Business

AMMAN — Jordanian and European officials discussed on Wednesday a 180-million-euro soft loan that will be signed in Brussels on Tuesday by the minister of finance and the governor of the Central Bank of Jordan. The talks were held during the ninth meeting of the Jordanian-European Economic Dialogue at the Ministry of Planning and International Cooperation.

AMMAN — Turmoil in Ukraine is driving Middle Eastern grain buyers to shy away from striking new deals there and to consider rival suppliers, a shift that is likely to push up import bills.

The Black Sea region, mostly Ukraine and Russia, has become the major source of wheat and barley for Middle East importers from Libya, Egypt and Syria to Saudi Arabia and Yemen, dislodging US, Canadian and European suppliers who once dominated the market.

Middle Eastern commodity traders and officials said fears that tensions between Russia and Ukraine could come to a head, however, are discouraging most buyers from striking deals with Ukraine suppliers for the new season, which starts in July.

“At this time of the year, end of March, people are selling forward contracts for the new crop. Traders and trade houses start selling July shipments. This is not happening now. People are very reluctant; they don’t know what to expect,” said Tony Mudallal, a senior commodities trader in an international house.

Ukraine, the world’s third-biggest maize exporter, also has come to dominate in corn exports, taking market share from traditional suppliers such as Argentina and Brazil.

“Ukraine proved to be a powerhouse in the trade of grains in the last 10 years. It affected the region positively in terms of supply, mainly in wheat, corn and barley,” Mudallal added.

On the supply side in Ukraine, foreign trading houses are avoiding fixing new grain export contracts as well. Russian corn export prices also have been rising for two weeks.

Ukraine’s main ports continue to operate, but Middle Eastern traders were concerned that shipping could be affected.

“The situation could change if fighting breaks out,” said Malak Jehad Al Akiely, a dealer in International Grain Suppliers-Jordan operation.

“If Ukraine enters into more turmoil, this could mean declaring force majeure, and that would definitely cause tension around other Black Sea origins and raise insurance premiums,” an Egyptian government source said.

Conflict-torn Syria, which has relied mainly on Ukrainian wheat in the last two years to cover a shortfall in local production, is likely to be the hardest hit by the Black Sea conflict, traders say.

Any delays in grain shipments could exacerbate Syria’s food shortages as western financial sanctions make it more difficult to switch to alternative markets, according to two Damascus-based Syrian traders.

Import bills to rise

The quality of Ukraine’s grain and its proximity to Mediterranean ports have helped it win lucrative business from Middle East state importers with lavish budgets to subsidise bread and basic foodstuffs at low prices.

Middle Eastern countries have already sealed deals for around 80 per cent of the grain they need for the current season to end-June, traders said.

A switch to other sources is likely to push up Middle Eastern import bills substantially in the coming season, however, with prices rising by $120-$150 per tonne from levels in existing contracts of around $280 per tonne FOB for Russian and Ukrainian wheat, according to regional experts.

“Ukrainian grains are very competitive price-wise, and they are as good or even better quality than say western European or other sources,” another commodities trader based in Jordan said.

“If the situation escalates, it means the Middle East consumers will pay a higher bill by up to $150 per tonne,” he indicated.

A Cairo-based trader said the crisis was already driving up prices for new deals.

“Egypt had banked on doing more buying from the US for example, but now prices are up as far as $304 a tonne on a FOB basis,” the trader said.

Middle Eastern state and private importers are likely to diversify to Romania, Bulgaria and western European suppliers, particularly France and the Baltic states.

“Russian and Romanian and other Black Sea origins could replace Ukraine, but also French wheat, which is priced slightly higher,” the Egyptian government source said.

Egypt, the world’s largest wheat importer, has said it will reconsider a rule that limits moisture content and excludes mostly French wheat.

That issue has to be resolved, the source noted. “We need to open the door to as many origins as possible and then choose.”

Even US and Australian wheat exporters may also see a comeback in shipments of corn to Egypt, which has relied on Ukraine for years.

