Posts Tagged ‘LNG’

Oil Prices Return To Bear Market

June 21, 2017

Price declines more than 20% since Feb. 23 despite OPEC’s production cuts

Lower prices in the futures market are also likely to show up at gasoline pumps in the months ahead.

Lower prices in the futures market are also likely to show up at gasoline pumps in the months ahead. PHOTO: MARK HUMPHREY/ASSOCIATED PRESS

Oil prices are back in bear-market territory, frustrating OPEC members that cut production in an attempt to boost prices and renewing fears that falling prices could spill into stocks and other markets.

A persistent glut has weighed on prices for most of the past three years, a blow to investors who believed that the Organization of the Petroleum Exporting Countries’ move this year to limit production would provide relief.

Instead, U.S. producers ramped up production when the world was already swimming in oil as OPEC members, Russia and other producing nations curtailed output.

U.S. oil production is up 7.3% to 9.3 million barrels a day since OPEC announced plans in November to cut output, and the number of active rigs in the U.S. is at a two-year high.

The cartel’s output cut “has been deemed an OPEC failure and a U.S. production win,” said Tony Headrick, energy analyst at CHS Hedging.

While oil prices have enjoyed gains in short spurts over the past year, U.S. prices closed down 2.2% to $43.23 a barrel Tuesday. They have fallen in four of the past five sessions to a new low for the year.

Prices are down 20.6% since Feb. 23, marking the sixth bear market for crude in four years and the first since August. Crude prices have lost 62% since settling at $115.06 a barrel three years ago. A bear market is typically defined as a decline of 20% or more from a recent peak, while a bull market is a gain of 20% or more from a recent trough.

“We’re seeing this decline amid some major OPEC production restraints,” said Jim Ritterbusch, president of energy-advisory firm Ritterbusch & Associates. “That’s the huge difference” compared with previous bear markets.

The oil market has also been more volatile this spring. Traders have crowded into bullish positions, only to reverse suddenly when the market failed to respond to positive data or news that OPEC was extending its cuts. Tuesday’s move marked oil’s eighth loss of more than 2% in the past two months.

Investors are starting to worry that oil’s steady declines may start to drag down other markets. When the oil-price plunge gathered steam at the end of 2015, analysts blamed crude in part for sparking selloffs in other commodities, emerging markets and other risky assets.

The S&P GSCI index, which broadly tracks commodity prices, fell 1.2% Tuesday. The S&P 500’s energy sector, already the worst-performing group of stocks in the index, dropped an additional 1.2%. Seven out of the 10 worst-performing stocks in the S&P 500 this year are energy stocks, according to FactSet.

“You’ve got a buyer’s strike out there on the equities side,” said Dan Pickering, head of the asset-management arm of Tudor, Pickering, Holt & Co. “I love the values I see, but I’m scared to death to put money to work.”

There are also signs that anxiety is spreading to the debt market. Bonds of oil and gas companies with below-investment-grade credit ratings, or junk bonds, have held up for most of this year, but anxiety is starting to creep in, analysts and investors say. The Bloomberg Barclays high-yield energy index has returned negative 1.6% since the beginning of June, through Monday.

The deepening oil rout brought strong demand for long-term U.S. government bonds, sending the yield on the 30-year Treasury debt to the lowest level this year Tuesday. Lower energy prices tend to deflate inflation expectations, making long-term Treasury debt more appealing.

Falling oil prices are typically helpful to U.S. consumers and the companies that serve them. Airlines made record profits last year in part from lower oil prices and were girding for profits to fall this year if oil rose. Lower prices in the futures market are also likely to show up at gasoline pumps in the months ahead, potentially lowering costs for drivers at the end of summer driving season.

But as the U.S. energy production has grown and become a bigger part of the overall economy, many companies have recently been touting the benefits of higher oil prices. They now stand to lose out.

