Singapore - September 5, 2006: The Dubai Mercantile Exchange Limited (DME) and Emirates National Oil Company (ENOC) today announced the signing of a Memorandum of Understanding (MoU) to explore the development of the first exchange-traded jet fuel futures contract.
The contract would be traded on the DME, which is currently seeking regulatory approval to be the Middle East's first energy futures exchange, based in the Dubai International Financial Centre (DIFC). The two parties will establish a joint task force that will focus on combining the DME's industry expertise with ENOC's experience and infrastructure in the refining and marketing of jet fuel. The task force will consist of a working group of select industry participants and a steering committee.
The DME, ENOC and the joint task force will seek to identify the elements necessary for creating a successful jet fuel futures contract, which is expected to be ready for trading on the DME in 2007.
The working group will explore and discuss the relevant issues involved in the establishment of the contract, by understanding the market's needs, existing pricing mechanisms, physical delivery requirements and other important criteria. The results will be reported periodically to the steering committee which will be comprised of senior DME and ENOC representatives as well as other select industry participants. The first working group meeting is expected in October.
Welcoming the announcement, Hussain Sultan, Group Chief Executive & Board Member of ENOC, said: "This is a ground breaking initiative and we are delighted to join together with the DME to explore the development of the first ever jet fuel futures contract. ENOC has extensive expertise in this area and we are well placed to work with the DME and collaborate with the jet industry to create a successful, liquid risk management tool for the airline industry refineries and other energy players."
Ahmad Sharaf, Chairman of the DME Board of Directors and Senior Vice President, Energy and Healthcare - Tatweer, a member of Dubai Holding, commented: "Joining forces with ENOC to develop our second benchmark futures contract is yet another major milestone for the DME. We are confident that this MoU will prove a successful collaboration as the UAE and Dubai have long played a pioneering role in the energy industry.
"Our relationship with ENOC in this venture also aptly demonstrates the DME's commitment to working with world-class partners in our pursuit of excellence. We are well on the way to launching a world class exchange in Dubai that will offer the best financial and regulatory structures, technologies and contracts."
Tayyeb Al Mulla, Chief Executive, International Refining and Marketing, ENOC, said: "As the energy partner of choice we are committed to the growth and development of the jet fuel industry in the region. With the undertaking of this strategic agreement we look forward to utilising our knowledge in refining and marketing to play a key role in the future of the jet fuel industry."
Gary King, Chief Executive of the DME, added: "We have already developed the first Oman Crude Oil Futures Contract with the backing and support of the Sultanate of Oman's Ministry of Oil and Gas. Now we are seeking to structure additional contracts that can support the energy trading community in better managing price and credit risk in a transparent and open marketplace.
"This is a direct response to the market's specific request for us to develop a jet fuel futures contract. We will carry on listening to our customers and strive to meet their needs as we continue to make progress towards launching the exchange."
The DME is a joint venture between Tatweer, a member of Dubai Holding, and NYMEX, Inc. The establishment of an exchange inside the DIFC and the associated clearing and settlement services to be provided by the NYMEX Clearinghouse are subject to regulatory approval from the Dubai Financial Services Authority and the licensing of the DME as an Authorised Market Institution to operate as an exchange.