“Today, Ukraine is still exporting. Yes, the price is going to differ. Eastern Europe will love this,” a Lebanese grains trader said.

As for shipments so far, Egypt’s main state grain buyer, the General Authority for Supply Commodities (GASC), has said the crisis would not affect any shipments already purchased.

If grain exports are disrupted through the port of Sebastopol in Crimea, Ukraine can still export to the region through its main deepwater ports of Odessa, Illichivsk and Yuzhny, traders say.

A significant volume of Russian and Ukrainian grain exports is shipped directly in 5,000-tonne vessels from small Black Sea ports in the Sea of Azov on the southern coastlines of Russia and Ukraine to ports in Egypt, North Africa and eastern Mediterranean such as Latakia and Beirut.

Also traders are concerned about the military buildup taking place in Crimea near the Strait of Kerch, a major transhipment point for Ukrainian and Russian grain shipments to the Middle East, where 5,000-tonne barges cross and 50,000-tonne cargoes load.

“Kerch is now witnessing a lot of military activity that is beginning to affect commercial vessel activity,” said one senior Middle Eastern commodities dealer.

“Even if you want to speak commercially about loading a vessel or doing some transhipment operation at this strait, the priority is going for the army not for the commercial,” the trader added.

“It disrupts Middle Eastern traders thinking of getting from Russia small barges and to top it off with mother vessels. You will think twice,” he noted.

Dealers said the potential that the conflict could lead to European Union trade sanctions against Russia was another factor weighing on their calculations.

AMMAN — Under a memorandum of understanding (MoU) signed this week between the Euro-Med Development Centre for Micro, Small, and Medium Enterprises (EMDC) and the Jordan Enterprise Development Corporation (JEDCO), the Kingdom will become a member to the regional network of National SME business support centres aiming at the implementation of the EMDC initiative — labelled as a Union for the Mediterranean Project — implemented by the Milan Chamber of Commerce (Promos). 

According to a JEDCO press statement, EMDC President Ambassador Giancarlo Aragona and JEDCO’s Chief Executive Officer Yarub Al Qudah signed the MoU, in the presence of Italian Ambassador Patrizio Fondi, to enhance targeted cooperation between Jordan and the European Union-Middle East North Africa region, highlighting the importance of offering continuous technical support to micro, small, and medium enterprises (MSMEs) in order to enhance their competitiveness in both the national and global economy.

“Activities to be implemented under this initiative includes, amongst others, favouring MSMEs’ access to markets, creating conditions that allow MSMEs in the Euro-Mediterranean region greater and easier access to financing, including by providing professional services and consultancy work (e.g., feasibility studies, business plan preparation, etc.) and creating and developing an environment which favours the growth, networking and exchange of entrepreneurial know-how for MSMEs in the Euro-Mediterranean region, aimed at job creation, with a specific focus on young entrepreneurship,” the statement said.

Aragona said: “The programme shall also offer opportunities to establish links and cooperation ventures between Jordanian and their counterpart Italian public sector institutions, Chambers of Industry and Chambers of Trade in addition to business associations.”

Fondi said: “Jordan heavily depends on human capital as its primary driver of economic growth, and Jordanians, by nature, are innovative and entrepreneurial with positive cultural reinforcement of risk-taking and enterprise. The passion that Jordanians have is our main driver to assist them in nurturing their entrepreneurial spirit and growth oriented businesses, especially with the aim of boosting economic relations, commercial two-way trade opportunities and socio-cultural environment in Jordan.”

Qudah said: “Our aim at JEDCO is to provide a coordination platform for all stakeholders in the field of entrepreneurship and SME development, excellent and transparent services to enhance the competitiveness of Jordanian enterprises especially SMEs, through providing technical assistance and financial support to achieve sustainable development and economic growth, in addition to raising those enterprises’ positioning in global markets ensuring that they benefit from Jordan’s preferential trade agreements where possible.” 

