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LONDON — With oil prices tumbling and ageing equipment making extraction ever more expensive, Britain's North Sea oilfields face a struggle for survival, threatening a vital source of income and energy.

The oil industry has been hard hit by crude prices falling more than 50 per cent since June to less than $50 a barrel.

Energy giant BP recently announced it was cutting 300 local jobs, mostly in the Scottish city of Aberdeen, Britain's oil "capital" and Europe's oil hub in northeast Scotland.

Others, including Shell, Chevron and Conoco Phillips, warned late last year of similar scale cuts.

The publication of the oil majors' financial results in a few weeks augurs more bad news, with British subcontractors particularly nervous that they may be deemed expendable.

In anticipation, oil services company Wood Group has already cut staff salaries by 10 per cent.

The industry has ridden out previous fluctuations, with prices dropping as low as $38.37 per barrel during the depths of the global economic crisis in 2008.

"We've seen oil prices fall in the past and it has recovered," said Neil Gordon, chief executive of Subsea UK. "There is confidence that it will recover, but that you'll have to go through an amount of pain, until the price recovers."

The recent price fall has only magnified existing problems of high operating costs in the deep offshore fields, with producers desperate to trim budgets even when prices were higher.

Faced with dwindling margins, the majors are beginning to think the unthinkable — abandoning Scotland's oil and gas fields, which have seen a 50 per cent fall in production over the past decade.

The BP-owned "Forties" field, which celebrated its 50th anniversary this year, produced around 500,000 barrels per day (bpd) at its peak, according to Colin Welsh, chief executive officer of the investment bank Simmons & Company. 

Today, the combined production of all Britain's North Sea fields is estimated at 800,000 bpd.

'Vital industry' 

"They'll have to make the North Sea a lot more attractive, and that involves reducing the tax rates," said Welsh.

The government for too long has treated the oil industry as a "cash cow", argued several officials who highlighted the 60 to 80 per cent tax rates levied on oil companies.

"If you look at Norway, they get very significant tax breaks for drilling exploration wells, which encourage them to deploy that money to do another one and another one," said Graham Stevens, finance director of Plexus, which specialises in wellheads.

"We don't get that kind of money in the UK," he added.

With Britain's general election just months away, politicians have recently been much more keen to show support for the North Sea, particularly in Aberdeen where more than half the jobs depend on oil.

"This is a vital industry," said Labour's Ed Balls, who would likely become Britain's finance minister if his opposition party wins the nationwide vote.

"Labour... will do what it takes to make sure we secure the jobs and the investment which is so important for livelihoods... but also for tax revenues coming in," he added.

The Conservative-led government of Prime Minister David Cameron has promised to include support measures in its budget for the financial year 2015-2016, which will be presented in March.

But in Aberdeen, concern is already growing that there may be no industry to revive if prices remain low for any length of time. 

"We need to make sure the industry is still in a fit state to recover," said Anne Begg, MP for Aberdeen South.

For Jake Molloy, regional organiser of the RMT Union, "it is a very serious situation that Westminster need to address, not only for Aberdeen but for the UK economy".

In 2013-14, tax revenues fell by a quarter to $4.7 billion due mainly to lower production. With prices at $50 a barrel, the wells could soon run dry.

On the docks in Aberdeen, oil workers put a brave face on hundreds of job cuts linked to sinking crude prices while union leaders warn that the worst is yet to come.

"It has happened before and it will happen again. There will probably be job losses but that's the way the industry works," said Tony Maguire, a rig worker.

But for Molloy, workers who lose their jobs face "a lifetime crisis".

Molloy was one of 20,000 people who lost jobs in a downturn in 1986 and said the decline is more dangerous now because North Sea offshore fields are depleting.

"I hope this is just a blip... but I am more concerned now than I was [then]," he told AFP in an interview in the city, which has been built on oil revenues.

At a time when the industry might be facing the biggest crisis in its history, the atmosphere in the Scottish hub has remained strangely calm.

In the port of Aberdeen, where dockers are busy loading equipment for a rig onto massive vessels, workers were trying to stay optimistic.

Robert, who has worked on the dock for 29 years and whose son is doing an apprenticeship in the sector, dismissed the latest fall in prices as "a few blips".

Residents still complain about traffic jams, seen as a positive sign reflecting the city's commercial buzz and the failure of road infrastructure to keep up.

"If things were really bad, the big building outside the airport would stop progressing," said Dave, a taxi driver, referring to a luxurious office complex being prepared for Norwegian oil services firm Aker Solutions. 

'A ghost town' 

Job cuts and their potential consequences on the city have not really sunk in but the warning signs are there.

"Aberdeen could be a ghost town in 10 years' time," indicated Welsh.

Begg remarked that job cut announcements have not resulted in actual layoffs yet.

"There will be a time delay, and there always is, so we could be looking at another six months to a year before it really starts to impact the economy," she said.

The oil and gas industry has made Aberdeen prosperous, salaries in the industry are two and a half times the national average, and the Scottish National Party (SNP) based its failed drive for independence on a prediction of future bountiful revenues from the North Sea.

