Saudi Arabia’s state oil giant Saudi Aramco is poised to sign about $50 billion of deals with US companies, it’s CEO told reporters on Saturday.

The deals include 16 memoranda of understanding (MoUs) with 11 large oil companies and an unspecified further number of joint ventueres, Amin Nasser said.

The companies include Jacob’s, Schlumberger, Emerson, Honeywell, Haliburton and McDermott International Inc, among others.

These companies are “trying to expand their footprint in the kingdom by expanding trade between the two sides,” he said.

The deals are expected to create thousands of jobs, many of them for Saudi nationals.

Nasser was speaking ahead of the Saudi-US CEO Forum in Riyadh as the kingdom prepared for the arrival of US President Donald Trump.

The world’s biggest crude oil exporter also plans to sign accords also with Baker Hughes Inc., KBR Inc., Jacobs Engineering Group Inc., Nabors Industries Ltd., Weatherford International Plc and Rowan Companies Plc, two people familiar with the matter said this week.

* with additional reporting from Bloomberg

JEDDAH: The oil market is expected to continue improving, said Saudi Aramco President and CEO Amin H. Nasser.

“The good news is that the market is moving toward rebalancing,” he told the 18th International Oil Summit in Paris.

“This returning confidence is being driven by improving fundamentals, and accelerated by the production agreement reached last year,” he said, referring to a deal reached between the Organization of the Petroleum Exporting Countries (OPEC) and other producers to cut production.

Despite short-term volatility in oil prices, Nasser said there had been “a rapid drawdown of floating storage during the first quarter of this year.”
The oil industry should continue to invest in long-term projects despite short-term price volatility, he added.
“An estimated 30 million barrels per day of oil production capacity needs to be developed over just the next five years… and incremental, short-term and lower capital investment projects are just not going to cut it,” Nasser said.
“So while the short-term market points to an oil surplus, the supplies required for the years ahead are falling behind substantially because the vast, long-term investments in proven and reliable energy sources are not being made.”
He said oil will play a key role in meeting future global energy demand, and the concepts of oil demand peaking and leaving stranded resources in the ground are “misleading.”
He added: “The global economy is forecast to double in size by 2050, while roughly 2 billion additional people will need access to affordable energy, so overall demand for energy will be substantially higher than today. This higher demand will only be met by using all energy sources, because despite the progress being made, alternatives still face multiple challenges. We should all anticipate a long and complex energy transition.”
The CEO said: “The conclusion is clear: Oil demand will continue to grow… in absolute terms… at fairly healthy levels… for the foreseeable future.”