He concluded that the MoU signed with EMDC is a clear support to the innovative initiative they are bringing to Jordan, as it will be setting our long-term and strategic partnership for SMEs’ joint-investments, and further highlighting our shared goals.

WASHINGTON — A US financial regulator warned consumers Tuesday that using the online currency bitcoin is fraught with risks including theft by hacking and fraud.

The Financial Industry Regulatory Authority (FINRA) issued the general warning amid a spate of scandals involving the digital currency, which has rocketed in popularity and been the focus of much speculation over the past two years.

“Buying and using digital currency such as bitcoin carry risks. Speculative trading in bitcoins carries significant risk,” FINRA said.

“Platforms that buy and sell bitcoins can be hacked and some have failed. In addition, like the platforms themselves, digital wallets can be hacked. As a result, consumers can — and have — lost money,” it added.

The agency, which regulates the securities industry, said digital wallets, where users hold their bitcoin on computer files, are vulnerable to theft, and have none of the legal protections and guarantees that depositors in US banks and credit unions enjoy.

Bitcoin transactions — designed to transfer funds between two parties without a bank or other intermediary — are also subject to fraud and robbery, and are irreversible, FINRA added.

It also pointed to the use of bitcoin in money laundering and drug payments. The agency said that exchanges involved in such activity could be shut down, costing other users not involved in illegal activity.

FINRA noted the closure of Japan-based Mt Gox, once the largest bitcoin exchange which said it had been robbed of nearly half a billion dollars’ worth of the digital currency, most of it clients’ money.

Mt Gox filed for bankruptcy protection in Japan at the beginning of this month and in the United States on Monday.

Separately, the first bitcoin ATMs are cropping up in North America, enabling consumers to swap cash for units of the crypto-currency, or cash in their bitcoins. ATMs are coming in Europe and Asia as well.

The machines could allow bitcoins, generated by a complex computer algorithm designed in 2009, to move out of the realm of geeks to the broader public.

The US startup Robocoin, after unveiling its first ATM in Vancouver last year, announced plans last week for bitcoin ATMs in Austin, Texas and Seattle, Washington, ahead of a wider global launch.

Removing bitcoin barriers 

“We have completely removed the barriers for people to buy and sell bitcoins,” Robocoin Chief Executive Jordan Kelley told AFP. “You no longer have to wait days, you don’t have to provide your bank account.”

Kelley said Robocoin provides the only “bi-directional” bitcoin ATMs, meaning that consumers can either buy or sell the digital currency.

Robocoin provides the hardware, made in the United States, to local operators, who must get certification from state and federal authorities, and comply with anti-money laundering rules.

Operators around the world will also need certification in the countries where they operate, Kelley noted.

“We were built to be fully compliant [with finance regulations] globally,” he said.

Kelley declined to provide the number of orders for the ATMs, saying only, “We have a lot.” 

He noted that the company is awaiting certification for its shipments to locations in Europe and Asia.

The Robocoin ATMs perform a biometric scan of each user’s palm, as well as take a facial photo, which is matched to the user’s government-issued identity card. The system also runs a check to determine if the user is a wanted criminal or terror suspect.

“We provide a profile of the customer that gives our operators full visibility and trackability,” Kelley said.

The first operational ATM in the United States started up last week in a New Mexico cigar shop, according to manufacturer Lamassu bitcoin Ventures.

Lamassu has some 200 orders around the world and has opened bitcoin ATMs in two Australian cities as well as one each in Helsinki, Berlin, Bratislava and Vancouver.

The New Mexico operator Enchanted bitcoins is “paving the way for mainstream bitcoin accessibility in the Unites States”, says Zach Harvey, chief executive officer of Lamassu, a company registered in the British Virgin Islands.

The operator is following guidelines from FinCEN, the Financial Crimes Enforcement Network, to avoid running afoul of the law and has registered as a money exchange service.

Despite the growing popularity of bitcoins, the digital currency has been linked to crime and drugs in exchanges like the dark Web bazaar Silk Road. And many economists warn that the currency has no hard value.

