The Weekly Circuit
đź‘‹ Good Monday morning in the Middle East!
The week opened with a surprise OPEC+ announcement of broad production cuts that will boost oil prices around the world. The reductions by Saudi Arabia, the United Arab Emirates, Kuwait, Iraq, Russia and other member countries in the oil-producing group were presented as a necessary step to maintain price stability amid concern that the world banking crisis may lead to declines in petroleum demand.
The move on Sunday was swiftly criticized by the Biden administration, which has argued that higher oil prices will choke global economic growth. The U.S. has also sought to cap prices to prevent Russian President Vladimir Putin from using oil revenue to support the war in Ukraine. The voluntary production cuts are set to start in May and extend through the end of the year. Oil analysts say the reductions in supply could boost prices by $10 above the current benchmark price of nearly $80 a barrel.
While it guards against falling revenue from its vast oil reserves, Saudi Arabia is also putting out word to poorer regional allies that foreign assistance will henceforth come with new strings attached. Egypt, Lebanon and other aid recipients are being told that the price for future support will be economic reforms such as shrinking food subsidies and selling off state-owned companies, The New York Times reports.
Welcome to The Weekly Circuit, where we cover the Middle East through a business and cultural lens. Read on for the stories, deals and players at the top of the news. Please send comments and story tips to [email protected].
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MIAMI VENTURES
Investors dream big at Saudi-backed Florida summit
From WeWork founder Adam Neumann and former White House advisor Jared Kushner to LIV Golf Commissioner Greg Norman, a parade of investors and entrepreneurs mounted a stage in Miami Beach, Fla., last week to talk about why Saudi Arabia looms large in their future business plans, The Circuit’s Jonathan Ferziger reports. Neumann, now building a residential real estate business called Flow that secured $350 million in funding from Silicon Valley venture capital firm Andreessen Horowitz, told the Future Investment Initiative’s Global Priority Summit on Friday that he sees the desert kingdom as an ideal environment for reinventing the way people live and work.
Starting from scratch: “What’s happening in Saudi right now is they’re dreaming up cities,” the 43-year-old Israeli who popularized the concept of shared office space said in an onstage conversation (Click here for a video clip) with investors Marc Andreessen and Ben Horowitz. “You’re starting from scratch. And that’s unbelievable, because you can apply the right technology and the right energy from the first day.” Neumann, who also spoke about difficult personal lessons he drew after getting ousted as WeWork CEO in 2019, was among the most anticipated speakers at the two-day meeting sponsored by FII, a spinoff of the group’s annual economic conference in Riyadh, Saudi Arabia, that is colloquially known as Davos in the Desert. Both are backed by the kingdom’s Public Investment Fund, a $650 billion sovereign wealth fund whose investments run from crypto startups and gaming studios to the upstart LIV Golf league.
Sovereign wealth: Yasir Al-Rumayyan, governor of PIF and chairman of state oil company Saudi Aramco, opened the proceedings on Thursday by saying he expects the PIF to grow to $1 trillion in assets by 2025 and between $2 trillion and $3 trillion by 2030. As head of Aramco, whose 2022 net income of $161 billion was the highest of any publicly traded company in the world, Al-Rumayyan said the company is committed to mitigating climate change but that shifting to sustainable energy sources needs to be gradual. “Some of the governments around the world bullied the oil and gas companies,” Al-Rumayyan said. “It takes time to have a transition from fossil fuels to renewables.”
Great opportunities: Kushner, founder of Affinity Equity Partners, which has received a reported $2 billion in investment from the PIF, said he sees great opportunities (Click here for a video clip) in both the Saudi kingdom and the Florida city where he moved after departing the White House. “I think Saudi Arabia and Miami are two places in the world that are shining examples of places that are on the rise, places that are not locked down by the past, places that are open-minded, [where] people are coming together,” he said. Miami Mayor Francis X. Suarez, who opened the conference alongside Al-Rumayyan, said he learned about the opportunities in Saudi Arabia when he attended the three-day Riyadh meeting in October, which drew more than 6,000 participants, and agreed to host the Priority Summit in his city. Notable attendees included investors Nelson Peltz of Trian Fund Management, Steve Wynn of Wynn Resorts, Josh Harris of 26North and Barry Sternlicht of Starwood Capital.
