Abu Dhabi Open For Privatisation.

Abu Dhabi will use its energy resources to diversify, privatise non-strategic industry sectors and complement Dubai by focusing on heavy industry, according to Shaikh Hamed bin Zayed al-Nahyan, chairman of the Abu Dhabi Economy and Planning Department. In late November he said: "We are interested in developing heavy industry, like aluminium, steel, petrochemicals, and related industries like automobiles. The Middle East can play a better role in these industries because of its position midway between world markets, its low-cost energy and its tax-free environment. Diversification from oil revenue is a challenge we have been facing for decades, but, at this time, I believe the odds are stacked in our favour. The time is now right for privatization... For 35 years the government has overseen the transformation of this country from among the world's lowest income groups to one of the highest. Developing the infrastructure and the economy has required a lot of attention.

Shaikh Hamed added: "We want to privatise all the services and industries that are not the core business of government. But strategic areas would not be privatised. Oil and gas, power and water, and some banks are considered strategic. When it comes to basic commodities and services, I see no reason for the government to have any stake in such companies in the long term". Asked why the UAE had attracted low levels of foreign direct investment despite its competitive advantages, he said: "We would like to attract more foreign investment, and yet we are capital exporters as well as...importers. First, we have to convince our own people to bring their capital back".

Shaikh Hamed made his comments in an interview in Emerging Abu Dhabi 2006, a business review of the emirate published by the Oxford Business Group. He said: "The [Abu Dhabi] government is examining issues of foreign ownership of companies and land, and I think new laws will be drafted soon that will make the UAE more attractive for foreign investment. The message is very simple Abu Dhabi is open for business".

Libya Is Selling Tamoil: Libyan Secretary-General (prime minister) Shokri Ghanem on Nov. 30 offered to sell more than 60% of his government's stake in Italian-based oil refiner Tamoil and said it may offload its entire interest if it received a good price. On Dec. 1 Reuters quoted "a senior [Libyan] government official" as saying many foreign firms, including Italy's ERG and Repsol/YPF of Spain had expressed interest in buying into Tamoil.

Tamoil, originally owned by the Tamraz family of Lebanon, is worth over $2 bn based on current industry valuations, and Libya owns around 45% of the company. In a statement, Ghanem said: "We are open to proposals to sell all or part of the state stake in Tamoil but the decision will come after assessing the offers we are getting. The share now on offer for sale is above 60% of the state stake in Tamoil. We expect the full success of this operation because there are many offers and the oil market is very brisk".

An Italian newspaper reported recently that Italian energy group API was preparing a bid for Tamoil and Total of France had expressed an interest. Tamoil owns a 90,000 b/d refinery at Cremona, Italy, a 72,000 b/d refinery at Collombey, Switzerland, and a 100,000 b/d plant in Hamburg, Germany. It also owns distribution networks in Italy, Germany, Switzerland, the Netherlands, Spain and Africa.

The Libyan state-owned group Oilinvest bought into Tamoil in 1988. In 1993 it sold a 55% stake to a consortium of private European investors as fears grew that UN sanctions could be extended to include a freeze on Libyan assets abroad and a ban on oil exports. Tripoli remained in control of the company.

A global shortage of crude oil processing capacity has boosted refining margins in the past year. Oil refining margins will remain firm for years to come, and this expectation has led to a resurgence of interest in the traditionally troubled sector.

Total, Europe's largest oil refiner, and Repsol/YPF have both announced big increases in investment in refining. But European bidders could face competition from outside the region. State-run Indian Oil Corp (IOC) bid for the Turkish refiner Tupras recently, and the largest independent US refiner, Valero Energy Corp, said in June that it was considering entering the European refining market.