Neiman Marcus Group Ltd., for one, a week ago credited higher oil prices with improving traffic in its Texas stores. Railroad executives have been concerned about shrinking oil shipments on their lines after low prices forced drillers to cut back two years ago. A continuing rebound in drilling could end or slow with lower prices.

“That’s something that we monitor, just given how radical the [last] decline was and how prolonged it was,” Keith Cline, chief executive of hotel operator La Quinta Holdings Inc.,said at a recent lodging conference. “We’re keeping a close eye on the 11% of our rooms that could be impacted in some way by oil production.”

Oil returned to a bear market for the first time since August 2016, before the historic agreement between OPEC and other major oil-producing nations to limit output by about 1.8 million barrels a day at the end of last year. In May, the group decided to extend the deal into March 2018.

Morgan Stanley said Monday the oil glut wouldn’t go away and would grow again next year unless OPEC cuts deeper or extends its cuts through 2018. Along with the U.S., rising production from OPEC members that are exempt from the deal, such as Libya and Nigeria, has offset progress by the group.

Traders are bracing for crucial data released on Wednesday by the U.S. Energy Information Administration about the latest inventories.

Analysts and traders surveyed by The Wall Street Journal expect crude stockpiles to have fallen by 2 million barrels, on average, in the week ended June 16, which could provide some support to falling prices.

Yet even amid falling crude stockpiles in the U.S., oil prices have dropped as modest stock drawdowns have failed to impress investors.

The data “is probably not going to provide much in the way of support,“ said John Saucer, vice president of research and analysis at Mobius Risk Group. ”The market’s definitely been very receptive to bearish news.”

Appeared in the June 21, 2017, print edition as ‘Oil Prices Return To Bear Market.’

https://www.wsj.com/articles/oil-returns-to-bear-market-1498001993?mod=e2tweu

Qatar Says Won’t Negotiate Until Economic Boycott Ends

June 19, 2017

DOHA — Qatar will not negotiate with Arab states that have cut economic and travel ties with it unless they reverse their measures, its foreign minister said, ruling out discussions over Qatar’s internal affairs including Al Jazeera TV.

Sheikh Mohammed bin Abdulrahman al-Thani said Qatar had still not received any demands from Saudi Arabia, the United Arab Emirates and Bahrain, which severed relations two weeks ago, triggering the worst Gulf Arab crisis in years.

Image result for Sheikh Mohammed bin Abdulrahman al-Thani, photos

Sheikh Mohammed bin Abdulrahmanal-Thani

The countries accuse Qatar of supporting Islamist militants and stirring up unrest, charges Doha denies.

“Qatar is under blockade, there is no negotiation. They have to lift the blockade to start negotiations,” Sheikh Mohammed told reporters in Doha. “Until now we didn’t see any progress about lifting the blockade, which is the precondition for anything to move forward.”

He said Kuwait’s ruler was the sole mediator in the crisis and that he was waiting for specific demands from Gulf states in order to take resolution efforts forward.

“We cannot just have (vague) demands such as ‘the Qataris know what we want from them, they have to stop this or that, they have to be monitored by a foreign monitoring mechanism,'” Sheikh Mohammed said.

Anything that relates to the affairs of the six-nation Gulf Cooperation Council is subject to negotiation, he said, referring to the body comprising Qatar, Saudi Arabia, the UAE, Bahrain, Kuwait and Oman.

“Anything not related to them is not subject to negotiation. No one has the right to interfere in my affairs. Al Jazeera is Qatar’s affairs, Qatari foreign policy on regional issues is Qatar’s affairs. And we are not going to negotiate on our own affairs,” he said.

Qatar’s Gulf critics have accused Al Jazeera of being a platform for extremists and an agent of interference in their affairs. The network has rejected those accusations and said it will maintain its editorial independence.

Image result for LNG, Qatar, photos

The crisis has hit civilian travel, some food imports, ratcheted up tensions in the Gulf and sown confusion among businesses. But it has not affected energy exports from Qatar, the world’s biggest exporter of liquefied natural gas (LNG).