Bitcoins have been exceptionally volatile, rising to more than $1,200 last year, before falling to around $600 in recent weeks. And some bitcoin exchanges have been shut down by regulators.

Last month, US authorities filed criminal charges against two operators of a bitcoin exchange, including the head of a company with high-profile investment backers.

Some analysts see advantages in the move to bitcoin — it has little or no transaction costs, is quickly and easily transmitted, and has verifiable and traceable transactions based on its software.

“The deeper I dive, the more impressed I am with this as a technology solution, as an incredible idea for finance, as a stored value for payments,” said Staci Warden, executive director of the Centre for Financial Markets at the Milken Institute.

Warden added that bitcoin has advantages over other currencies because it can be divided into extremely small units — one quadrillionth of a bitcoin — for micropayments.

“bitcoins can be sent to you with no transaction costs at all,” Warden told an online forum. She said that contrary to popular belief, bitcoin transactions are not anonymous but “pseudonymous” and can be traced and verified on the bitcoin master ledger.

“If Target used bitcoin, none of the 70 million customers would have had their accounts compromised, because Target wouldn’t know anything about the customers,” she said.

But a report last month by the International Institute of Finance, which represents more than 450 banks and financial institutions, said bitcoin’s future as a broadly accepted exchange medium is limited.

Mark Williams, a Boston University banking and risk management specialist, argues that bitcoins are dangerous for the financial system and that ATMs heighten the risks.

“An ATM makes it easier for the average person to get access to bitcoins,” Williams said. “But there is no consumer protection. There is no guarantee you will get your money back.”

Williams argues that bitcoin is not really a currency but a commodity, “and it’s a high-risk commodity, a speculative commodity”.

He said bitcoin values have fluctuated more than 50 per cent in a single day, like other speculative assets.

“So I don’t think they should even use the term ATM machine,” he added. “It’s really a betting machine.”

Warren Buffett, founder of Berkshire Hathaway and routinely touted as the most successful investor of the 20th century, said last week that he didn’t expect bitcoin to stay around in the longer term.

Buffett posited that in wartime it is much better to hold stocks rather than money or bitcoin, referencing his first investment in 1942, when World War II wasn’t going well for the US. He was right to do so because the stock market appreciated during the war and the dollar weakened.

Buffett offered this piece of wisdom: “American businesses are going to be worth more money. Dollars will be worth less, so that money won’t buy you quite as much, but you’ll be much better off owning productive assets over the next 50 years than you will be holding pieces of paper or, I’m not sure, bitcoins.”

As regards bitcoin, Buffett expressed the view that the self-styled crypto-currency “is not a currency”, in that “it is not a durable means of exchange”. The “Oracle of Omaha” said that he “wouldn’t be surprised if it [bitcoin] wasn’t around in the next 10-20 years”.

Eric Spano, director of finance at the bitcoin Embassy in Montreal and a director of the bitcoin Alliance of Canada, asserted last week that the rally is due to the fact that investors are starting to understand that the crypto-currency is separate from the exchanges which trade it. 

“Any issues these companies may be having are not necessarily rated to the bitcoin protocol or the network itself,” Spano claimed.

“In bitcoin, nobody is too big to fail,” Spano said. “But overall by weeding out the bad actors, bitcoin will become stronger.”

He believes that, whilst the Mt Gox collapse may have been catastrophic for some investors, bitcoin is still extremely young and that such failures are part of a maturing market. “The people who can’t keep up with the industry or are not prepared… will eventually get kicked out.”

The bitcoin expert observed that, with the dust starting to settle, exchanges are experiencing a trend toward accountability and transparency as the industry shift its focus to prove to customers that the digital currency is secure. He noted that bitcoin exchanges and websites for e-wallets are now implementing different types of audits.

“This [MtGox’s closure] has brought the community together in a way most crises don’t really bring anyone together.”

FARAYA, Lebanon — The mountains north of Beirut, usually a snowy winter playground for skiers and other tourists vital for Lebanon’s services-based economy, are brown, muddy and completely empty this season.

