Posts Tagged ‘oil’

Venezuela’s Maduro Travels to China in Search of Fresh Funds

September 13, 2018

Chinese loans: Venezuela was close to clinching a fresh loan of $5 billion to finance oil projects

Venezuelan President Nicolas Maduro is traveling to China to discuss economic agreements, as the crisis-struck OPEC nation seeks to convince its key Asian financier to disburse fresh loans.

“I am going with great expectations and we will see each other again in a few days with big achievements,” the leftist leader said on Wednesday in a state broadcast from the airport, without providing details.

Venezuela’s Information Ministry did not respond to a request for comment.

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FILE PHOTO: Venezuela’s President Nicolas Maduro attends an event with the Youth of the Venezuela’s United Socialist Party (PSUV) in Caracas, Venezuela September 11, 2018. Miraflores Palace/Handout via REUTERSREUTERS

China’s Foreign Ministry, in a brief statement carried by the official Xinhua news agency, said Maduro would visit from Thursday until Saturday at the invitation of President Xi Jinping. It gave no other details.

Venezuelan Vice President Delcy Rodriguez is currently in China and on Wednesday met with Chinese Vice President Wang Qishan, the Chinese Foreign Ministry said in a brief statement late Wednesday.

The two countries have long had friendly ties and cooperation has been “steadily progressing” in all fields, the ministry cited Wang as telling Rodriguez.

On Tuesday, Rodriguez met with Zhang Jianhua, president of top state energy firm CNPC to discuss cooperation, said a senior oil source briefed with the matter, without giving further details.

A CNPC spokesman did not immediately respond to a request for comment.

CNPC is a major investor in oil and gas exploration in Venezuela and also a top lifter of Venezuelan oil under the government-to-government loans for oil deals.

Over a decade, China plowed more than $50 billion into Venezuela through oil-for-loan agreements that helped Beijing secure energy supplies for its fast-growing economy while bolstering an anti-Washington ally in Latin America.

The flow of cash halted nearly three years ago, however, when Venezuela asked for a change of payment terms amid falling oil prices and declining crude output that pushed its state-led economy into a hyperinflationary collapse.

Venezuela’s finance ministry in July said it would receive $250 million from the China Development Bank to boost oil production but offered no details. Venezuela previously accepted a $5 billion loan from China for its oil sector but has yet to receive the entire amount.

Local consultant Asdrubal Oliveros, who tracks Chinese loans closely, said on Wednesday Venezuela was close to clinching a fresh loan of $5 billion to finance oil projects. Beijing was waiting for Maduro to announce a series of economic measures, including a steep devaluation and more flexible currency controls, before extending fresh funds, Oliveros said.

(Additional reporting by Vivian Sequera and Alexandra Ulmer, and Ben Blanchard and Chen Aizhu in Beijing and Brenda Goh in Shanghai; Writing by Alexandra Ulmer; Editing by Steve Orlofsky and Gopakumar Warrier)

Reuters

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Turkey Will Secure Its Energy Supply, No Matter The Cost

September 7, 2018

Economic problems resulting from US sanctions and the decline in the value of the Turkish lira will increase the already record high trade deficit, currently half of which is related to energy imports. In 2017 it amounted to 77 billion USD, more than twice the amount of 2016. Erdoğan is determined to create a politically dominant state. To this end he needs to ensure energy independence, which can be done through the occupation of the oil fields in Kirkuk, and the acquisition of the gas fields of Cyprus.

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Last year Turkey consumed more than 1 million barrels of oil a day. Energy spending increased from 27.16 billion USD in 2016 to 37.19 billion USD in 2017, which made up 50% of the trade deficit.

The increase in oil prices will affect the trade deficit even more, while 75% of its value will be energy imports. The average annual barrel price in 2017 was 54 USD, and this year the average cost is about 70 USD, and the price will continue to rise. All of this is a drag on Turkish economy. To counteract the negative balance sheet, Recep Erdoğan will take more determined steps to ensure energy independence. This, however, will lead to turmoil in the region.