Sheikh Mohammed said Qatar would rely on other states if the boycott continued, including Saudi Arabia’s arch regional foe Iran.

“We have a back-up plan which depends mainly on Turkey, Kuwait and Oman,” he said. “Iran has facilitated for us the sky passages for our aviation and we are cooperating with all countries that can ensure supplies for Qatar.”

(Reporting by Tom Finn; writing by Sylvia Westall; editing by Mark Heinrich)

Beijing: U.S. Energy Secretary Rick Perry calls for cooperation on clean energy between U.S. and China

June 8, 2017

AFP

© POOL/AFP | US Energy Secretary Rick Perry (left) shakes hands with China’s Vice Premier Zhang Gaoli in Beijing on June 8, 2017

BEIJING (AFP) – 

US Energy Secretary Rick Perry called for Sino-US cooperation on clean energy during a visit to Beijing Thursday, a week after President Donald Trump’s much-criticised withdrawal from the Paris climate pact.

Trump’s decision has jolted the international community and could put China, the world’s top carbon emitter, in a position to fill the leadership void on curbing global warming.

But Perry said the United States was still eager to work with China on developing clean energy technology such as liquefied natural gas, clean coal and nuclear power.

“We have extraordinary opportunities to be partners to work on clean energy issues,” Perry said during a meeting with China’s number seven, Zhang Gaoli, on the sidelines of a ministerial-level clean energy meeting in Beijing.

The relatively low-level reception was a contrast to the red carpet Beijing rolled out for California governor Jerry Brown earlier this week.

Brown met for almost an hour with Chinese President Xi Jinping and they signed a memorandum of understanding on developing clean energy.

Brown has vowed to step into the vacuum left by Trump’s exit from the Paris accords, and has mounted a vigorous PR campaign on behalf of his state’s leadership on environmental issues during his week long tour of China.

Beijing has said it will stick with the agreement despite the US withdrawal and is seeking to reach out to American states that share its determination.

California, which has the world’s sixth-largest economy, is one of a handful of American states that have pledged to continue fighting climate change regardless of action at the federal level.

The state — which has some of the worst air pollution in the country — has dramatically slashed its harmful emissions in the last decade.

It has pledged to cut greenhouse gas emissions to 1990 levels by 2020, and to 40 percent below 1990 levels by 2030.

Before setting off for China, Brown pledged California would resist Trump’s decision to abandon the Paris deal, describing the move as “misguided and insane”.

German Foreign Minister: Trump Stirring Up Trouble Among Qatar’s Neighbors

June 7, 2017

Foreign Minister Sigmar Gabriel has accused the US president of stirring up conflicts in the Middle East and risking a new arms race as Qatar’s neighbors cut diplomatic ties. Saudi’s foreign minister is visiting Berlin.

Jemen Kämpfe (Reuters)

Gabriel told Germany’s Handelsblatt business newspaper that what he termed a “Trumpization” of interactions in the already crisis-shaken Middle East region was extremely dangerous.

“US President Trump’s recent giant military contracts with Gulf monarchies raise the risk of a new spiral in arms sales,” Gabriel warned in the interview to be published Wednesday.

Außenminister Sigmar Gabriel (Picture alliance/dpa/M. Skolimowska)Foreign Minister Gabriel is to meet his Saudi counterpart in Berlin

His remarks came ahead of Saudi Foreign Minister Abdel al-Jubeir’s visit to Berlin on Wednesday. Gabriel said it seemed the intention was “to more or less completely isolate Qatar and affect it existentially.”

“That is the completely wrong policy and certainly not the policy of Germany,” Gabriel said.

Germany is part of a six-nation group had pushed for the 2015 nuclear de-escalation deal with Iran – Saudi Arabia’s regional rival – to avert such a Middle East arms spiral, Gabriel added.

“A deep conflict between neighbors is actually the last thing we need,” Gabriel warned.

Trump takes credit

President Donald Trump on Tuesday wrote on Twitter that his recent trip was “already paying off,” and claimed that a speech he gave in Saudi Arabia had prompted Arab powers to isolate Qatar over its alleged backing of Islamist extremism.