Hotel rooms lie vacant and winter sports rental shops are idle, with the lack of snow deterring even the keenest visitors.

An unseasonably warm and dry winter — the mildest in decades by most accounts — has also endangered the harvest of vineyards which export prize-winning Lebanese wines around the world.

Along with worsening security problems and political gridlock, the fickle weather has exacerbated a three-year drop in tourism in this small Mediterranean country. Before the conflict in neighbouring Syria erupted in 2011, the sector generated about 10 per cent of economic output.

“This is the first time the slopes have not opened at all,” said Joost Komen, general manager of Intercontinental Mzaar, the largest hotel and ski lodge in Faraya.

“That there is limited snow, it happens. But that there is absolutely no snow? No, this has never happened,” he added.

Komen told Reuters revenues were down more than 80 per cent, directly affecting around 600 families dependent on hotel jobs. Ski instructors, rental shops and other businesses that benefit from seasonal activity have also taken a severe blow.

“God forbid we have another year like this. If it happens again, you’ll see many shops shutting down,” said one vendor, sitting in a parking lot full of idle all-terrain vehicles.

An early snowstorm in December battered the Middle East with high winds and dropped around 30 centimetres of white powder in Faraya. Many thought it was a harbinger of a long and cold winter to come. Aid agencies worried about hundreds of thousands of Syrian refugees living in crude shelters at high altitudes.

But that first snowfall was not enough to open the slopes. There has been almost no precipitation since. Though it could still snow in March or even April, the damage has been done.

“What happened in January and February is gone. This is money unrecoverable,” Komen said.

Marwan Barakat, chief economist at Bank Audi, said those two months witnessed a decline in arrivals at Beirut Airport, one of few metrics available for analysing the tourism sector.

“This is probably due to some tourism foregone because of the adverse winter conditions,” he added.

Lack of precipitation and mild temperatures are creating problems for vineyards and farms across Lebanon.

Government observations put rainfall through the beginning of March at less than half the average for this time of year.

Massaya vineyard, spread out over 40 hectares in the Bekaa valley, is one of several struggling to cope.

Ramzi Ghosn, the winemaker at Massaya, said the lack of moisture would cut volumes of wine production significantly, although it might not jeopardise the quality. “The more the vines suffer, the better the wine usually,” he remarked.

But the mild winter will make vines start growing again and sprouting earlier than usual, meaning that a late winter storm or even just a brief cold spell could devastate the harvest.

“In Lebanon, we always said we don’t have to worry about the vines because we have perfect weather... but we have to worry about other issues. This year, in addition to the geopolitical issues, we have to worry about the vines,” said Ghosn.

Farmers of other crops are already feeling the effects of the abnormal winter weather.

Hassan Mheish, a farmer in the northern region of Tripoli, said the lack of rain had drastically reduced his almond crop, and threatened to destroy the olive and lemon harvests.

Standing on dry, cracked soil in an olive grove he manages, he said the government should build dams and take other steps to alleviate the impact of dwindling water resources on farmers.

“The wells are drying up. Now they’re mostly giving only mud and soil,” the farmer sighed.

AMMAN –– The European Bank for Reconstruction and Development (EBRD) on Monday officially launched a special unit to help the Kingdom’s small- and medium-sized businesses, which according to a government official struggle to access finance. 

On Monday evening, the EBRD’s Small Business Support (SBS) held an official launch event –– attended by executives from the London-based bank, government officials and a large number of private sector representatives –– to increase the awareness of local companies about the activities of the unit in Jordan. 

Speaking at the event, head of EBRD office in Jordan Heike Harmgart said SBS has been active in Jordan since 2012, providing business advice through more than 40 projects, helping companies access the know-how they need to succeed and grow. 

The programme’s activities in the southern and eastern Mediterranean (SEMED) region are funded by the SEMED Multi-Donor Account and the SEMED cooperation funds account, which have provided 2.4 million euros in donor support, according to the bank.  

