Move aims to amplify Zambia’s renewable energy capacity
Top US futures exchange CME Group Inc doubled its stake in DME in February. Sources in the industry have said that it is unhappy with the slow progress of the flagship Oman contract.
“I want to take the DME on a totally different direction in terms of the focused approach on NOCs. Obviously, we will always be interested in having discussions with them but they are not our primary focus at the moment,” Christopher Fix said in an interview.
The exchange will go after oil consumers such as China, Fix said, instead of knocking at the doors of lukewarm NOCs in vain. It is also in talks with six local Arab banks to get them involved in the financing of oil cargoes priced off DME.
“In our exchange alone we’re doing $1 billion to $1.5 billion worth of physical oil financing a month and it is coming from foreign banks. Why shouldn’t it come from local banks?
“Western banks are slowing down...they don’t have the dollars to lend,” he said.
Fix said the exchange has spoken with a total of six banks from Saudi Arabia, Bahrain and the UAE, adding that they were all looking to start the financing business as early as January next year.
The DME has been pushing to promote Oman futures as a benchmark for markets east of Suez. It argues that much of the world’s crude output is produced in the region and therefore should be priced in the Middle East, rather than via established global benchmarks like Brent and U.S. crude futures which do not fully reflect the regional market.
The exchange is also studying the launch of a new contract in refined oil products, potentially fuel oil, to create a pricing mechanism for the opaque but booming bunkering market refuel ling ships in Fujairah.
“When we look at the refinery complex, you have the inputs, which is going to be a Middle Eastern sour crude, so it makes total sense for us to look at the other part of the barrel, which is coming out on the other side of the refinery complex,” Fix said.
“There is definitely a need to have a transparent price discovery mechanism for physical, for example fuel oil, because of the fact that Fujairah is such an enormous bunkering terminal.”
Refined oil products in the Middle East and Gulf are usually priced with a discount or a premium against benchmarks in Singapore or Europe. Traders peg fuel oil and bunker sales in Fujairah against Singapore spot quotes.
“We don’t feel that the existing benchmarks reflect at all really what’s happening in our market,” Fix said. He said the exchange was looking at the possibility of a new contract in other refined products as well but studies on fuel oil have seen the most progress.
“We have a long way to go in terms of successful design of a contract...right now we’re in the process of talking to the market,” Fix said, adding that the exchange had been talking to traders in Singapore about the matter.
The CME, Dubai Holding and Oman’s sovereign wealth fund Oman Investment Fund set up the DME in 2007 as a joint venture along with oil and financial firms like Shell, Vitol , Goldman Sachs and JP Morgan. — Reuters
The latter group will now hold a combined 12 per cent stake after the recapitalisation in February which also took Oman Investment Fund’s holding to 29 per cent from 25 per cent and reduced the debt-laden Dubai Holding’s stake to nine per cent from 25 per cent. —
Move aims to amplify Zambia’s renewable energy capacity
More vertiports will be set up in strategic locations across Abu Dhabi, including major business hubs and tourism destinations
Kerala will decide the fate of 194 candidates as polling on all 20 parliamentary constituencies will be held in the second phase
Pecker is a key witness in the case against the former US president, who is accused of falsifying business records to cover up hush-money payment
The oil and gas conglomerate and Fifa, the world governing body, sign major sponsorship agreement
Toomaj Salehi risks being hanged after the conviction on the Shariah charge of "corruption on Earth" by a Revolutionary Court
Aid groups warn any invasion would add to already-catastrophic conditions for Gaza's 2.4 million people
The American they will face Australia and Serbia on July 15 and July 17 as part of their preparation for the Paris Olympic Games