The largest GCC economies have started 2017 on a relatively firm footing, with both Saudi Arabia’s and the UAE’s purchasing managers’ indices showing faster than expected expansion in the non-oil private sector.
The Emirates NBD/Markit Saudi Arabia Purchasing Managers’ Index (PMI) rose to 57.0 in February from 56.7 in January, the highest reading since August 2015, whilst in the UAE the PMI rose to 56.0 in February from 55.3 in January, a level last seen in September 2015. This tallies with the pick-up in growth seen around the world at the start of the year, with activity readings for many other developed and emerging market economies on the rise.
In the UAE and Saudi Arabia, the main drivers of the improvement were output and new orders, with improving external demand and new projects both being cited as the key factors behind them. In the UAE’s case it appears as if the projects related to Dubai’s Expo 2020 are beginning to kick in, and in Saudi Arabia business optimism is likely to have benefitted from the settlement of arrears by the government, easing liquidity in the banking sector and the relative stability of oil prices.
The oil price impact is best seen on a year-on-year basis, with today’s levels contrasting with the period a year ago when oil fell below $30 per barrel, which saw corresponding softness in PMI readings.
It may be counterintuitive that the non-oil sector appears to do well when the oil market perks up, but the reality is that regional sentiment is very closely tied to the price of oil. Moreover, much of the region’s non-oil activity depends to a varying extent on the price of oil, such as the petrochemical sector, construction and manufacturing.
Nevertheless, 2017 is likely to remain a challenging year, with oil markets recently showing us that they could remain quite volatile, especially ahead of the next OPEC meeting in May. Domestically too households in Saudi Arabia are expected to face further cuts in subsidies and relatively low wage growth. These vulnerabilities are also revealed in the PMI data which show that even as output and new orders rise, the benefit is still not feeding through into job creation. In the UAE the employment component eased to 51.3 in February from 51.9 in January, while in Saudi Arabia the employment index remained close to the neutral level at 50.3.
More encouragingly, however, there appears to be some nascent stirrings of inflation. Even as input costs have firmed recently, companies have generally been reluctant to pass these on to consumers, with output prices remaining unchanged overall, causing profit margins to be squeezed. However, this might be about to change as selling prices in Saudi Arabia rose in February at their fastest rate since August, while UAE selling prices rose above the 50 mark for the first time since October 2015.
The readings for output prices remained low compared to the other headline indices in the PMI data, but the fact that they both pushed up at all bears out the evidence from some other national inflation data that pricing power may be beginning to return.
In the UAE, for instance, inflation jumped 0.7 percent month-on-month (m/m) in January on the back of sharply higher transport costs (0.8 percent m/m) as petrol prices were increased. This caused the annual inflation rate to rise to 2.3 percent from 1.2 percent in the year to December.
This increase was not replicated in Saudi Arabia, however, which saw annual inflation falling in January, illustrating that its recovery path is more difficult.
Of course the energy dynamic is the dominant factor in most of the inflationary trends discernible across the MENA region, and as we have seen in recent weeks these can change quickly. Exchange rates are also playing a part. Egypt’s situation is reflecting all of these factors with the reform of subsidies, the introduction of new excise duties and the sharp devaluation of the Egyptian pound all contributing to inflation.
The headline consumer price index in Egypt hit 28.2 percent year-on-year in January, up from 23.3 percent in December and 10.1 percent in January 2016.
Still there are also the beginnings of some of the positive effects of that devaluation, with the Egypt PMI pulling back significantly in February from the sharp contraction seen towards the end of 2016. The PMI continued to show an overall contraction last month with a reading of 46.7, but the pace of decline was noticeably much softer than in January when it stood at 43.3, and it was the highest reading in six months.
Most encouragingly, the new exports index also improved to its strongest levels since August 2015, suggesting that the devaluation is already having a positive effect on external demand. Egypt is by no means out of the woods yet, but there are promising signs that the worst may be over, especially as it ties in with other evidence that the region is starting to see some green shoots.