Accounting for more than 98 per cent of active enterprises in Jordan, around 70 per cent of total employment, 40 per cent of national exports,  SMEs in Jordan still face challenges in access to finance, said Yarub Qudah, chief executive officer of the Jordan Enterprise Development Corporation. 

He indicated that the sector’s share of credit facilities extended by banks is only 5 per cent, describing the figure as “ironic”. 

Qudah said that in the past decade, Jordan’s exports grew from JD1.6 billion to JD7 billion, thanks to SMEs. 

“Without small- and medium-sized enterprises the Kingdom’s economy would not have grown,” he added, calling on the private sector to seize the support of  EBRD programme. 

Strengthening small businesses is a top priority for EBRD activities in Jordan as the country faces significant regional disparities, according to Hildegard Gacek, the bank’s managing director for SEMED. 

Smaller businesses continue to suffer from poor access to finance, limited exposure to managerial best practices and low productivity, which hamper their potential to create jobs, she said.

Charlotte Ruhe, director of the Small Business Support team at the EBRD, noted that the SBS facility can play a key role in supporting small businesses. 

“Improving access to external advice is important in helping them grow and become catalysts for the country’s economic development,” she said.

Drawing on the expertise of local consultants and international experts, SBS connects small- and medium-sized enterprises with the expertise that can boost their businesses, transferring the skills and know-how that help them innovate, attract finance and source further expertise, she added. 

The EBRD’s SBS team introduces the latest best practice in marketing, operations, information communication technology, human resources and energy efficiency to improve quality, resource efficiency and growth, according to the bank’s official. 

In addition to working with individual businesses, the EBRD also engages with government agencies, local business associations and chambers of commerce.  

In October last year, the EBRD opened a permanent office in Jordan in a step that was described by executives as long-term commitment to supporting economic development in the Kingdom.

The bank has also invested in two major projects in Jordan: A $100 million loan for Al Manakher Power Plant, and a $80 million credit for the Abdali shopping mall and entertainment centre in Amman.

Late last year, the bank granted Jordan the status of a recipient country, allowing the Kingdom to benefit from the bank’s capital resources.

DUBLIN — US fruit firm Chiquita Brands and Irish rival Fyffes, Europe’s largest distributor, have struck an all-stock deal to create the world’s biggest banana supplier.

With the $526 million tie-up, the new firm will grab some 14 per cent of the global banana market, and considerable negotiating power at a time when supermarkets are cutting prices for their product owing to an economic downturn.

“Two big fruit companies have felt the downward pressure of the big retail buyers on their margins and consolidation appears to them to be a strategy for survival,” said Bananalink, a British-based group which works for more sustainable trade in bananas and pineapples.

The global banana market, worth $7 billion, is currently controlled by four multinationals, according to the United Nations: Chiquita, Fresh Del Monte, Hawaii-founded Dole Food Company and Fyffes.

Chiquita and Fyffes sell 180 million boxes of bananas a year between them, versus 117 million for Del Monte and 110 for Dole. The combined ChiquitaFyffes will have $4.6 billion in annual revenues and expects to make operational pre-tax savings of at least $40 million by the end of 2016.

“The first three [companies] on a global scale are not too far away from each other, whereas Fyffes was a good deal smaller. Now a firm number one has been created, there will be some impetus for further consolidation in the sector,” said David Holohan, an analyst at Merrion Stockbrokers in Dublin.

The new firm will be listed in New York — though domiciled in Ireland for tax purposes -—and have a market value of $1.1 billion. Chiquita shareholders will own about 50.7 per cent of the combined company and Fyffes shareholders the remaining 49.3 per cent, the companies indicated.

The deal will be subject to review by competition authorities but, Holohan noted, is unlikely to prompt burdensome regulatory demands because the two companies operate mainly in separate North American and European markets.

Chiquita Chief Executive Ed Lonergan, who will be chairman of the combined company, was confident the match of the businesses would persuade regulators to give it the green light, with most of the savings expected in logistics.