Local residents, a majority of whom voted against independence, now point out that the SNP had based its budget calculations on a $110 barrel.

"The oil prices have fallen, I did not predict that but nobody else did," said Fergus Ewing, the SNP's regional minister for commerce, energy and tourism.

"In politics, you play the cards as they fall, we respond to the challenges, the challenges are very serious," he added.

AMMAN — Jordan Industrial Estates Corporation (JIEC) Chief Executive Ali Madadha on Saturday underlined the corporation's commitment to removing obstacles investors face in Muwaqqar Industrial estate. During a meeting with investors in the estate, which is considered the latest industrial incubator to be established by the JIEC in the east Amman region, he noted that the new investment law will enable investors to benefit from many incentives and benefits. Launched in 2010, the occupancy rate in the estate stands at 70 per cent, having 49 industrial companies.  

AMMAN — Amman Chamber of Commerce (ACC) President Issa Murad called for eliminating obstacles hindering the penetration of Jordanian commodities' to the Russian market. During a meeting with a delegation from the Russian customs department on Thursday, he called for addressing challenges to ensure the flow of commodities between the two countries. Murad noted that the Kingdom's exports to Russia witnessed a "noticeable" decline, going down by 57 per cent between 2010 and 2013, adding that imports from Russia also declined by 49 per cent during the same period. Moreover, he cited the "modest" Russian investments in the Kingdom, which he said do not exceed JD280, 000 and are only concentrated in the industrial sector. The ACC president called on Russian businesspeople to explore investment opportunities in Jordan.

MOSCOW — Russia may have to spend more than $40 billion this year to avert a banking crisis, as the growing likelihood of a sharp recession threatens to pile extra costs on a sector suffering from Western sanctions over Ukraine and a plunge in the ruble.

Russian banks are seeing a deterioration in their loan quality, a rise in their risk management costs and increase in their cost of funding, and banking executives and analysts predict things are going to get worse.

This represents a major challenge to President Vladimir Putin, who took power 15 years ago in the ashes of a crisis that wiped out the financial system, and whose popularity partly rests on his reputation for restoring stability.

"We expect a contraction in the number of small, medium and large banks this year," Mikhail Zadornov, head of VTB 24, the retail arm of No. 2 bank VTB, said on Thursday. "It will be hard for all banks. The weakest will leave the market." 

Russia's central bank has already relaxed regulation of banks, and the government has pledged support of more than 1.2 trillion rubles ($19 billion) this year after spending more than 350 billion rubles in 2014. But analysts say this is a fraction of what is needed.

The anti-crisis measures will significantly add to pressures on Russia's international reserves and the budget, which is already forecast to run a deficit of up to 3 per cent of the gross domestic product this year, hurt most by a collapse in oil prices which is withering the country's export revenues.

"To preserve the status quo, banks may need far more capital than 1 trillion rubles," said Yaroslav Sovgyra, associate managing director for Moody's ratings agency in Russia.

"One trillion would boost their capital [adequacy ratio] by about 200 basis points. But on the other hand, because of credit losses you'll see a reduction in capital by roughly 500 basis points," she added.

One further problem is that the government's planned capital injection comes with strings attached: Russian banks are being asked to increase lending to core sectors of the economy by around 12 per cent. That could further stretch their capital.

Slippery slope

The government is soon to distribute up to 1 trillion rubles of OFZ treasury bonds issued late last year to banks including VTB, Gazprombank and Rosselkhozbank, all state-controlled and under sanctions imposed by Western countries to punish Russia for its involvement in Ukraine.

VTB and Gazprombank are also expected to receive money from the National Wealth Fund, a sovereign fund originally intended to support the pension system, of over 200 billion rubles.

Top bank Sberbank could also attract a subordinated loan of up to 600 billion rubles from the central bank, its main shareholder, or extend an existing loan from the regulator. It has said it is too early to talk about a new loan for now.

BNP Paribas estimates that Russian banks could need up to 2.7 trillion rubles ($42 billion) in additional capital to support lending and absorb credit losses.

Such figures would amount to almost 20 per cent of planned federal budget expenditure this year.

Sberbank Chief Executive German Gref said this month that Russian banks would need to create about 3 trillion rubles of provisions this year should oil prices average around $45 a barrel.

Last month, the state spent 130 billion rubles to bail out the first major bank to fall victim to the ruble crisis, mid-sized lender Trust Bank, then ranked 15th biggest by retail accounts and 32nd by assets.

"If banks from the top 30 get into trouble, the government will have to save them at any price," said Armen Gasparyan, a banking analyst at Renaissance Capital. 

"It would be very painful for such a bank to go under, as it could spark a crisis of confidence in which the population withdraws deposits en masse and interbank lending rates spike," he added.

Russian central bank deputy governor, Mikhail Sukhov, told Reuters he did not expect a wave of banking insolvencies, but that the current financial crisis could force those engaged in high-risk financial operations to leave the market.

So far, the central bank says non-performing loans were just 3.8 per cent of banking sector assets at the beginning of December. But Moody's, which uses a different methodology, puts them at 7.5 per cent already and says they could roughly double this year.