1. Kirkuk, one of the oldest and largest oil fields in the Middle East, is located in the Kurdish autonomous area in northern Iraq. Iraqi Kurdistan took control of them in 20113) and decided to connect Kirkuk with the existing pipeline to Ceyhan to bypass Baghdad and sell Iraqi oil on the international market without the consent of the Iraqi authorities. After the Iraqi part of the Kirkuk-Ceyhan pipeline had been taken over by ISIS and partly destroyed, the Kurdish authorities created a pipeline transmission network, and so were able to export 300,000 barrels a day to Anatolia.In October 2017, the region was retaken by the Iraqi army. The government in Baghdad has committed itself to building a new transmission line from Kirkuk to the Turkish border (around 350 km), where it will merge with the existing oil infrastructure leading to Ceyhan.4) Both the Iraqi and Kurdish authorities want Turkey to be perceived as the most important oil importer from the Kirkuk fields (other countries adjacent to Iraq are self-sufficient in terms of oil), Erdoğan has a different strategy for this area.. Kurdish oil fields can produce up to 1 million barrels a day, which equals Turkish demand. In 2016 Erdoğan declared “If the gentlemen desire so, let them read the Misak-i Milli (National Oath) and understand what the place means to us,” The Turkish president referred to an Ottoman Parliament-sealed 1920 pact that designates Kirkuk and Mosul as parts of Turkey.

Ankara wants to regain these regions lost in 1926 as a result of the Treaty of Ankara regulating the border with Iraq, which was then a British colony. The agreement signed in 1926 stipulates that although the areas do not belong to Turkey, Ankara has the right to initiate military action in case of destabilization in the region. Thus, the agreement between Turkey, United Kingdom and Iraq is Erdoğan’s pretext for increasing Turkey’s military presence in Kurdistan.

In August 2018 Erdoğan said Turkey was taking steps to save Iraq’s Qandil (and possibly Sinjar) area from being a “nest of terror”. It took the form of the Tiger Shield operation, whose aim was to combat the Kurdistan Workers’ Party (PKK) with its headquarters and training bases in Northern Iraq.

8)Both Ankara and Baghdad treat it as a terrorist organization threatening both countries. As a result Turkey has created 11 military bases in the Kurdistan area and doubled the number of soldiers stationed there. The Iraqi authorities, however, are afraid of the growing involvement of Turkey on Iraqi soil.

[The map of Turkey according to the Ottoman Parliament-sealed, 1920 National Oath that designates today’s Kurdistan Region, Mosul, Syrian Kurdistan, Aleppo, parts of the Balkans and Caucasus as Turkish soil.]

While an outright takeover of Kirkuk is not imminent, Ankara realises that the incorporation of Kirkuk into its economic sphere or creation of a Turkmen vassal-state will solve a large part of its energy problems. However, Erdoğan, being a statesman, will take his time in reaching his goal. The leader of the Iraqi Turkmen Front (ITF) said last month in support of Turkey: “An attack on Turkey is an attack on all of the region’s Turkmen,” he added “The situation of the region’s Turkmen — in both Iraq and Syria — is all connected,” he said: “As Turkmen, a strong Turkish lira is good for us.”

2. Turkey under the pretext that some areas of the coastal sea zone in Cyprus (like Block 3, which Gefira team analyzed in February) fall under the jurisdiction of Ankara-dependent Turkish Cypriot government (Northern Cyprus) intends to extract gas from the Cyprus Exclusive Economic Zone (EEZ). At the beginning of this year the Turkish navy prevented the Italian Eni group vessel from operating in the Cypriot economic zone. Erdoğan already made a statement addressed to the authorities in Nicosia and Athens:

“„We warn those who overstep the mark in Cyprus and the Aegean. (…) They are standing up to us until they see our army, ships and planes”.

The statement of the President of Turkey confirms the greater military involvement in this part of the Mediterranean and the intensification of the exercises. At the beginning of the month Foreign Minister of Turkey Mevlüt Çavuşoğlu said that Turkey could start drilling in the Eastern Mediterranean this autumn as the country had already purchased a platform. A conflict in this area is inevitable.

President Erdoğan warned Cyprus and international gas exploration companies that the violation of Turkish interests would have bad consequences. We expect that if Ankara takes over Cypriot gas blocks, Israel will be on the side of Cyprus, which has its own interests in this area and whose troops are stationed there. In September, Greece, Israel and Cyprus will hold a summit about gas exploration in the Eastern Mediterranean and Turkish plans to drill in the region. Ankara is not invited.