“We looked at it and thought we could create a much stronger competitor,” Lonergan told Reuters. “The overlap between the businesses is de minimis.”

Fyffes shares leaped 44 per cent on Monday, bringing the stock, which had traded at about 10 times earnings prior to the announcement, roughly into line with its peers

Chiquita shareholders will get one share of the new company for each share held. Fyffes investors will get 0.1567 of a share in the new group for each existing share, which values it at a premium of 38 per cent over its Friday’s closing price.

Goldman Sachs and Wells Fargo Securities, LLC acted as financial advisers for Chiquita and its board and Lazard for Fyffes.

Most bananas are grown for export on large plantations in Latin America and Africa and are from a single variety. This standardises taste and brings economies of scale but leaves the bananas vulnerable to diseases which can require extensive fungicide treatment, a potential hazard to local ecosystems.

Campaigners for sustainable farming expressed concern that the ChiquitaFyffes tie-up could intensify the economic pressure on small-scale banana producers, as well as environmental hazards.

“The banana market is dysfunctional and this merger feels like further proof,” said Michael Gidney, chief executive of British charity The Fairtrade Foundation.

“There’s downward pressure that’s creating a race for the bottom. The big producers are under pressure too — the banana business is not working for anybody,” he added.

AMMAN — More than 800 small- and medium-sized companies have benefited from the first payment of the World Bank’s loan, valued at $48 million and presented to banks through the Central Bank of Jordan (CBJ) at a competitive interest rate. In a statement, the CBJ indicated that 60 per cent of companies that have benefited from the loan were located outside Amman, of which 57 per cent are owned by women and 21 per cent by young Jordanians. The statement said the project has succeeded in supporting small and medium enterprises and reaching out to the targeted segments outside the capital, noting that the success of the initiative will be reflected on the economic growth by helping to reduce unemployment and poverty. The CBJ recently announced the referral of the second payment of the loan, totalling $13 million, to banks and signing of loan agreement with the Arab Fund for Economic and Social Development, under which $50 million will go to support small-and medium-sized companies during the upcoming few months.

LONDON — Iran’s oil tanker fleet is gearing up for more business, with some vessels taking to the high seas after over more than a year at home ports, another sign that an easing in Western sanctions is enabling exports to begin to pick up.

Iran and Western governments reached an interim agreement in November to restrict Tehran’s disputed atomic work in exchange for limited sanctions relief for six months, which came into effect in January.

US and European sanctions imposed in the previous two years had sharply hit Iran’s oil exports, mainly by making it difficult for buyers to arrange financing for transactions and insurance and documentation for shipments.

The Geneva deal included an easing on restrictions on ship insurance and allows for less difficult shipping of oil that the OPEC (Organisation of Petroleum Exporting Countries) member is permitted to sell to buyers mainly in Asia.

Ship tracking sources say in recent weeks at least three Iranian supertankers had made their first trips to Asia after months at Iranian anchorages where they were storing unsold oil. The tankers, known as very large crude carriers (VLCCs), can hold up to 2 million barrels of oil each.

“While all eyes will be on whether we see an extension in sanctions relief after July, Iran’s fleet is more visible and active now,” one shipping industry source said.

Tanker tracking sources told Reuters recently that Iran’s oil exports have risen further in February for a fourth consecutive month, increasing by around 100,000 barrels per day (bpd) to at least 1.30 million bpd, just over half the pre-sanctions rate from 2011.

Many of Iran’s oil tankers belong to the country’s top operator NITC. One ship tracking source said NITC’s Dal Lake tanker was making its first journey outside the Gulf to Asia in 10 months. The Halistic was also heading to China on its first voyage since December 2012, while the Nanital was on its way to Asia making its first journey since last June.

Another NITC tanker, Alert, is currently in a dry dock in Oman for repairs.

“The enlarged NITC VLCC fleet will be able to go about its business without all of the subterfuge which has been apparent over the past few years. Initially, we are likely to see more VLCC cargoes heading East, freeing up the units which have formed the nucleus of the long-term Iranian floating storage fleet,” tanker broker EA Gibson said in a recent report.