Karte Countries that severed ties with Qatar ENG

“Perhaps this will be the beginning of the end of the horror of terrorism,” Trump wrote.

By contrast, the Pentagon on Tuesday renewed praise for Qatar for hosting the largest US air base in the Middle East. “I consider them a host to our very important base at al Udeid,” said Pentagon spokesman Navy Captain Jeff Davies. More than 11,000 US and coalition forces are deployed or assigned to al Udeid Air Base, from which more than 100 aircraft operate.

Saudi Arabien Rex Tillerson PK Adel al-Jubeir (Getty Images/F.Nureldine)US Secretary of State Rex Tillerson with his Saudi counterpart Adel al-Jubeir

“We continue to be grateful to the Qataris for their longstanding support for our presence and their enduring commitment to regional security,” Davis said. He added that the United States had no plans to alter its presence in Qatar.

Saudi comments in Paris

Visiting Paris on Tuesday, Saudi minister Adel al-Jubeir said energy-rich Qatar “has to choose whether it must move in one direction or another direction.” He demanded Doha end support for the Palestinian militant group Hamas and the Muslim Brotherhood.

The cut in ties pits Saudi Arabia, the United Arab Emirates, Egypt and Bahrain against Qatar – the world’s biggest producer of liquefied natural gas. On Tuesday, Jordan said it was reducing its level of diplomatic representation with Qatar and canceling licenses of the Doha-based Al Jazeera television office in the country

Aviation links have been suspended and regional ports closed to Qatari ships as anxious residents started stockpiling food.

ipj/jm (AP, Reuters, AFP)

http://www.dw.com/en/german-foreign-minister-accuses-us-of-stirring-up-middle-east-conflict/a-39138183

Image result for LNG, Qatar, Photos

How the Qatar-Gulf row is blocking China’s new Silk Road

June 6, 2017

Rift between Qatar and its neighbours could disrupt key projects in Beijing’s sprawling trade initiative

By Julia Hollingsworth
South China Morning Post

Tuesday, June 6, 2017, 11:00am

A worsening rift between several Gulf Arab nations along China’s modern Silk Road trade route will make it harder for China to manage its ties in the region, according to analysts.

Bahrain, Egypt, Saudi Arabia, Yemen and the United Arab Emirates all cut diplomatic ties with Qatar on Monday, citing Doha’s alleged links to terrorism.

The nations also said they planned to cut air and sea traffic, while Saudi Arabia announced it would shut its land border with Qatar, cutting the gas-rich nation off from the rest of the Arabian peninsula.

Qatar denies that it funds extremist groups.

The nations are involved in Xi Jinping’s ambitious “Belt and Road Initiative”, which stretches across 65 countries and encompasses Asia, Africa and Europe.

The Arab peninsula is the top source of oil for China, the world’s biggest oil importer. Global prices rose in early trading on Monday.

Pang Zhongying, a senior fellow at the Ocean University of China in Qingdao, Shandong province, said the spat among the Middle East nations would make it more complicated to manage ties with the region.

“China has a huge economic interest in the Middle East,” he said. “With the belt and road and other initiatives it is using to expand geopolitical influence in the region, China may need to think about adjusting its “non-interference” diplomatic motto.”

Zhu Bin, an analyst at Southwest Securities, said: “These countries’ cutting of their diplomatic relationships with Qatar marks the beginning of a new round of chaos, even conflicts and war, in the Middle East.”

China’s trade with the Middle East

Saudi Arabia is China’s top trade partner in the region, and China is now Saudi Arabia’s largest oil customer.

In 2015, Saudi Arabian exports to China totalled US$5.61 billion and its imports were worth US$23.97 billion. Last year, total trade topped US$42 billion.

The figures for Qatar in 2015 were exports of US$5.24 billion and US$3.7 billion in imports.

But for most of the countries involved in the new rift, China is an important source of imports rather than a major export partner.