3. Maintaining good relations with Qatar is essential for Turkey. Both Turkey and Qatar are supporters of Muslim Brotherhood and it is said that Qatar’s row with the Gulf countries is about its assistance to the brotherhood.22) Turkey is still a staunch supporter of Morsi, the abolished Egyptian Muslim Brotherhood president of Egypt. Ankara and Doha are strategic partners on political, economic and military levels. Qatar supplied Turkey with 1.5 billion tonnes of LNG.23) Ankara is Qatar’s important and natural security ally.As part of the 2014 military cooperation agreement, Turkey created a military base in Qatar, and in the aftermath of the 2017 Gulf Crisis decided to increase its contingent there.24) Ankara’s presence in Qatar is a better security guarantor than the US, which sacrificed their staunch ally Hosni Mubarak of Egypt. Turkey also provided Qatar with food by plane when the other countries of the Gulf blocked the latter’s supply lines.25)Doha repays Ankara by promising to help to the amount of USD 15 billion in the form of support for “many economic projects, investments and deposits” and a currency swap.26) In return for further military presence and support for Qatar through Turkey, Doha may repay further investments and financial measures aimed at stopping the decline of the Turkish lira.

Military forces have changed governments in Afghanistan, Iraq, Yemen, Libya but failed to do so in Syria. The goal is the same as with the actions against Venezuela, Iran and Turkey. Before the election the Gefira team predicted that the financial attack on Turkey would stop after the election, but we were wrong. We also said that Erdoğan would not give in, and we were right. Erdoğan’s plan for Turkey is the restoration of the Ottoman power and its role in the region and in the world. To accomplish that, he has to shrink its trade deficit and secure his energy supply.

https://www.zerohedge.com/news/2018-09-06/turkey-will-secure-its-energy-supply-no-matter-cost

Africa seeks China deals that will bring jobs and skills

September 1, 2018

Continent’s leaders want Beijing to commit to strategic relationship at summit
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China’s President Xi Jinping (right) shows the way to Sierra Leone President Julius Maada Bio (left) during the welcome ceremony at the Great Hall of the People in Beijing, launching the Forum on China-Africa Cooperation © AFP

By Lucy Hornby in Beijing and David Pilling in London 


African leaders will step up their quest for more manufacturing investment from China next week as they converge on Beijing for a summit at which both sides will seek to extricate their relationship from charges of debt and dependency.

The triennial Forum on China Africa Cooperation has in the past been a catalyst for deepening ties, which a decade ago hinged on Beijing’s efforts to secure commodities such as oil and copper in return for infrastructure investment in African nations.

But African governments, partly under pressure from their own citizens, are planning to use this year’s meeting to push for deals that create domestic jobs and transfer skills and technology.

“We want a strategic relationship. Not just ‘you build us a bridge and we’ll give you money’,” said Kamissa Camara, a foreign policy adviser to Ibrahim Boubacar Keita, Mali’s recently re-elected president.

Ahead of the summit, African diplomats have mounted a co-ordinated push for Chinese commitments for fresh loans and, crucially, for manufacturing investment that could help employ a rising generation of urban youth.

Africa’s population, set to double by 2050, is the youngest and fastest-growing in the world. At the last FOCAC meeting in 2015, Chinese President Xi Jinping pledged $60bn in grants and loans.

Attracting low-end manufacturing jobs being priced out of China could redress Africa’s trade deficits with Beijing, which has been a source of friction. Recovering oil and commodity prices have taken some of the sting out of the dispute, but African businesses blame Chinese imports for wiping out swaths of domestic manufacturing.

China’s African push lends it clout in a continent that has a love-hate relationship with former colonial powers. Dealing with China can improve an African nation’s bargaining position with Europe, the US and even other developing countries such as India or Turkey.

“A relationship with China rebalances our unbalanced relationship,” said Ms Camara. “We hope that when others see China getting involved in Mali, they too will be interested in investing.”

About 13 per cent of Chinese investment into Africa goes to manufacturing, according to the China Africa Research Initiative at Johns Hopkins School of Advanced International Studies.