A groundbreaking iron product from Cork-based life sciences start-up Solvotrin Therapeutics looks set to disrupt the €10 billion global market for oral iron supplements.
Iron supplements are not easy on the body. They can cause constipation, vomiting and nausea and unsurprisingly this puts a lot of people off taking them. As a result iron deficiency is a big problem, affecting an estimated two billion people worldwide.
The market is crying out for a user-friendly supplement that offers all of the benefits associated with taking iron without the nasty side effects and this is exactly what Solvotrin has created. The product is called Active Iron and within weeks of its launch late last summer it was snapped up by Boots in the United Kingdom for exclusive distribution in 500 of its branded stores and 300 of its independently owned Alphega pharmacies. The product is also on sale here through pharmacies.
Iron is the only nutritional deficiency common in both developed and developing countries. It is also the most frequent cause of anaemia in women, children and older people.
Solvotrin CEO Pat O’Flynn says that as of now the market is “dominated by a range of poorly absorbed and poorly tolerated products. By contrast Active Iron is a ferrous sulfate supplement with a unique, patent-protected formula that boosts iron absorption while improving gastrointestinal tolerance and the taste characteristics of oral iron”.
Scientific input
O’Flynn is the business brain behind Solvotrin. The scientific input has come from his co-founders Prof John Gilmer of Trinity College Dublin and Prof Mark Ledwidge of UCD. Additional scientific backup was provided by Prof Anne Marie Healy, head of the school of pharmacy and pharmaceutical sciences at Trinity College.
“Professor Gilmer is a pharmaceutical chemist with a particular research interest in why the gut reacts against certain products, such as iron and aspirin, and how this can be overcome,” O’Flynn says.
“Active Iron is our launch and lead product and we went with it first as it was the platform that allowed us to get to market fastest. Our aspirin platform is still in development and our intention as a company is to develop a range of products using innovative science to answer unmet clinical needs. We are already looking towards launching our second product, a women’s health-focused product, towards the end of 2017.”
Solvotrin specialises in the creation of pro drugs, which are modified forms of existing therapies. The formula for Active Iron is a closely guarded secret, but Prof Gilmer describes it as “a unique composition comprising iron and denatured protein that increases absorption and reduces the reactive oxygen species generated by iron that causes toxicity.
“Currently absorption rates from supplements are 5-10 per cent with the rest remaining in the gut where it causes the problems people are familiar with such as epigastric pain and diarrhoea. Active Iron has an absorption rate of two to three times that of leading competing products.”
O’Flynn is an entrepreneur who formed the hazardous waste-processing company, Safeway, in 1997. In 2001, Safeway teamed up with leading Dutch waste-management company AVR to form a joint venture and the company was subsequently acquired by international utilities operator Veolia in 2008.
O’Flynn’s introduction to Prof Gilmer came through Enterprise Ireland’s Business Partnering Programme. “I was approached by Enterprise Ireland to look at 15 different technologies across a number of third-level institutions that had been identified as having the potential to be commercialised and turned into substantial indigenous companies,” O’Flynn says.
“What really attracted me to Professor Gilmer’s research was its potential. In the case of Active Iron it was clear that its absorption level was far superior to even the best products available but with none of the side effects.
“It also ticked all of the boxes one typically looks for with this kind of investment such as a strong scientific base, proof of concept, robust patents and the fact that it was possible to manufacture the product and to scale it. My main role was to bring business acumen to this advanced technology and to help it form a life of its own as an independent commercial entity. To this end we established Solvotrin Therapeutics in 2010.”
Produced in the US
The founders were keen to have Active Iron made in Ireland, but it proved impossible to find a local manufacturer that could produce it on the scale required. The product is currently being produced in the United States (where the market for iron supplements is estimated at over $1 billion) and packaged in Europe but O’Flynn is not ruling out having it made in Ireland at some point.
He is also not ruling out the possibility of Solvotrin setting up its own manufacturing plant. “A lot of expertise has been built up in Ireland around pharma manufacturing due to the scale of FDI here over the years and in areas such as compliance, Ireland is state of the art, so the skillsets are available,” O’Flynn says.
Active Iron has been five years in development and investment in the venture to date has been in the region of €10 million, with funding coming from the founders, private equity and Enterprise Ireland under its HPSU fund.
The most recent round (€3 million) was led by Irish-based Elkstone Capital Partners and will be used to complete the product’s commercialisation and launch process. The company currently employs 15 people and this is expected to rise to 50 people by the end of 2018.
“The Holy Grail with iron and aspirin products in particular is the side effects profile and being able to significantly reduce, if not eliminate, them is a huge breakthrough,” says O’Flynn.
“In a trial of 500 consumers before Christmas last year, for example, nine out of 10 people were side effects-free with Active Iron. Because of its unique formulation we believe that Active Iron could potentially become the number one iron brand globally and it is really exciting that Irish research can travel the globe in this way.”

A gauge of the Dubai economy says the emirate’s business conditions improved in March amid gains in output, new orders and employment. The latest Emirates NBD Dubai Economy Tracker says that the wholesale and retail, travel and tourism and construction industries led the advance, which capped the index’s strongest quarter since the first quarter of 2015.

The index rose to 56.6 in March from 56.2 in February.

Emirates NBD sponsors the monthly survey of business conditions in the emirate’s non-oil private sector by Markit, a financial information services company. A reading above 50 suggests that the non-oil economy is growing, while a reading below 50 suggests that it is contracting.

“The March data is consistent with sharp improvements in business conditions across Dubai’s non-oil private sector economy, with output, new orders and employment all expanding at a faster pace than the previous month,” said Tim Fox, head of research and chief economist at Emirates NBD.

The best performing subsector was wholesale and retail, whose index stood at 57.1. The second-best performer was travel and tourism at 55.3, followed by construction at 54.8. Those are the only three subsectors covered by the survey.

While the latest data collected showed an increase in overall employment, the pace of job growth was relatively subdued, the data collected shows.

There were however other clearer bright spots such as when it came to new work and business activity expectations. The pace of new business growth, which advanced for the thirteenth straight month, rose by the highest degree in over two years. Those polled for the survey said that the gains were due to an improvement in economic conditions, an increase in construction as well as promotions to boost sales.

When it came to business optimism going forward, respondents were strongly optimistic about the next 12 months even though the intensity of the optimism slipped to its weakest in seven months despite the increasing output. The report did not specify the reason behind the weaker optimism in relative terms.

The finding of Markit accord with what has been seen on a nationwide basis in the month of March. For the UAE as a whole non-oil businesses were at their most confident in more than a year and a half in March. That adds to signs throughout the first quarter that the country is starting to recover from a slump induced by the low oil price.

According to the Emirates NBD/ IHS Markit Purchasing Managers Index for the UAE as whole released last week, non-oil PMI climbed to a 19-month high of 56.2 in March, from 56.0 in February.