China’s major projects in the Middle East

The region is seen as a critical partner along the new Silk Road, partly due to its strategic position between Asia and Europe. The area is also significant for its energy resources, and Chinese firms are winning contracts in infrastructure projects across the Middle East.

In June 2015, ICBC became the first Chinese bank with a retail presence in Saudi Arabia when it opened a branch in Riyadh. A month earlier, China established a yuan clearing centre in Qatar – the first in the Middle East.

Earlier this year, China and Saudi Arabia signed a memorandum of understanding on investment cooperation valued at US$65 billion, including joint efforts in energy and finance. China has also signed a partnership with Saudi Arabia for the manufacture of CH-4 unmanned drones.

Last year, China’s Cosco Shipping Ports invested US$400 million in building a container terminal in Abu Dhabi, the capital of the United Arab Emirates.

How the Arabian peninsula nations see the belt and road scheme

The region has been receptive to the plan.

Last month, Saudi Energy Minister Khalid Al-Falih praised the initiative at Beijing’s new Silk Road summit, saying “the potential offered by this unique initiative is immense and promising”.

The United Arab Emirates was interested in reaping the benefits from the road, Dubai International Financial Centre’s governor Essa Kazim told The Financial Times last month.

Last year, Qatar became a key partner to promote the initiative, pledging to play an active role.

How China mediates conflict in the Middle East

China has traditionally stayed out of political issues in the Middle East, preferring not to pick sides to maintain good relations with all its trade partners.

But that may be changing as its links with the region strengthen. In April 2015, a Chinese frigate helped evacuate 225 foreign nationals from Yemen – the first time China’s military has helped other countries evacuate their people from a danger zone.

Last year, Beijing appointed its first special envoy for the Syrian crisis, seen as a move to get more involved in Middle Eastern diplomacy. In China’s first – and vague – Arab policy paper issued at the start of last year, it reiterated its commitment to peace and stability in the region.

http://www.scmp.com/news/china/diplomacy-defence/article/2096984/how-gulf-arab-row-blocking-chinas-new-silk-road

Ten gunned down near China ‘Belt and Road’ projects in Pakistan — Blames on militants trying to disrupt construction on the “economic corridor”

May 13, 2017

Reuters

Sat May 13, 2017 | 5:18am EDT

By Gul Yusufzai | QUETTA, PAKISTAN
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Ten laborers were gunned down in southwestern Pakistan on Saturday while working on link roads to connect outlying towns to the country’s $57-billion Chinese “Belt and Road” initiative, security officials confirmed.

The attack on the Pakistani laborers took place some 20 kilometers from the emerging port city of Gwadar in Baluchistan province that forms the southern hub of the China-Pakistan Economic Corridor (CPEC).

“All the laborers were shot at close range,” said senior levies official Muhammad Zareef, adding that the shooters were traveling on a motorcycle. The levies are a paramilitary force that oversees security in Baluchistan where police jurisdiction is limited to major urban centers.

Gwadar’s deep-water port is the exit point for a planned route from China’s far-western Xinjiang region to the Arabian Sea.

Nadeem Javaid, who advises Prime Minister Nawaz Sharif’s government and works closely on the CPEC program, told Reuters earlier in the week that the Gwadar-Xinjiang corridor should be operational from June next year.

He said Pakistan expects up to 4 percent of global trade to pass through it by 2020.

Baluchistan, however, has long faced security concerns. Separatist militants in the province have waged a campaign against the central government for decades, demanding a greater share of the gas-rich region’s resources.

Security officials have said previously that militants trying to disrupt construction on the “economic corridor” have killed 44 workers since 2014, all of whom were Pakistani.

Pakistan’s military created an army division in 2015, believed to number more than 10,000 troops, specifically to protect CPEC projects and Chinese workers.

The men killed and wounded on Saturday had been working for the provincial government at two separate construction sites on three kilometers apart along the same road. Two laborers wounded in the shootings were taken to hospital where one of them died from his injuries, Zareef said.