Africa has become a testing ground for China’s external initiatives from peacekeeping and debt negotiations to building consumer brands. Beijing has also wooed countries without commodities, especially Ethiopia, a fast-growing nation with a similar centrally controlled economy that is positioning itself as a manufacturing hub.

While Chinese investment in Africa has grown, reaching $2.4bn in 2016, it is dwarfed by a trade relationship worth $170bn last year.

China became Africa’s largest trading partner in 2009, as Chinese companies imported more African commodities. Meanwhile, Chinese manufactured goods make up more than 80 per cent of China’s exports to Africa. But as demand for commodities slowed, Africa’s trade deficit with China widened. In 2016, it was equivalent to Africa’s trade deficit with the rest of the world.

We want a strategic relationship. Not just ‘you build us a bridge and we’ll give you money’

Chinese bureaucrats complain that African markets are too small and fragmented for the big projects that state planners love. They grouse that African nations refuse to come up with regional plans for integrated development.

“The two sides have shared interests; for example some of the overcapacity China has is the capacity Africa needs,” said Shen Xiaolei, a researcher from the Chinese Academy of Social Sciences. “The African market is far from mature in most cities because the lack of middle class, but potentially it’s a very big market.”

Chinese state-owned groups do well at building debt-financed infrastructure, but have performed poorly in manufacturing. Their engagement has led to the rising debt levels have been the main factor in loan distress in Zambia and Brazzaville, according to the China Africa Research Initiative.

“In some aspects all of this looks good for Africa. It would appear there are new jobs being created and noticeable infrastructure improvements,” said David Alexander, whose Florida-based company, Baysource Global, advises businesses on offshoring. But the terms of infrastructure-focused financing could mean revenues accrue to Chinese investors, he warned.

As Chinese manufacturing gets more expensive or more difficult, many foreign-invested manufacturers are shifting out of coastal China to south-east Asia and Bangladesh. A few looked to Africa, particularly leather processors and glove manufacturers, said Deborah Brautigam, director of the China-Africa Research Initiative. “There’s room for Africa too.”

Twitter: @HornbyLucy

Additional reporting by Joseph Cotterill in Johannesburg and Xinning Liu and Archie Zhang in Beijing

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Stocks falter after gloomy China declines set tone

August 30, 2018

Concern at impact of tariffs eclipses Nafta optimism, hitting European exporters
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By Michael Hunter
Thursday 10.50 BST

What you need to know

–Export and resource stocks drag on European bourses after China’s indices wilt
–Optimism on Nafta talks gives way to worries about impact of tariffs on China
–Momentum from further record close on Wall Street fades
–Pound holds on to gains on hopes for Brexit deal between UK and EU

Hot topics

European bourses are falling, tracking declines in Shanghai and Hong Kong, with concern about the impact of the Trump administration’s tariffs on the Chinese economy setting the tone. Export stocks are leading the declines in Europe.

Caution is replacing the optimism that came with the breakthrough this week in trade talks between the US and Mexico.

Leading quote

“Comments by the head of China’s state planner warning about risks to growth in the second half of the year and urging more economic support have caught the attention of investors,” noted Chang Liu of Capital Economics.

“Although China’s fiscal policy has become more proactive lately, a reluctance to turn to off-budget borrowing means that policymakers aren’t yet doing enough to arrest the slowdown.”

Equities

The Europe-wide Stoxx 600 is down 0.6 per cent, with the gauge tracking industrial metals makers off 1.5 per cent. The Stoxx technology index is down 0.8 per cent, while the equivalent benchmark for carmakers is down 1.1 per cent. Frankfurt’s Xetra Dax 30 is down 1.1 per cent, with London’s FTSE 100 off 0.7 per cent.

Mainland China’s CSI 300 fell 1.1 per cent and Hong Kong’s Hang Seng sank 0.9 per cent.

After setting another record close overnight, Wall Street’s S&P 500 is expected to slip 0.2 per cent, according to futures trade.

Forex

Sterling is holding above $1.30, a level it reclaimed on Wednesday on signs from the EU that the UK could be offered a deal on the terms of its departure from the bloc. It is 0.1 per cent softer on Thursday at $1.3010. Against the euro, sterling is steady with £0.8984 required for a unit of the shared currency.

