Author: Gordon Platt



By Gordon Platt


Iran is inching forward with its proposal for an “Islamic pipeline” to Europe.



South Pars field to connect with Europe

Iran, which has the second- largest proven gas reserves in the world, is inching forward with its proposal for an “Islamic pipeline” to Europe. Iran, Iraq and Syria signed a memorandum of understanding (MoU) for a $10 billion project involving the construction of 3,500 miles of pipelines delivering gas from Iran’s South Pars field.


Iran has already completed construction of a large part of its 800-mile portion of the pipeline, which could ultimately be extended through Lebanon and under the Mediterranean Sea to Europe.


Iraq’s oil minister and his Syrian counterpart signed the MoU in the southern Iranian port of Assalouyeh on July 25, along with Iran’s acting oil minister. Last year, Iran abandoned two major projects to export liquefied natural gas (LNG) after French firm Total and Anglo-Dutch group Shell withdrew due to international sanctions on Iran because of its nuclear program.


Meanwhile, in what amounts to a feather in its cap, debt-ridden Dubai has been selected to host the September 2013 meeting of Sibos. This is the first time the financial services event organized by SWIFT for more than 30 years will be held in the Middle East.


Dubai’s outstanding debt has increased to an estimated $31.5 billion, equivalent to 38% of the emirate’s GDP, according to the economics department of Saudi Arabian bank Samba Financial Group.


Samba says the level is manageable under usual debt-to- GDP indicators, but the repayment burden is large, given limited fiscal revenues of around $8 billion a year, and given that the budget is in deficit. Dubai’s sovereign credit default swap spreads and bond yields have been falling, suggesting that investors are confident the government will repay its direct debts.


Standard & Poor’s raised its sovereign ratings for Kuwait to AA from AA-, citing methodology revisions. The changes place more weight on Kuwait’s high GDP per capita and strong external and fiscal balance sheets. “The spillover from recent political events in the Middle East and North Africa into Kuwait appears minimal,” S&P; says.