Arab-Israeli ties: Reflecting on the Abraham Accords, the 2020 set of agreements he spearheaded to normalize Israel’s relations with the United Arab Emirates, Bahrain, Morocco and Sudan, Kushner said he was gratified to see regional political changes leading to wider commercial opportunities. The Miami conference comes amid efforts by Americans and Saudis to ease tensions between the two countries, which have been close allies for more than seven decades. “The practical implications have been tremendous right now,” he said. “You have business happening in the Middle East that would not have been… you have defense agreements that are happening, which wouldn’t happen… The biggest thing for me is really two things. Number one is you’re seeing Arabs now, finally, and Muslims being able to say nice things about Israel and Jews, and you’re having human-to-human connections, which I think is now finally pushing back against the opposition, which is hard.”
Click here to read the full story.
DRILLING DEEP
Emirati-U.K. partnership buoys Israeli offshore gas field
A year and a half after Mubadala Petroleum in the United Arab Emirates sealed a deal to buy 22% of Israel’s offshore Tamar gas field, the Gulf state’s Abu Dhabi National Oil Co. is teaming up with BP to tap the energy resources of those same Eastern Mediterranean waters, Robert Lakin reports for The Circuit. The agreement announced last week to acquire 50% of Israel’s NewMed Energy is valued at about $2 billion and will take the Israeli company formerly known as Delek Drilling private. It comes just as a free-trade pact between Israel and the UAE took effect April 1, strengthening commercial relations between the two countries that normalized their political ties with the 2020 Abraham Accords. Israeli and Emirati leaders say they expect bilateral trade to reach $10 billion by 2026. In another major deal enabled by the accords, Abu Dhabi’s ADQ holding company leads a consortium that offered in December to buy control of Israel’s biggest insurer, Phoenix Group.
Biggest reservoir: Adnoc, the world’s 12th-largest oil company, is joining with BP, the fourth-largest, to buy 45% of the free-floating shares held by the public in NewMed along with about 5% of stake held by Delek Group, the holding company owned by Israeli billionaire Yitzhak Tshuva. NewMed, which trades on the Tel Aviv Stock Exchange, holds a 45% stake in the Leviathan gas field located 80 miles off the coast of Haifa. That field contains an estimated 22 trillion cubic feet of gas, the largest find yet in the Eastern Mediterranean, and is operated by Chevron, the world’s seventh-largest oil company. In its earlier incarnation as Delek Drilling, prior to its February 2022 rebranding as NewMed, the company was a key player in the exploration and development of the Tamar, Karish and Tanin natural gas fields. Under a natural gas framework agreement in 2015, the Israeli government required Delek to sell its holdings in those three fields to bust up its monopoly and that of its partners.
Global stage: NewMed CEO Yossi Abu said in a social media post that the deal will likely “catapult NewMed Energy from the regional to the global stage.” The company plans to make a final decision on the deal in the second half of 2024, according to the Financial Times. “The offer we received is the result of the warm relationships and bridges we have built in recent years with the energy companies working in the region, and is an important vote of confidence – the most significant given to the Israeli gas market in general, and to the business and assets of NewMed Energy in particular,” Abu told the FT. “Although Chevron is the operator, having a new player like BP and Adnoc will definitely enhance our ability to move this project forward.”
More to discover: The deal refocuses a spotlight on the promise of investing in the Eastern Mediterranean’s offshore energy resources. Three years ago, it was Chevron that saw the promise of Leviathan, ultimately acquiring a 39.7% stake in the field when it bought Noble Energy. From a geopolitical perspective, that set the stage for Mubadala’s purchase of the Tamar field interest, Simon Henderson, the director of the Bernstein Program on Gulf and Energy Policy at The Washington Institute for Near East Policy, wrote in a March 29 report. “If the NewMed bid goes through, BP will bring its enormous exploration experience to the Eastern Mediterranean, which is thought to have more reserves waiting to be discovered.”
Click here to read the full story .
Circuit Chatter
Water Delivery: Saudi Arabia is planning to build the world’s biggest desalinated water distribution system, digging 12,000 kilometers of tunnels across the kingdom.
Natural Pearls: Engineers from MIT are working with gemologists in Bahrain on a system to distinguish natural pearls from cultured pearls and reinforce their value.
Police Mind Reader: A police conference in Dubai exhibited new surveillance tools, including a brain-wave reader to detect lies and cameras hidden in vape pens.