“It is also likely that NITC will take the opportunity to undertake dry docking and repairs to many of the older tankers during the sanction suspension window,” it added.

The sanctions prohibit dealings by US and European companies with a list of firms that includes NITC, and companies from third countries that have dealt with NITC have themselves been added to the sanctions list.

Over the past few years NITC frequently changed the name of its vessels and flags to conceal its activity. Its fleet of 37 supertankers and 14 smaller tankers has an overall carrying capacity of around 86 million barrels of oil.

“The way NITC seems to be operating is as near to the pattern of a normal operator as possible — bearing in mind sanctions have prevented them having access to facilities in most other countries,” said Richard Hurley, a senior analyst at IHS Maritime.

“We have not seen any renaming activity recently. Previously we have seen a renaming every six to eight months. They should be due for a renaming but that does not seem to be happening,” he added.

As part of the Geneva deal, US sanctions have been eased on NITC for oil exports granted under waivers to specific buyer countries, but European Union (EU) sanctions on the carrier remain in place.

NITC’s Managing Director Ali Akbar Safa’ie was quoted by Iranian media in recent weeks as saying Iran’s oil exports “are done currently with the country’s tankers” with no need to use foreign vessels. He said there were fewer obstacles for exports to key clients including India and China due to the limited relief provided by the November deal.

When contacted, a senior NITC official said: “We are optimistic that everything is going to be okay. For the time being, things are as they were before.”

Among vessels also being used by Iran are some previously controlled by Irano Hind, an Indian-Iranian joint venture recently wound up due to sanctions, trade sources said. The former company’s fleet included at least three oil tankers. 

Oil exports

According to  Ole-Rikard Hammer of Norway’s RS Platou Economic Research, a return of Iranian exports was “no longer unrealistic”.

“Any return of Iranian flows would represent somewhat of a double-edged sword for the tanker market: More transportation volume, but also more vessels available due to reduced floating storage,” he said.

World powers have aimed to keep exports close to 1 million bpd to maintain pressure on Iran to abandon its nuclear programme. A return to Iran’s pre-sanction export level of around 2.2 million bpd is some way off.

Tehran faces hurdles ahead as many top ship insurers still balk at providing cover for Iranian oil cargoes, arguing that regulations are unclear over any potential claims process once the current six-month easing of sanctions ends in July.

“The main point for insurers... is the absence of confirmation from the US or Europe that insurers will be able to respond post 20 July to claims/liabilities arising during the six-month suspension period,” said Andrew Bardot, executive officer of the International Group of P&I clubs, an association whose members insure the majority of the world’s tanker fleet.

“Which renders any cover provided during this period potentially and in all probability worthless,” he added.

Specialist Protection & Indemnity (P&I) insurers, mutually owned by shipping lines, dominate the market for insuring ocean-going vessels against pollution and injury claims, the biggest costs when a tanker sinks.

Vessels transporting Iranian crude have previously been left with limited alternatives, mostly set up by importers.

“While many insurers still remain wary of returning to the market given the short six-month window on sanctions relief permitted by the interim Geneva agreement, any perception that the agreement will be renewed for an additional six months, or more, beyond the July 2014 deadline will encourage more to do so,” said Mark Dubowitz, of US-based think tank the Foundation for Defence of Democracies, which supports tough sanctions on Iran.

“Already, we are starting to see NITC... beginning to make its first journeys in over a year. Any further easing of sanctions may encourage insurers to jump back into the market and allow NITC to come in from the cold,” he added.

AMMAN — Jordan is currently participating in the Lebanon Economic Forum, which opened on Saturday. Finance Minister Umayya Toukan, head of the Jordanian delegation, is scheduled to deliver a speech on Sunday during a session dedicated to the Syrian crisis and the current status in countries affected by Arab Spring uprisings. About 400 Arab business leaders, government officials, and representatives of investment commissions are taking part in the forum.