During the last financial crisis in 2008-2009, there was a time lag before the proliferation of bad loans appeared on balance sheets: At the start of 2009, they made up 3.8 per cent of Russian banks' loan portfolios, but a year later this figure had risen to 9.6 per cent. 

Separately, former finance minister Alexei Kudrin said Russia is starting to see a wave of mass layoffs as a result of the plunging economy and needs to rethink where and how fast it spends its reserves.

Kudrin resigned from the government in 2011 to protest against soaring military spending, but is believed to still have the respect of and access to President Putin.

The ruble has lost half of its value against the dollar since the start of last year as a result of plunging oil prices and Western sanctions, making it very difficult for Russia to borrow from Western capital markets.

"I was predicting tough times, but I had not expected them to be so tough," Kudrin told Reuters on the sidelines of the World Economic Forum in Davos.

"Consumer prices have risen sharply. Large layoffs have begun. The Moscow construction sector has seen 100,000 people being laid off. We see signs of crisis in the auto industry. There will be also a serious slowdown in modernisation and deployment of Western technology," he said.

He added that the economy would shrink by over 4 per cent this year if oil prices remain low. Russia has a relatively small unemployment rate of over 5 per cent.

Under Kudrin, Russia accumulated more than $500 billion in reserves, including around $160 billion in two reserve funds which can be used in difficult times to protect the ruble and the economy.

Last week, Russia's central bank said its gold and foreign exchange reserves had dropped below $380 billion as it continued to protect the currency and authorities spent money on bailing out banks and companies.

With social spending representing a third of the overall budget and military expenditure at 35 per cent, Russia is poised to exhaust its two reserve funds in 18 months if oil prices stay at around current levels of $50 a barrel.

Kudrin stressed that Russia needed to urgently cut outlays to make sure it had enough funds to protect the economy for longer.

"If oil stays at $50, our reserve fund shall be spread over three years, while we switch to lower spending and conduct reforms," he said. A huge military modernisation programme should be carried out over 15 years rather 10, which would also save money, he added.

Some European politicians and businessmen have in recent weeks called for a re-engagement with Russia and the easing of sanctions. But Kudrin said the majority of Western business people and public opinion were still against this idea, making the removal of sanctions an unlikely prospect.

CARACAS — President Nicolas Maduro shook up complex currency controls on Wednesday and also prepared Venezuelans for a rise in the world's cheapest fuel prices in response to a recession worsened by plunging oil revenue.

The socialist-run economy shrank 2.8 per cent in 2014 while inflation topped 64 per cent, the socialist leader announced in a speech to parliament, in what is almost certainly the worst performance in Latin America.

With oil prices down by more than half since mid-2014, Venezuela's economic mess has hit Maduro's popularity hard and threatened the future of the ruling "Chavismo" movement named for his charismatic predecessor Hugo Chavez.

The 52-year-old Maduro blamed political foes for Venezuela's dismal data, but he also announced the most concrete changes in months to try to shore up the economy.

Carefully avoiding the word devaluation and without giving much detail, Maduro said he was modifying existing complex currency controls to combat the black market for dollars while sticking to a complex three-tier model.

Greenbacks would still be available for essential food and medicine at the current, strongest rate of 6.3 bolivars to the dollar, he added, but two weaker central bank rates of around 12 and 50, respectively, would be merged.

A third new system would be created to offer dollars via private brokers to vie with the black market where the rate is 177 bolivars, Maduro continued, noting that economic officials would give further details.

Assuming the merged rate, known as Sicad, and the third level would be weaker than the current rates, those changes would give the government more bolivars for its dollar oil revenue and, essentially, represent the "stealth devaluation" many economists had been predicting.

That could add to pressure on Venezuela's inflation, already the highest in the Americas.

While economists were waiting to see fine print, some feared it could be another quick fix. 

"Overall, the historical record is quite extensive and clear that multitier exchange rate systems are very difficult to administer and eventually collapse," said Alberto Ramos of Goldman Sachs. 

'If you want, crucify me!'

On the touchy subject of domestic fuel prices, Maduro said he favoured a rise this year, a measure recommended by many economists to lessen distortions and boost revenue.

Venezuelans currently fill up for less than $0.02 a litre, thanks to a roughly $12 billion annual government subsidy. But Maduro is mindful of the infamous "Caracazo" riots in which hundreds died in 1989 over fuel price increases.

"If you want, crucify me, kill me," he said, announcing a national debate on the subject. "The price is a distortion... I think the time has come... to do it this year. I assume the responsibility and the criticisms."

Opponents say 15 years of misguided socialist policies and corruption since Chavez took power have wrecked Venezuela's economy and heaped suffering on its 30 million inhabitants who are facing unprecedented shortages of basic products.

"They've destroyed production," opposition leader Henrique Capriles tweeted during Maduro's three-hour speech. "That's the cause of the queues, not the lies they're telling."

According to UN estimates, Argentina is the only other country in Latin America whose economy was seen contracting last year, though by less than Venezuela which is a member of the Organisation of Petroleum Exporting Countries.

