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UAE business activity at 11-month high in May

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Growth in business activity in the United Arab Emirates' non-oil private sector edged up to an 11-month high in May, a purchasing managers' survey showed on Tuesday.

June 5, 2012 11:45 by



Growth in business activity in the United Arab Emirates’ non-oil private sector edged up to an 11-month high in May, a purchasing managers’ survey showed on Tuesday.

The HSBC UAE Purchasing Managers’ Index, which measures the performance of the manufacturing and services sectors, increased to 53.8 points last month from 53.5 in April. The adjusted index remains above the 50-point mark which separates growth from contraction, the survey of 400 private sector firms showed.

“It’s a good reading and, given the weakness PMIs are showing elsewhere in the world, the pick up in the new orders and employment scores is particularly encouraging,” said Simon Williams, chief economist for the Middle East and North Africa at HSBC.

“The UAE’s reliance on external demand and foreign funding, though, and the limited fiscal stimulus that’s in place, mean it will be hard for the economy to continue to build momentum, particularly as we move into the hot summer months.”

UAE firms saw output growth ease to 54.8 points in May from a 10-month high of 55.4 in April. But new orders advanced to an 11-month high of 59.1 points.

Employment across the UAE’s non-oil private sector rose for a fifth month in a row, and at the sharpest pace since last July, the survey showed.

Rises in both salaries and purchasing costs led to a sharp increase in overall input price inflation to 57.0 points in May from 55.8 in the previous month.

Consumer price inflation in the UAE, one of the world’s top five oil exporters, is forecast to climb to 2 percent this year from 0.9 percent in both 2011 and 2010, a Reuters poll of analysts showed in March.

Minister of Economy Sultan bin Saeed al-Mansouri on Monday cut his forecast for the country’s gross domestic product growth this year, predicting expansion of around 3 percent instead of the “almost 4 percent” which he expected in March. Last year, the economy grew 4.2 percent.

Irat[ c�� P) er said, though he declined to comment on Japan’s Showa Shell, in which Shell has around a one-third stake and which imports Iranian crude.

 

Output from Iraq’s giant Majnoon oilfield, which Shell is developing and operates, will reach 175,000 barrels per day (bpd) before 2015, up from around 65,000-75,000 bpd now, he said. Shell is in talks with Iraq to cut its eventual output target from the field from 1.8 million bpd to 1 million bpd in 2017, Reuters reported last month.

LNG NEEDS

Speaking on the liquefied natural gas (LNG) market, Shell said exports of the fuel from the United States would help meet rapid growth in world demand.

“It’s hard to see how the industry can lift supply to meet the speed of demand without a contribution from North America,” De la Rey Venter, Shell’s head of global LNG, told the same conference earlier, adding he expected the global LNG market to remain tight until at least 2015 due to a dearth of new supply projects coming on stream as a result of a slowdown in investment after the global financial crisis.

The market may be tight for longer, as the track record for project delays in the industry means that those scheduled to start in 2015 could actually start later. “Projects with a notable delay have become the rule, not the exception,” Venter said.

Rex Tillerson, CEO of Exxon Mobil Corp, said his company, the world’s largest publicly traded energy firm, is considering exporting LNG from the United States. Exxon Mobil has been North America’s largest natural gas producer since it bought XTO Energy Inc in 2010.

Asked at the conference whether Exxon Mobil planned to export LNG from the United States, Tillerson said: “We are studying it.”

Shell’s Voser said he expects global LNG demand to double by 2025. Shell sold 18.83 million tonnes of LNG in 2011, up 12 percent from 2010 on higher output from Qatar, Nigeria and Russia. The company has 8 million tonnes per annum (mtpa) of LNG under construction, all in Australia, and has some 15 mtpa of new LNG capacity under study globally.

Shell, whose gas output is likely to outpace its oil output for the first time this year, is to anchor the world’s largest floating offshore production vessel off northwestern Australia. The Prelude project, likely to cost over $10 billion, will produce 3.6 mtpa of LNG by 2017 for energy-hungry Asia.

In March, Shell signed a production-sharing contract with China National Petroleum Corporation (CNPC) to develop a shale gas block in China, the first deal of its kind in the country.

(Reporting by Florence Tan, Writing by Simon Webb; Editing by Himani Sarkar and Ian Geoghegan)



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