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May 2010

News Letter - 4th May 2010

First of all we apologise for the “extended” time interval since our last newsletter. We’ve been extremely busy relocating our Dubai operation and as you can imagine this has impacted the time we have to put together the newsletter. However we are pretty much settled now so hopefully normal operations can resume.

A lot has happened since our last communication. There was the ash cloud caused by the volcanic eruption in Iceland that closed European airspace and cost millions. It served to illustrate that despite massive advances in communication technology we are still so heavily depended on air travel. The editor himself only just avoided the disruption by fortuitously leaving London about eighteen hours before the airspace was closed. In terms of airline profits Emirates has reported losses of USD 66M and Air France-KLM USD 47M.

UAE expat numbers fell 4.2% in the last quarter of 2009 and remittances were down 15% over the year. Expat numbers rose in Saudi Arabia and Qatar but fell across the rest of the Gulf. Saudi continues to expand awarding contracts work worth $ 5.57Bn during the first quarter of 2010; most of which was geared towards roads, hospitals and schools. 25/04/10

UAE banks will face the brunt of the DW debt restructuring in the second quarter of this year. The exposure of these banks is said to be $ 15Bn. The central bank has advised lenders they “are not required to provision their related exposure” until there is more clarity!!! Effectively this instruction allows domestic banks to avoid taking a hit related to DW in the first quarter but once the banks accept the DW debt restructuring proposal they will have to announce the accounting impact – in order words Q2!!! Hopefully regardless of what they’ve been told at least some banks will have started booking provisions already. However there is some good news on the Dubai World debt refinancing issue: indications are that DW will pay creditors an additional 1% on the maturity of rolled over loans that are part of the $14.2B debt restructuring. It is believed this 1% is in addition to the 1% previously tabled by the firm. We applaud this move as it shows the world that DW is prepared to honour its commitments and compensate creditors for the extension of their credit terms. We would suggest that the rate is tied to LIBOR if this hasn’t been included already.

We reported some time ago that DP World is looking for a listing on the LSE and we are now informed their shareholders have approved an amendment allowing this to go-ahead. Once gain DP World is not affected by the restructuring plan of Dubai World and is seeking the LSE listing to provide additional liquidity not to raise additional capital. We have also heard that DP World is investing $735.3M in the port of Callao in Peru.

In our capacity as ME region representatives of the IMarEST; Carmania attended the ShipTek 2010 conference and exhibition in Dubai on April 18th and 19th. The exhibition was small (only about twenty stands) but was great in that we met many familiar contacts and made several new ones and we thank all of you who stopped by and took the time to thank us for this newsletter. Your compliments and encouragement were most gratifying. The (too) few session of the conference we were able to attend were interesting also but unfortunately the organisers (Marine Biz TV) are not going to be sending copies of the presentations to the delegates that attended. This is indeed unfortunate as we believe many of us would like to either recap what was presented or be able to review those presentations that we missed.

The event culminated in the 4th Marine Biz TV International Maritime Awards. We were invited at the behest of Marine Biz TV as the IMarEST publication “Shipping World and Ship Builder” was nominated for the “Best Maritime Media” award. (We should at his point note that amongst the competition was “The Naval Architect” a publication from the Royal Institution of Naval Architects and that this won out on the night and our congratulations go to RINA for an excellent publication.) Unfortunately the volume of the music and announcements emanating from the stage made even a trip to the cinema seem relatively quiet. This combined with a bare minimum of refreshments and a limited buffet dinner meant that many people left shortly after the awards began without bothering to eat.

Also during this period we’ve had the terrible loss of the Deepwater Horizon in the Gulf of Mexico. A lot has been said about this and more will surely follow but within days of the tragedy a source reported as follows: “An eyewitness was in the moon pool under the drill floor and survived the explosion. According to the witness they had just displaced the well to salt water (and it was a bad cement job) and the well was flowing. The seal assembly failed and they ended up flowing out through the diverter. Near the diverter were the diesel engines and their exhausts. Diesels have a lot of carbon in them and it comes out in the exhaust and the sparks from the exhaust led to the explosion resulting in the destruction of the drill floor – doghouse and all.  The missing people include driller, 2 AD’s, floor crew, some MI mud & cementing personal.” While we have been unable to verify the authenticity of this account we nonetheless have no reason to doubt it. We will continue to watch developments and offer our deepest condolences to the families of those who have lost their lives in this tragedy.

To close something a little more cheerful: Arthur Fry and Spencer Silver have been inducted in to Inventors Hall of Fame. Who are they you ask? Well they are a couple of scientists that work for 3M: a company whose innovative culture we’ve long admired. Amongst other things (and most famously) these are the two guys behind that ubiquitous 80’s invention the Post It Note that recently turned 30. Silver was “playing” with a new family of monomers and on a whim he put an unusually large amount of one of the monomers into the reaction mixture. The result: an adhesive that “didn’t really adhere” but which had the strange property of retaining its stickiness after repeated uses. Absolutely useless 3M thought and for five years it came to naught until Silver was transferred to a different research group and ultimately met Arthur Fry. Fry was active in his local church choir and used pieces of paper to mark the hymns he’d be singing. Many a time one unguarded movement resulted in them ending up all over the church floor. Fry thought wouldn’t it be great if I had a little of that adhesive on these bookmarks!!! It’s not quite true to say the rest is history and there’s a lot more to this story than space allows me to recount but it makes for a wonderfully charming, inspirational and funny read. For those who are interested there is an account of this in: Nayak, P. R. and Ketteringham, J. M. (1994) Breakthroughs! Arthur D. Little pp. 35-56.