In one of the grimmest forecasts yet, an International Monetary Fund official estimated on Wednesday that Venezuela's economy will shrink 7 per cent this year.

Maduro said on Wednesday that Venezuela's crude, which trades at a discount to other benchmarks due to its greater heavy-oil content, was at $38 a barrel versus $99 in June.

"It will not return to $100... We have less foreign currency... But God will provide," he said, sounding a note of resignation after a nearly two-week tour of oil producers around the world to seek ways to boost the price of crude.

Venezuela's opposition coalition called on people to bang pots and pans in a traditional form of protest during Maduro's speech. That could be heard in some neighbourhoods of Caracas, though not as loud as on occasions last year.

Maduro repeatedly lashed his political opponents for trying to sabotage the economy via hoarding and disruption.

"In 2014, we again faced the script of destabilisation and violence," he said, referring to four months of protests that caused major disruption and killed 43 people, including demonstrators, government supporters and security officials.

The government still maintains popular Chavez-era welfare programmes, such as subsidised food and free health clinics, that benefit millions.

Maduro said unemployment was at a new low of 5.5 per cent, and announced a 15 per cent minimum wage increase next month as well as new housing projects and scholarships.

With a vicious blame-game under way over Venezuela's economic shortages and parliamentary elections due later this year, the government plans to mobilise supporters in a rally on Friday, and the opposition has called a march for Saturday.

Even though his popularity has dropped to 22 per cent, according to one leading pollster, Maduro predicted his ruling Socialist Party would win the National Assembly vote by 10 percentage points.

Flanked by a giant photo of Chavez twice his own size, Maduro confidently predicted, "2015 will be the year of victory and economic rebirth". 

At the same time, scores of opponents took to Twitter across Venezuela predicting he would not last the year in power and his "Chavismo" movement was dying.

FRANKFURT — The European Central Bank (ECB) took the ultimate policy leap on Thursday, launching a government bond-buying programme which will pump hundreds of billions in new money into a sagging eurozone economy.

The ECB said it would purchase sovereign debt from this March until the end of September 2016, despite opposition from Germany's Bundesbank and concerns in Berlin that it could allow spendthrift countries to slacken economic reforms.

Together with existing schemes to buy private debt and funnel hundreds of billions of euros in cheap loans to banks, the new quantitative easing (QE) programme will release 60 billion euros ($68 billion) a month into the economy, ECB President Mario Draghi indicated.

By September next year, more than 1 trillion euros will have been created under the QE, the ECB's last remaining major policy option for reviving economic growth and warding off deflation. 

The flood of money impressed markets: The euro fell more than two US cents to $1.14108 on the announcement, and European shares hit seven-year highs.

"All eyes were on Mario Draghi and he has delivered a bigger bazooka than investors were expecting," said Mauro Vittorangeli, a fixed income specialist at Allianz Global Investors, adding that the news marked "an historic crossroads for European markets".

The ECB and the central banks of eurozone countries will buy up bonds in proportion to its "capital key", meaning more debt will be scooped up from the biggest economies such as Germany than from small member states such as Ireland.

The prospect of dramatic ECB action had already prompted the Swiss central bank to abandon its cap on the franc against the euro. Denmark cut its main policy interest rate on Thursday for the second time this week after the ECB announcement, aiming to defend the Danish crown's peg to the euro.

Draghi has had to balance the need for action to lift the eurozone economy out of its torpor against German concerns about risk-sharing and that it might be left to foot the bill.

Will it work?

Economists noted that Draghi had said only 20 per cent of purchases would be the responsibility of the ECB. This means the bulk of any potential losses, should a eurozone government default on its debt, would fall on national central banks.

Critics say this casts doubt over the unity of the eurozone and its principle of solidarity, and countries with already high debts could find themselves in yet deeper water.

"It is counterproductive to shift the risks of monetary policy to the national central banks," said former ECB policy maker Athanasios Orphanides. "It does not promote a single monetary policy. This path towards Balkanisation of monetary policy would signal that the ECB is preparing for a break-up of the euro."

Tensions broke out as the ECB's meeting got under way with French Finance Minister Michel Sapin firing a broadside at Berlin. 

"The Germans have taught us to respect the independence of the European Central Bank," he told France Info radio. "They must remember that themselves."

A German lawyer who has been prominent in attempts to halt eurozone bailouts said he was already preparing a legal complaint against the bond-buying programme.

Draghi said the ECB's Governing Council had been unanimous in agreeing that the step to print money was legally sound. There was a large majority on the need to trigger it now, "so large that we didn't need to take a vote".

"There was a consensus on risk-sharing set at 20 per cent and 80 per cent on a no-risk-sharing basis," he added.

One eurozone central banking source said five policy makers opposed the expanded asset-purchase plan: The central bank chiefs of Germany, the Netherlands, Austria and Estonia, along with executive board member Sabine Lautenschlaeger, a German.