Easy Rider: The UAE and Israel agreed to recognize each other’s driver’s licenses after a year of negotiating the terms. The new rules take effect immediately.
Edible Oils: Dubai’s DP World is building a terminal for edible oils at the Port of Berbera in Somaliland, seeking to reduce supply chain costs and create jobs.
Desert Wellness: Rosewood Hotels & Resorts will open a 1,300-room wellness retreat on Saudi Arabia’s Red Sea coast that will be called Redwood Amaala.
Meatless Manufacturer: Dubai’s IFFCO opened a factory that will exclusively produce plant-based meat as the market for vegetarian and vegan food grows in the Gulf.
Closing Circuit
Spin Cycle: Cisco Systems plans to acquire Israel’s Lightspin, a cloud security platform, for an estimated $200 million.
Chinese Partners: Saudi Aramco will buy 10% of Rongsheng Petrochemical for $3.6 billion and partner with two other companies as it strengthens ties with China.
Workflow Help: Israel’s env0, which develops software for automating and managing workflow, raised $18.1 million in a funding round led by Venture Guides.
Interior Redecoration: Egypt’s sovereign wealth fund will spend $26 million to revamp the old Interior Ministry in Cairo as a three-star hotel and serviced apartments complex.
To Life: Israel’s Longevity Venture Partners said it has raised $30 million to invest in companies and technologies that support the earth’s aging population.
Dream Homes: Sales of luxury homes in Dubai are expected to jump 14% this year, led by Chinese buyers newly freed to travel from COVID-19 restrictions at home.
Cyber Fences: Japan’s Fujitsu and Mitsubishi Electric were among the investors in a $16 million round to raise money for Israeli cybersecurity company SCADAfence.
Mark of Health: Israel’s Zorro, which helps companies and employees optimize health benefits, raised $11.5 million in a seed round co-led by Pitango and 10D.
Room Service: Israel’s Reeco, which helps hotels order supplies from pasta to cleaning mops, raised $10 million in a seed round led by Net Capital and Joule Ventures.
On the Circuit
Khaled bin Mohamed bin Zayed was appointed crown prince of Abu Dhabi on March 29 by his father, Sheikh Mohamed bin Zayed, president of the UAE and ruler of Abu Dhabi.
Craig Pollock, the British veteran Formula One manager and team owner, said he is in discussions to form a new team that may be based in an unspecified Gulf country.
Mohamed Al Khaja, the UAE’s ambassador to Israel, invited guests of the Jewish, Christian, Muslim and Druze faiths to an Iftar meal at his residence on March 28, the first time he has hosted the traditional dinner in Israel to break the daily Ramadan fast.
Ahead on the Circuit
April 26-27, Dubai, UAE: FiNEXT Awards and Conference 2023. A platform for the global investors, financial institutions and fintech companies to connect and interact. Le Meridien Dubai Hotel and Conference Centre.
May 2-3, Tel Aviv, Israel: Agritech Israel. Introducing innovative farming technologies for growing food and meeting the challenges of climate change, water shortages and desertification. Expo TLV.
May 3, Tel Aviv, Israel: GoForIsrael Investment Conference. Connecting global investors and technology companies. Co-hosted by Cukierman & Co and Catalyst Investment. Tel Aviv Hilton
May 11, Dubai, UAE: Annual Private Wealth Middle East Forum. Conference connecting family offices, high-net-worth wealth managers and investors. Shangri-La Hotel.
May 15-16, Abu Dhabi, UAE: Mobility Live Middle East 2023. Conference brings together investors, corporate executives, policymakers to discuss the future of transportation. Abu Dhabi National Exhibition Center.
May 23-25, Doha, Qatar: Qatar Economic Forum. Qatari financial leaders, international investors and corporate executives meet to discuss global financial challenges.
Culture Circuit
Quran Competition: Saudi Arabia is running a TV talent show for the second year with a top prize of more than $1 million for reciting verses from the Quran and the traditional call to prayer. Some 50,000 entrants from more than 100 countries applied to compete on the show, called “Otr Elkalam,” or “Scent of Speech,” and broadcast during the month of Ramadan on MBC1. Participants are judged by a jury of experts in recitation, phonetics and musical structures. In the first season, Morocco’s Younes Mustafa Gharbi won the Quran recitation category, earning a prize of 5 million Saudi riyals ($1.33 million).