Yet while there are a number of encouraging signs of a rebound in economic growth, not everyone is totally convinced that this is the year that the economy will bounce back after several difficult years amid low commodity prices.

“With regards to Dubai, we are not expecting growth to pick up strongly this year as a revival of new investments pipeline beyond what is already underway may take longer to materialise while private consumption could remain constrained this year,” said Dima Jardaneh, an economist at Standard Chartered in Dubai.

Ms. Jardaneh said she had recently downgraded her economic growth projection for the UAE as a whole for 2017 to 1.5 per cent from 2.1 per cent.

Saudi Arabia’s non-oil private sector growth eased marginally in March, despite sharp rates of expansion in new orders and output underpinning the overall upturn, according to a new survey.
Data from the Emirates NBD Saudi Arabia Purchasing Managers’ Index (PMI) showed that as a result, companies raised input buying to the greatest extent in 18 months.
Despite greater output requirements and increasing backlogs, companies raised their payroll numbers only marginally while input price inflation climbed to a seven-month high.
The headline seasonally adjusted PMI slipped from February’s 18-month high of 57.0 to 56.4 in March. The PMI average for the first quarter of 2017 (56.7) was the highest in one-and-a-half years.

Tim Fox, head of research and chief economist at Emirates NBD, said: “Saudi Arabia’s non-oil economy appears to be holding up well amidst ongoing reductions in oil production. Unlike previous periods of expansion however, gains in output and new orders are not being matched by new job growth, while competitive pressures appear to be keeping a lid on the prices firms are able to charge to customers.”
The above-50.0 reading for the headline index reflected steep increases in output and new work, though the respective rates of expansion eased since the preceding month.
Anecdotal evidence indicated improvements in economic conditions, new projects, more construction work and increased marketing efforts. The rise in new business was mainly driven by domestic demand as growth of new export orders eased to the weakest in four months and was modest.
Firms that reported higher levels of new work from abroad, commented on increased marketing efforts, good quality of products and internationally competitive prices offered.
In response to greater output requirements, firms raised payroll numbers. However, the rate of job creation was only marginal.
According to the PMI report, firms remained strongly optimistic towards output over the coming year due to projects in the pipeline, construction work and expectations of further improvements in market demand.

Dubai remained by far the most favoured city as the Middle East and Africa (MEA) regional headquarters for the world’s largest 500 companies, according to a new study.

Dubai was well ahead of the next favoured city, Johannesburg, South Africa, according to the analysis of the 500 largest companies by revenue, as compiled annually by Fortune magazine.

Research company Infomineo found that of these 500 companies some 196 had a dedicated office to cover the region.

Of that total, 138 companies had their MEA headquarters in Dubai, way ahead of Johannesburg’s 58 and up 11 on the previous year, despite the pressure on Arabian Gulf economies because of the lower oil prices.

“Companies make these decisions on long-term trends and probably decided well in advance of the oil price slump,” said Martin Tronquit, Infomineo’s managing partner. “Dubai is by far the best place to be operating in the region from a legal standpoint, for connectivity and for living conditions.”

The emirate also benefits from what he calls “the network effect”, which explains why nearby Abu Dhabi, which has virtually the same infrastructural benefits and high living standards, has failed to get much spillover in terms of attracting major companies.

“There is not much difference between Abu Dhabi and Dubai, but historically Dubai didn’t have the advantage of being the oil capital and government centre so had to develop as the commercial and financial centre; so now is benefiting from that legacy,” Mr Tronquit said.

Last year, Dubai gained 11 new regional company HQs including Lockheed Martin, which changed from Abu Dhabi as it took a permanent chalet at Dubai World Centre, while Boeing also set up an office at Dubai South’s airport city.

Dubai was also favoured by the world’s largest financial institutions and auto companies, gaining five new regional HQs in the latter sector last year.

The region’s fastest growing city was Casablanca, growing by more than 150 per cent last year to 33 corporate regional HQs.

“Eventually when companies become really serious about Africa they need to set up sub-regional headquarters, because you cannot cover 54 countries from one location,” Mr Tronquit said.

Johannesburg is dominant in the south, Nairobi for the east and Lagos in the west and Casablanca is essentially the only choice for the north, he said. It is also the favoured HQ for francophone Africa.

“It has attracted a really diverse range of industries,” said Mr Tronquit. “It is the regional hub for Renault and has growing aeronautics manufacturing and FMCG [fast-moving consumer goods] sectors who want to serve Africa’s 200 million French-speaking customers.”