Guntram Wolff, head of the Bruegel think tank, said the plan's size was impressive. "But the ECB has given the signal... that its monetary policy is not a single one. That's a bad signal to markets and a bad signal to everybody in the eurozone."

The ECB is trying to push eurozone annual inflation back up to its target of just below 2 per cent; consumer prices fell last month, raising fears of a Japanese-style deflationary spiral. But there are doubts, and not only in Germany, over whether printing fresh money will work.

Most eurozone government bond yields are at ultra-low levels and the euro had already dropped sharply against the dollar. Lower borrowing costs and a weaker currency could both help to boost economic growth but there is a question about how much further either can fall.

Asked if the ECB had a Plan B, Draghi responded: "We just presented Plan A, and we have Plan A. Period."

The ECB could create the basis for growth, he said, but he put the onus on governments to follow. 

"For growth to pick up... you need structural reforms," he stressed. "It's now up to the governments to implement these structural reforms. The more they do, the more effective will be our monetary policy."

Draghi was echoing the view of German Chancellor Angela Merkel, who said: "Regardless of what the ECB does, it should not obscure the fact that the real growth impulses must come from conditions set by the politicians."

A plunge in the price of oil has thrown central bankers into a spin worldwide. Canada cut the cost of borrowing out of the blue on Wednesday while two rate setters at the Bank of England dropped calls for tighter monetary policy as inflation has evaporated in Britain.

The ECB has already cut interest rates to record lows. Earlier, it left its main refinancing rate, which determines the cost of eurozone credit, at 0.05 per cent.

Greece and Cyprus, which remain under European Union (EU)/International Monetary Fund (IMF) bailout programmes, will be eligible for the ECB programme but subject to stricter conditions. 

"Some additional eligibility criteria will be applied in the case of countries under an EU/IMF adjustment programme," Draghi said.

The move comes just three days before an election in Greece where anti-bailout opposition party Syriza is on track to gain roughly a third of the vote.

PARIS — New car sales in Europe rose by nearly 6 per cent in 2014, ending a long slump in activity that began in 2007, but analysts warn the sector has not yet turned the corner in the region.

The European Automobile Manufacturer's Association (ECEA) said last week that 2014 new car sales grew by 5.7 per cent, but noted current volumes of activity remain significantly lower than they were before the global financial crisis that drove the sector into six years of decline.

Europe's continuing economic sluggishness means carmakers are unlikely to be able to repeat 2014's performance, with analysts expecting sales growth to be limited to 1 to 3 per cent this year.

A recovery to pre-crisis levels is most likely still years away.

Carlos Da Silva, an auto industry expert at IHS consultants, said that "2014 should be taken with relief and satisfaction".

"However, by any means, this growth should not be misinterpreted: The foundations for a flourishing car market are yet to be built," he added. "Right now, the patient is still limping, not starting to run on both legs!"

The European car sector's convalescent state is clear in comparing the 12.5 million units sold last year to the 16 million which rolled off dealer's lots in 2007 before Wall Street unleashed a global financial crisis.

IHS said it does not expect the market to approach those levels until the end of the decade.

Moreover, activity across Europe varied greatly by market, lacking the generalised effervescence needed to drive enduring growth across the industry.

Among the largest markets, Spain led the sales growth at 18.1 per cent, in part due to a new government incentive programme.

Britain followed with 9.3 per cent growth, Italy at 4.2 per cent, Germany 2.9 per cent.

France managed only 0.3 per cent growth.

"The situation in Europe is still quite contrasted, but it's much better than we expected at the beginning of the year, when we forecast 2 to 3 per cent," said Jean-Francois Belorgey, an analyst with consultants EY.

"[There is] a rather clear relationship between [national] economic health and market activity," he added.

Britain has been a bright spot in the region, with its economy expected to have grown 3 per cent in 2014.

But with the Europe-wide economic outlook remaining mostly subdued through 2015, hopes that 2014 might mark a definitive rebound for carmakers are equally guarded.

"The European economy is still ailing, with weak growth and high unemployment," said Belorgey. "It's more a case of 2014 having been a nice surprise." 

Volkswagen European leader  

The Volkswagen (VW) group remained Europe's largest car producer in 2014, with sales rising by 7.2 per cent to 3.2 million units.

It was followed by Peugeot maker PSA, which managed a 3.7 per cent increase to 1.4 million vehicles.

But No. 3 Renault posted a much larger 13.3 per cent increase to 1.2 million units.

Ford moved into fourth place, with sales rising by 5.8 per cent to 927,861 vehicles.

General Motors (GM) fell into fifth place as sales dropped by 4.3 per cent to 905,444 vehicles, due largely to the withdrawal of its Chevrolet line from Europe.

Renault said this week that low-cost models are now three of its top-five selling vehicles worldwide.

Sales of its low-cost Dacia brand rose by 23.9 per cent last year in the countries the ECEA tracks. Renault sells the vehicles under its own symbol in numerous countries around the world.

Belorgey noted that while much of Renault's growth was driven by the surge of its Dacia brand, the wider segment is not uniformly booming, as witnessed by modest activity for rivals like Kia, which posted just a 4.4 per cent advance.

