The Dubai Mercantile Exchange Limited (DME) announced details of its Oman Crude Oil Futures Contract at the prestigious Asia Oil & Gas Conference (AOGC) in Kuala Lumpur, Malaysia and updated the market on its progress towards launch in the fourth quarter of 2006.

Chief executive Gary King revealed that the contract will be known officially as the Oman Crude Oil Futures Contract. 
Developed in collaboration with the Sultanate of Oman’s Ministry of Oil and Gas, Ministry of Finance and Petroleum Development of Oman (PDO), the contract has undergone intensive market consultation and will contain the following key terms and conditions:
The contract will be physically delivered using the Mina Al Fahal crude oil storage and loading facilities in Oman. 
The contract size will be 1,000 barrels and settled daily at the close of the Singapore trading day. This recognises the fact that by far the biggest market for Middle East crude oil is in Asia.
The minimum   position size to take physical delivery will be 200,000 barrels.
All delivery matching will be undertaken by the Dubai Mercantile Exchange and PDO, the national oil exploration and production company of Oman, whose main offices are based in Mina al Fahal.
All contracts will clear at the New York Mercantile Exchange (NYMEX) Clearinghouse.  In addition to current margining practices at NYMEX, delivery margining will be conducted through Letters of Credit (LCs) and Letters of Indemnity (LOIs) posted to the clearinghouse via each clearing member.   
Some of the contract’s other terms and conditions must remain confidential for the time being while the contract is being finalised.
King said, “Just one year ago in New York, our joint venture partners Tatweer, a member of Dubai Holding and the NYMEX announced the creation of the DME.  Two days later, our chairman and the president of NYMEX were in Kuala Lumpur at this very same conference to introduce the DME to the Asian markets that are so important to us.”
King said that building on unprecedented regional confidence, the current market situation presents an ideal opportunity for this contract to succeed. 
Despite its status as the world’s largest hydrocarbon region, the Middle East still lacks a robust and liquid price discovery mechanism for its crude oil.
The two leading crude oil futures benchmarks, WTI and Brent, reflect the value of sweet crude oil, not Middle East sour crude oils. 
“We are confident that both producers and their customers will see the benefits to them when the Oman Crude Oil Futures Contract starts trading on the DME,” he added.
King reported that much has been achieved in the past year to ensure that the Exchange will launch successfully in the fourth quarter of 2006. 
Most notable was the continuing support that the DME is receiving from Oman.  The regional and international markets are also responding favourably to the DME’s proposition following a series of roadshows.
He said,”We have a first-class management team in place and have made some important decisions regarding the strategic direction of the Exchange. 
“We have decided to trade electronically while also physically locating a community of traders on the Exchange floor in unique trading hubs, and we are finalising the process for deciding membership of the Exchange.
“Our building, located in the Dubai International Financial Centre, and our trading facilities are nearing completion.
“And we have recently announced plans for the creation of the DME-AUD Academy with the American University in Dubai which will give people from the region the skills and information needed to trade on the Exchange. While work remains to be done, this all bodes well for the future success of the DME.”
The Dubai Mercantile Exchange Limited’s (DME) establishment of an exchange inside the Dubai International Finance Centre (DIFC) is subject to regulatory approval from the Dubai Financial Services Authority (DFSA) to be licensed as an Authorised Market Institution to operate as an exchange inside the DIFC.  Furthermore, all clearing and settlement services to be provided by the New York Mercantile Exchange to DME are subject to the New York Mercantile Exchange becoming recognised by the DFSA to operate a remote clearinghouse in the DIFC and subject to the review and/or approval of the Commodity Futures Trading Commission.
Until the above regulatory approvals have been granted, no trading on the DME will be permitted and no person will be admitted as a member of the DME.