, Saudi Arabia and the United Arab Emirates, which together pump around 18 million barrels of crude oil daily.

In its report, Markaz projected the earnings of companies in the GCC would end the year down 4 per cent.

Profits of companies with medium- and small-sized capitalisation fell by 38 per cent and 22 per cent respectively, while net earnings of large corporates dropped by just 5 per cent, it said.

The drop was attributed to the fall in earnings of commodities, real estate and construction sectors. Banks' earnings remained flat while telecoms and financial services increased, said Markaz.

Profits of firms listed on the Saudi stock market, the largest bourse in the Middle East, dropped 7 per cent with the real estate sector down by 50 per cent, it said.