By contrast, virtually all players in the premium luxury segment saw robust sales increases, including 30.1 per cent for Lexus, 12.3 per cent for Volvo, 4.8 per cent for Audi, and a whopping 70.6 per cent for Jeep.

"The automobile industry is one where the offer is a means of stimulating demand," Belorgey said.

"Cars are products that make people want them, which is reassuring for manufacturers. Rolling out new attractive models is a way... to come out ahead," he added.

Toyota sells 10.23mn vehicles in 2014, still world's top automaker

Separately, Toyota kept its title as the world's biggest automaker on Wednesday as it announced record sales of 10.23 million vehicles last year, outpacing GM and VW, but a shaky outlook for 2015 could see it lose the crown to its German rival.

The worldwide annual sales figure beat Volkswagen, which logged sales of 10.14 million vehicles, and US-based GM, which said it sold 9.92 million cars last year.

But Toyota also said sales would decline this year to an expected 10.15 million vehicles, as demand falls off in its home market.

That will likely mean VW will be in pole position this year as the German automaker rides momentum in emerging economies that could see it take the lead in global auto sales for the first time.

"Their focus is not No. 1," Peggy Furusaka, an auto-credit analyst at Moody's Investors Service, told Bloomberg News, referring to the Japanese firm.

"Toyota is more concerned about keeping profitability than chasing numbers. So for coming years, I wouldn't be surprised to see Toyota selling fewer cars than VW," she said.

Toyota broke GM's decades long reign as the world's top automaker in 2008 but lost the crown three years later as Japan's earthquake-tsunami disaster hammered production and disrupted the supply chains of the country's automakers.

However, in 2012 it once again overtook its Detroit rival, which sells the Chevrolet and luxury Cadillac brands.

Toyota boosted its fiscal year through March profit forecast to 2 trillion yen ($16.97 billion), and said revenue would come in at 26.5 trillion yen, as it saw strong results in North America while a sharply weaker yen inflated its bottom line.

But it earlier warned over a downturn in some other key Asian markets including Indonesia and Thailand, which has been hammered by political unrest.

There are also growing fears about the entire industry's prospects in China owing to concerns about the health of the world's number-two economy.

Fuel-cell cars 

Toyota's upbeat announcement on Wednesday comes despite the firm struggling to recover its reputation for safety after the recall of millions of cars around the world for various problems, including an exploding air bag crisis at supplier Takata.

The maker of the Camry sedan and Prius hybrid has frozen the building of new plants for the three years until early 2016, and a Toyota executive at the Detroit auto show told AFP last week that the giant automaker is emphasising quality of sales rather than volume.

Among the moves, Toyota is pushing further into the fast-growing market for environmentally friendly cars, especially in China where officials are struggling to contain an air pollution crisis.

Toyota said this month it had been swamped by domestic orders for its first mass market hydrogen fuel-cell car, with demand in the first month nearly four times higher than expected for the whole year.

The company received more than 1,500 orders for its "Mirai" sedan since its launch in mid-December. It had planned to sell 400 in Japan over 12 months.

It has also announced plans to develop components for hybrid vehicles with two Chinese automakers in an unprecedented technology-sharing deal aimed at increasing green car sales in the world's biggest vehicle market.

The deal marked a shift away from Japanese carmakers' traditional reluctance over such deals for fear of losing their competitive edge.

Previously, Toyota would make key components such as batteries and motors in high-cost Japan and then ship them to joint ventures overseas. But that drove up the price of models such as its Prius, which has seen sluggish sales in China.

Toyota shares slipped 0.93 per cent to close at 7,588.0 yen in Tokyo, as the broader market fell into negative territory.

WASHINGTON — The International Monetary Fund (IMF) said on Wednesday that losses from lower oil exports should sap up to $300 billion from economies in the Middle East and Central Asia this year, as countries in the region adjust to falling crude prices.

Economies that are particularly dependent on oil exports, including Qatar, Iraq, Libya and Saudi Arabia, will be hit hardest by the more than 50 per cent decline in petroleum prices, the IMF said in an update to its outlook for the Middle East and Central Asia.

Of the major exporters of the Gulf Cooperation Council (GCC), the IMF predicted that only Kuwait would maintain a budget surplus this year. Saudi Arabia, Bahrain, Oman, Qatar and the United Arab Emirates will sink into deficits.

The hit will amount to another $125 billion for other oil and gas exporters across the Middle East, Iran, Iraq, Algeria and Libya, and exporters of Central Asia, pushing nearly all into fiscal deficits this year, the IMF said.

Oil prices are now hovering near six-year lows amid expectations of an abundance of supply tied to unexpectedly high production of US shale crude.

The IMF said, however, that falling crude prices will not translate immediately into major gains for oil importers in the Middle East and Central Asia, which have been hurt by the slowing growth prospects of key trading partners in the eurozone and Russia.

The IMF this week cut its forecasts for global economic growth to 3.5 per cent for 2015 compared with an October outlook of 3.8 per cent, and significantly lowered projections for oil exporters Russia, Nigeria and Saudi Arabia.