The roads the laborers were working on are not specific CPEC-funded projects, but they are part of a network of connecting roads that are part of the corridor.

No group has admitted responsibility for the shootings but past attacks in the region have been carried out by separatists who view construction projects as a means to take over their land.

The shootings come a day after a suicide bomber targetting a Pakistani senator killed 26 people and injured 40, Baluchistan Home Minister Sarfraz Bugti said.

Friday’s attack was claimed by Islamic State via its Amaq news agency.

(Reporting by Gul Yousufzai; Writing by Saad Sayeed; Editing by Eric Meijer)

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US and China announce deal aimed at reducing trade gap

May 12, 2017

AFP, Reuters and The Associated Press

© JIM WATSON, AFP file US President Donald Trump (R) and Chinese President Xi Jinping (L) shaking hands during dinner at the Mar-a-Lago estate in West Palm Beach, Florida on April 7, 2017

Beijing and Washington on Friday unveiled a trade deal aimed at reducing the US trade deficit with China, as the Kushner family’s real estate company abandoned a controversial business proposal targeting Chinese investors.

The trade deal would give US beef, natural gas and certain financial services access to China‘s massive market of 1.37 billion people. In exchange, the US would lift barriers to Chinese cooked chicken products.

The deal seems to be part of warming trade relations between the US and China. Despite President Donald Trump’s aggressive rhetoric against China throughout the US presidential campaign, Trump and Chinese President Xi Jinping launched a 100-day action plan on economic cooperation last month.

In Beijing, foreign ministry spokesman Geng Shuang said the two countries “enjoy very close economic cooperation”.

“The two sides decided to press ahead with this economic plan and … much progress has been made in a short amount of time,” Geng told reporters during a regular press conference on Friday.

US Commerce Secretary Wilbur Ross told reporters at the White House that Friday’s deal will help reduce the US trade deficit with China, which reached nearly $350 billion last year.

Ross called the agreement a “herculean accomplishment” and “more than has been done in the whole history of US-China relations on trade.”

Meaty details

Under the agreement, China will authorise US beef imports by July 16 while the United States will lift barriers on Chinese cooked poultry exports “as soon as possible”.

China banned US beef following a case of mad cow disease in the United States in 2003.

Beef is rising in popularity in China. The country’s residents are projected to eat roughly 8 billion kilograms of the meat this year, according to the US Department of Agriculture’s Foreign Agricultural Service. That’s up more than 40 percent in the past five years.

The deal also has implications for US natural gas and financial services. Chinese companies would be allowed to buy liquefied natural gas from the US, while US firms providing credit rating services and electronic payment services would gain greater access to Chinese markets.

‘Paltry trade benefits’

However, experts said the deal would fail to substantially reduce the US trade deficit with China, which is by far the biggest imbalance America has with any country.

A report by Capital Economics consultancy expected “paltry trade benefits” from the deal because it would amount to “just a few billion dollars.”

The agreement “won’t make any meaningful difference to the bilateral trade imbalance, which could still trigger a flare-up of tensions between the two sides in the future,” it said.

Kushner family withdraws from investment-visa swap

But trade with China hit a snag for one particular company Friday.

The real estate company owned by the family of US President Donald Trump’s son-in-law and adviser withdrew from a controversial sales pitch to Chinese investors involving US visas.

Nicole Kushner Meyer, the sister of White House aide Jared Kushner, had headlined events in Beijing and Shanghai last weekend that encouraged Chinese businessman to invest more than $150 million in a US luxury apartment complex.

In exchange, investors would be eligible for the US’s EB-5 visa program that offers US residency in exchange for at least $500,000 investment in a US business that must also create at least 10 American jobs.

Meyer’s participation raised conflict-of-interest concerns after it emerged that she had mentioned her brother’s name during the sales pitch for the investment-visa exchange.

Kushner, who is married to the president’s daughter Ivanka, resigned as chief executive of Kushner Companies in January in order to begin his job as White House adviser. His work involves serving as a liaison between the administration and Beijing.

