Oman Oil - La Seda deal signals comeback: Arab investors return to 'Al Adnalus'

In recent months, a number of deals involving Arab companies have taken place in Spain.

The financial institution Banco Árabe-Español (Aresbank) was fully acquired by the Lybian Foreign Bank in late 2006.

The Egyptian conglomerate Orascom purchased two Spanish cement companies in 2005 and 2006.

Currently, Algeria's Sonatrach is negotiating with the Spanish government over the relaxation of regulatory constraints on the sale of gas as it has implemented a number of projects in recent years, among them a propylene plant and a LNG facility.

In addition, Sonatrach is now the largest shareholder in the ambitious Medgaz pipeline, which will deliver natural gas from Algeria to Europe through Spain. Sonatrach is also believed to be considering a bid for Spain's second-largest oil group, Cepsa, in which Abu Dhabi's International Petroleum Investment Co. (IPIC) already owns 10%.

Already an irresistible tourist and residential magnet, as shown by King Fahd's long stays in
Marbella and sizable hotel purchases by Middle East investors since the 1980s, with its accession to the European Community in 1986 Spain rapidly became an appealing destination for Arab investment as well.

However, the Arab infatuation with the ancient Al Andalus suddenly came to an end when a financial scandal regarding Kuwait Investment Office's investments was unveiled.

KIO's representatives in Spain were convicted on fraud and embezzlement both in Spain and the
UK. Their key managers have now been imprisoned for several years. The losses suffered by KIO
were estimated to amount to hundreds of millions of Euros.

Better corporate governance and higher development standards in Spain together with improved checks and balances on the Arab side cater for a radically different framework for Arab investment in Spain today.

While hospitality and tourism remain a major area of interest, as shown by Jumeirah's recently announced plan to develop a resort on the Island of Majorca, Spain represents a key energy market and a logistics gateway in Southern Europe.

Moreover, Spanish companies benefit from sizable market shares and excellent contacts in Latin America, where they invested €100 billion over the past decade. The Spanish government is also determined to promote business ties with the Arab world in the framework of its new foreign policy.