The IMF said nearly every exporting country in the Middle East and Central Asia is expected to run a fiscal deficit this year because of the oil price shock, which prompted the IMF to downgrade the region's growth prospects by as much as 1 percentage point compared with its October forecasts, to 3.4 per cent for 2015.

The losses are likely to reach 21 percentage points of the gross domestic product (GDP) in the countries of the GCC, or about $300 billion. In non-GCC countries and in Central Asia, the expected losses are $90 billion and $35 billion this year, the IMF indicated.

Oil importers will see smaller gains, compared to exporters' losses, as their economies are less dependent on the price of petroleum, the IMF said. 

Morocco, Lebanon and Mauritania are expected to gain most from falling crude prices, while Lebanon and Egypt are likely to see improved fiscal balances, the IMF indicated.

The IMF expects oil-importing countries in the Middle East to save most of the windfall, boosting their current account positions by 1 percentage point of GDP, compared with what the IMF forecast in October.

Central Asian importers should see worse external positions this year, compared with the October forecasts, because of lower demand from Russia and China, the fund said.

"Most oil exporters need oil prices to be considerably above the $57 [a barrel] projected for 2015 to cover government spending, which has increased in recent years in response to rising social pressures and infrastructure development goals," it added.

Only Kuwait, Turkmenistan and Uzbekistan appear able to keep their budgets balanced, it indicated.

But the report said that most oil exporters retain significant cushions from years of surplus, and have substantial financial assets and borrowing power, allowing them to avoid suddenly slashing their budgets.

Even so, it said, spending growth could slow in many to adjust to what could be lower prices over several years or more.

Lower global crude prices since June, is delivering a windfall to importers and giving the global economy more support.

Separately, Kuwait's oil minister said Wednesday that his country plans to spend about $100 billion in the next five years on oil projects to modernise the vital sector.

"We already have started the implementation of the 2030 strategy, and overall spending over the next five years is estimated to be at $100 billion," Ali Al Omair told an oil conference in Kuwait City.

The funds "will be spent on various projects related to production, refining, petrochemicals, as well as transportation”, Omair said.

Kuwait, a member of the Organisation of Petroleum Exporting Countries (OPEC) plans to increase its crude production capacity to 4 million barrels per day (bpd) by 2020 and maintain it until 2030 from the current level of about 3.2 million bpd.

The investment plans come as oil prices have shed about 60 per cent of their value since June. Income from the sector accounts for around 94 per cent of Kuwait's public revenues.

The government earlier this month proposed investment spending of $155 billion during the next five-year development plan starting in April.

Nizar Al Adasani, the chief executive of national oil conglomerate Kuwait Petroleum Corp., told the conference the emirate plans to raise its production capacity to 3.5 million bpd by the end of 2015.

"We are focusing on the upstream where the challenges are so great. It is our strategy to invest to maintain excess capacity," said Adasani.

In the past year, Kuwait has launched two megaprojects, one worth $12 billion to make two of its three refineries more environmentally friendly and another valued at $4.2 billion to produce heavy crude.

It is still reviewing bids for a $15 billion project to build a new 615,000-bpd refinery.

Iraqi Oil Minister Adel Abdul Mahdi predicted that world prices would not fall much further.

"Our estimate is that the prices have reached the bottom. It is very difficult to drop lower than this," Abdul Mahdi told the conference in Kuwait.

"We do not find any real justification for the big and persistent drop in oil prices," said the Iraqi minister whose country is the second largest OPEC producer after Saudi Arabia. "A number of factors will work to correct oil prices upward."

Oil rebounded in Asia Wednesday, with international benchmark Brent North Sea crude for March, adding 44 cents to $48.42, as traders bought the commodity at cheaper prices following a slide to near six-year lows.

But analysts do not expect the rebound to last, as weakening global demand and a supply glut show no signs of abating, especially after the latest gloomy IMF forecast for the global economy.

The Iraqi minister said current low prices will knock out part of the high-cost production, especially shale oil.

This is likely to reduce the amount of surplus production, currently estimated at 2.5 million barrels per day, and support prices, he said.

The world's biggest miner BHP Billiton said on Wednesday that it was cutting back its operating US shale oil rigs by 40 per cent because of the price slump, but still expected output to rise for the financial year.

OPEC's top producer Saudi Arabia has said it will not cut production for fear of losing market share.

Its close ally the United Arab Emirates has said the price slump was necessary to correct oversupply by shale producers.

However, Abdul Mahdi said that other group members had been attempting to broker an output cut in coordination with the world's top crude producer, non-OPEC Russia, to shore up prices.

"Venezuela is exerting huge efforts... and there are contacts involving Russia and OPEC to try and cut production," he added.

But the International Energy Forum (IEF), which groups 76 member countries, including consumers as well as producers, did not share the Iraqi minister's confidence about a swift reduction in surplus production.

"It is still very hard to say when the oil market will be in balance," IEF Secretary General Aldo Flores-Quiroga told the conference.

He said that based on IEF figures, the United States has boosted global supply by 1.2 million barrels per day over the last 11 months.