The Meyer and the Kushner family company will not attend a series of events advertising the investment program this weekend, James Yolles, spokesman for the firm, said.

(FRANCE 24 with REUTERS, AFP, and AP)

Warsaw court jails lawyer for spying for Moscow

March 20, 2017

AFP

© AFP/File | A lawyer has been jailed in Poland for giving Russia information on a new liquefied natural gas terminal at Swinoujscie, whose port is pictured above, on the Baltic coast
WARSAW (AFP) – A Polish-Russian lawyer has been sentenced to four years in prison for spying for Russia’s GRU military intelligence agency, a Warsaw court said Monday.The lawyer, a man with dual citizenship identified only as Stanislaw Sz. for legal reasons, pleaded not guilty at the trial held behind closed doors. He can appeal the verdict.

Judge Agnieszka Domanska said the man gave Russia information on Poland’s energy sector, in particular regarding a new liquefied natural gas terminal at Swinoujscie on the Baltic coast, according to the Polish news agency PAP.

He notably got hold of a secret report by the national audit chamber NIK on natural gas contracts and the launch last June of the Swinoujscie terminal, which Poland built to ease its dependence on Russian gas.

Poland currently relies on Russia for about forty percent of its gas, with a third coming from domestic sources and 20 percent from central Asia.

Stanislaw Sz. was arrested in October 2014, at the same time as a Polish officer, Zbigniew J., who was sentenced last year to six years in prison by the Warsaw military court for spying for Russia.

Their cases were related but the two men did not work together, according to Polish media reports.

Australian deputy PM flags lifting gas drilling bans — Energy shortage could trigger further broad power outages and industry supply cuts

March 18, 2017

Reuters

By Harry Pearl | SYDNEY

Australia’s deputy prime minister said he would support lifting bans on coal seam gas (CSG) drilling if landowners were given a bigger slice of royalties, a significant policy shift as the country scrambles to avoid a looming energy crisis.

Australia, with an abundance of natural riches, was supposed to be a world energy power on its way to becoming the largest global exporter of liquefied natural gas (LNG), but the government instead finds itself battling to explain why the country is unable to keep the lights on at home.

A series of massive blackouts in South Australia state has already caused major embarrassment and the national energy market operator has warned of a domestic gas crunch from 2019 that could trigger further broad power outages and industry supply cuts.

Deputy Prime Minister Barnaby Joyce’s support to lift the CSG ban – if landowners were granted royalties – could be a game changer as his right-wing National Party has traditionally opposed such a move.

“By paying a royalty it means the value of a farmer’s land increases as a result of gas extraction, rather than decreasing,” said Joyce, who is also the agricultural minister, in comments confirmed by his office on Saturday.

Manufacturers have long complained of tight gas supplies and soaring prices as producers have focused on supplying gas to LNG plants that have locked in 20-year export contracts.

Restrictions on drilling CSG have added to supply constraints. Under pressure from green voters and farmers, the state of Victoria has banned onshore gas developments, including fracking, and New South Wales state has prevented developments.

Australia’s power supply problems made international headlines last week when Tesla Inc boss Elon Musk offered to save South Australia, the country’s most renewable-energy dependent state, from recurring blackouts by installing battery storage worth $25 million within 100 days.

Prime Minister Malcolm Turnbull also this week floated spending up to A$2 billion ($1.5 billion) to expand the Snowy Hydro power scheme and held crisis talks with major gas producers, including Exxon Mobil Corp and Royal Dutch Shell, who have large export contracts.

(Reporting by Harry Pearl; Editing by Jane Wardell and Tom Hogue)

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South China Sea: China Wants To Chart Its Own Destiny on The Maritime Silk Road — But The Neighbors Are Objecting

April 14, 2016

By Neal Kimberley
South China Morning Post

“The South China Sea islands are China’s territory,” Foreign Minister Wang Yi told the ASEAN Regional Forum in August.