Brazil added an average of 217,000 bpd of supply over the past 10 months, and China also raised its output.

"US output growth has more than compensated production losses elsewhere," Flores-Quiroga said.

He added that based on available statistics, there will still be surplus supplies of crude in the second quarter of 2015.

Non-OPEC oil producer Oman described as bad politics and bad business Wednesday the group’s November decision to make no cut in output, which sent world prices crashing.

OPEC kingpin Saudi Arabia said the decision was necessary to prevent the group losing market share after a sharp increase in US shale oil production.

But Oman, a Saudi neighbour which has been badly hit by the resulting loss in revenue, said it saw no logic to it.

“I fail to comprehend how market share became more important than revenue,” Omani Oil and Gas Minister Mohammad Al Rumhi told the conference.

Rumhi said that before the decision, with oil trading at $100 a barrel, OPEC was earning $3 billion a day from its output of 30 million bpd.

“When earnings dropped to $2.9 billion, $2.8 billion, they got up to defend market share... and as a result, revenues dropped to roughly $1.5 billion,” the Omani minister said. “This is politics that I don’t understand. Business? This is not business.”

Ruhmi said the fall in prices had hit the Gulf sultanate hard and “it is really a difficult time in Oman”.

Income from Oman’s oil output of around 1 million bpd accounts for some 80 per cent of revenues and the sultanate last month forecast a budget deficit for 2015 of $6.47 billion (5.35 billion euros).

AMMAN — The Kingdom's trade deficit went up by 4.1 percent until November 2014, reaching JD9.45 billion compared with JD9.84 billion recorded in the same period of 2013.  A report issued by the Department of Statistics (DoS) on Tuesday, attributed the increase to higher prices of oil and machineries. Total exports until end of November 2014 stood at JD5.42 billion, a 4.6 increase, compared with JD5.18 billion  in the same period of 2013. Imports went up by 4.3 percent, reaching JD14.87 billion until November of last year, compared with JD14.27 billion in the same months of 2013, according to DoS.

BEIJING — The International Monetary Fund (IMF) lowered its forecast for global economic growth in 2015, and called on Tuesday for governments and central banks to pursue accommodative monetary policies and structural reforms to support growth.

Global growth is projected at 3.5 per cent for 2015 and 3.7 per cent for 2016, the IMF indicated in its latest World Economic Outlook report, lowering its forecast by 0.3 percentage points for both years.

"New factors supporting growth, lower oil prices, but also depreciation of euro and yen, are more than offset by persistent negative forces, including the lingering legacies of the crisis and lower potential growth in many countries,"  Olivier Blanchard, the IMF's chief economist, explained in a statement.

The IMF advised advanced economies to maintain accommodative monetary policies to avoid increasing real interest rates as cheaper oil heightens the risk of deflation.

If policy rates could not be reduced further, the IMF recommended pursuing an accommodative policy "through other means".

The United States was the lone bright spot in an otherwise gloomy report for major economies, with its projected growth raised to 3.6 per cent from 3.1 per cent for 2015.

The United States largely offset prospects of more weakness in the euro area, where only Spain's growth was adjusted upward.

Projections for emerging economies were also broadly cut back, with the outlook for oil exporters Russia, Nigeria and Saudi Arabia worsening the most.

The drop in world oil prices, which have fallen more than 50 per cent since June, is largely the result of organisation of Petroleum Exporting Countries (OPEC) not cutting supplies, a decision that is unlikely to change, Blanchard said.

"We expect the decrease in price to be quite persistent," he told reporters at a news conference launching the report. "We expect some return, some increase, but surely not an increase back to levels where we were, say, six months ago."

The IMF predicts that a slowdown in China will draw a more limited policy response as authorities in Beijing will be more concerned with the risks of rapid credit and investment growth.

Slower 2015 growth in China "reflects the welcome decision by the authorities to take care some of the imbalances which are in place and the desire to reorient the economy towards consumption and away from the real estate sector and shadow banking”, Blanchard added.

The IMF also cut projections for Brazil and India.

The forecasts are far rosier than World Bank predictions last week that the global economy would grow 3 per cent this year and 3.3 per cent in 2016.

Lower oil prices will give central banks in emerging economies leeway to delay raising benchmark interest rates,  although "macroeconomic policy space to support growth remains limited”, the report said.

According to the IMF, falling prices will also give countries a chance to reform energy subsidies and taxes.

The prospects of commodity importers and exporters will further diverge.

Oil exporters can draw on funds they amassed when prices were high and can further allow for substantial depreciation in their currencies to dull the economic shock of plunging prices.

The report is largely in line with remarks by IMF Managing Director Christine Lagarde last week, in which she said falling oil prices and strong US growth were unlikely to make the IMF more upbeat.

The eurozone and Japan could suffer a long period of weak growth and dangerously low inflation, she said.

Both Lagarde and the report indicated that money flowing back to the US as it tightens monetary policy could contribute to volatile financial markets in emerging economies.

The US Federal Reserve is widely expected to begin raising interest rates some time this year.