Other nations reject that assertion.

But territorial disputes in the South China Sea are also inextricably linked with wider issues of geopolitics and energy security.

China has every right to peaceably pursue what it considers its legitimate claims in the area. Still its challenge of the existing status quo is of considerable interest to others — even those without territorial claims in the South China Sea and who view their energy security and geopolitical interests aligned to continuing freedom of navigation in those sea-lanes.

Thus, even if the Obama Presidency had not already committed the United States to a foreign policy pivot towards Asia, US geo-strategic interests in Asia would anyway have forced Washington to take an interest in developments in the South China Sea.

Tanker Golar Mazo transits the South China Sea with liquefied natural gas for Taiwan

Even though Beijing subscribes to the principle of freedom of navigation and overflight, any prospect that China might more easily exercise control over the sea-lanes of the South China Sea could be viewed as a potential threat to the energy security of key US allies Japan and South Korea while Taiwan too would also be vulnerable.

As the US Energy Information Authority (EIA) wrote, in 2013: “The South China Sea is one of the most important energy trade routes in the world” with “almost a third of global crude oil and over half of global liquefied natural gas (LNG)” passing through it each year.

In Japan’s case, given its own lack of natural energy resources and with the vast majority of its nuclear power plants offline since the March, 2011 earthquake and tsunami that resulted in very serious damage to and leakage from the reactors at the Fukushima plant, ensuring free navigation through the South China Sea is critical.

As the EIA pointed out in January, Japan is now the world’s largest LNG importer, second-largest coal importer and third-largest net importer of crude oil and oil products. And the vast bulk of those energy imports are sea-borne.

At the time of the Fukushima disaster Japan generated some 27 per cent of its energy from nuclear power and that has had to be replaced by even larger hydrocarbon imports, such as crude oil.

“Japan is primarily dependent on the Middle East for its crude oil imports,” the EIA said, noting that “roughly 84 per cent of Japanese crude oil imports originated from this region in 2014, up from 70 per cent in the mid-1980s.”

All those shipments pass through the South China Sea as they wend their way to Japan.

As for LNG, 84 per cent of Japan’s imports in 2013 came from eight sources, Australia, Brunei, Indonesia, Malaysia, Nigeria, Oman, Qatar and the United Arab Emirates.

All of that too has to pass through the South China Sea.

It is a similar story for South Korea which, as the EIA said in October, imports 97 per cent of its primary energy consumption with the Middle East accounting “for more than 84 per cent of South Korea’s 2014 crude oil imports, according to Korean customs statistics.”

That makes South Korea the world’s fifth largest importer of crude oil and condensate — but it is also the world’s second-largest importer of liquified natural gas.

In 2014, African, Middle East and South East Asian countries supplied 88 per cent of South Korea’s LNG imports, according to the 2015 BP Statistical Review of World Energy.

In Taiwan “total energy import dependence was about 98 per cent according to the Taiwanese government” the EIA said last September, with 83 per cent of crude oil imports sourced from the Persian Gulf.

As the world’s fifth-largest importer of LNG, Taiwan imported some 82 per cent of its needs in 2014 from three sources, Indonesia, Malaysia and Qatar.

Of course Taiwan itself has its own claims on the islands of the South China Sea, but irrespective of that, its own energy security, as well as that of Japan and South Korea, depends on freedom of navigation in the area’s sea-lanes.

The US military has recently expressed its own concerns over developments in the South China Sea.

“In my opinion China is clearly militarising the South China Sea,” Admiral Harry Harris, head of the US Pacific Command, told the US Senate Armed Services Committee on Feb 23 He added: “You’d have to believe in a flat earth to believe otherwise.”

The bottom line is that in the South China Sea, jurisdictional claims cannot be divorced from wider issues of energy security and geopolitics in Asia.

There’s more at stake in territorial disputes in the South China Sea than just islands, islets, rocks and reefs.

 http://www.scmp.com/business/article/1933745/south-china-sea-headbutting-nations-about-energy-security