The dollar index is flat at 94.636, trading around its lowest level of the month.

Fixed income

The yield on 10-year US Treasuries is drifting lower by 1 basis point to 2.88 per cent. The German Bund yield over the same maturity is down 1.6bp at 0.39 per cent.

Commodities

Brent crude is up 0.2 per cent at $77.31, on lingering concern at potential disruption to supply from Venezuela and Iran.

https://www.ft.com/content/9140f610-ac2c-11e8-89a1-e5de165fa619

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Asian markets rally after Wall St record, dollar eases

August 27, 2018

Asian markets rallied on Monday following a record lead from Wall Street, while the dollar remained under pressure after the head of the Federal Reserve suggested it would not speed up its pace of lifting interest rates.

Jerome Powell said the US economy was healthy and prices showed no sign of rising more than the bank’s two percent target, adding that there appeared to be no risk of overheating.

The remarks at the annual Jackson Hole bankers’ symposium in Wyoming on Friday were taken by observers as an indication the Fed will stick to its gradual increases in borrowing costs, which weighed on the dollar but provided a boost to equities.

Monday

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The S&P 500 and Nasdaq closed at fresh records, while the dollar dropped across the board, with Asian traders extending that trend on Monday.

Tokyo ended the morning 0.7 percent higher, Hong Kong jumped 1.3 percent, Shanghai added 0.8 percent and Singapore put on 0.6 percent. There were also gains in Wellington, Taipei and Jakarta, while Sydney and Seoul were flat.

In forex trading the dollar retreated against its major peers as well as high-yielding currencies, with Mexico’s peso boosted by news that US and Mexican officials were close to a deal on a revised free-trade pact.

The yuan also won support after the People’s Bank of China said Friday it had made a policy tweak to prevent the currency from falling too sharply.

The central bank adjusted the way it fixes the unit’s midpoint each day as it looks to provide more stability at a time when the dollar is broadly in the ascendance.

It also comes as leaders try to temper trade tensions with the United States, with Donald Trump accusing Beijing of keeping the yuan artificially low to boost its exports and offset the impact of tariffs.

The move “should calm both local and international investors that this move does signal the PBoC has no intention of moving into a full-scale currency war in the trade war escalations”, said Stephen Innes, head of Asia-Pacific trading at OANDA.

He also said the euro could face headwinds after Italy’s populist government threatened to withdraw European Union funding unless it agrees to take some of the 150 people stranded on an Italian coastguard ship.

“I expect the market to start fading on this recent euro move because of Italy’s risk, which matters because it’s enormous and the ECB is more than content sitting on their hands,” Innes said.

– Key figures around 0230 GMT –

Tokyo – Nikkei 225: UP 0.7 percent at 22,759.53 (break)

Hong Kong – Hang Seng: UP 1.3 percent at 28,018.18

Shanghai – Composite: UP 0.8 percent at 2,750.64

Euro/dollar: UP at $1.1630 from $1.1623 at 2040 GMT Friday

Pound/dollar: UP at $1.2850 from $1.2847

Dollar/yen: UP at 111.23 yen from 111.21 yen

Oil – West Texas Intermediate: DOWN 10 cents at $68.62 per barrel

Oil – Brent Crude: DOWN nine cents at $75.73 per barrel

New York – Dow Jones: UP 0.5 percent at 25,790.35 (close)

London – FTSE 100: UP 0.2 percent at 7,577.49 (close)

U.S., Mexico Said Poised to Reach Nafta Deal as Soon as Monday

August 26, 2018

The U.S. and Mexico are close to resolving bilateral differences on Nafta and may wrap up as soon as Monday, said three people familiar with the progress, clearing the way for Canada to possibly return to talks to update the three-nation trade pact.

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The nations achieved significant breakthroughs in the past several days on the critical issues of automobiles and energy, according to the people, who asked not to be named discussing private talks. Talks are expected to continue Sunday.

President Donald Trump was optimistic on Saturday, saying on Twitterthat the U.S. could have a “big Trade Agreement” with its southern neighbor soon. The terms of any deal struck by U.S. Trade Representative Robert Lighthizer would need Trump’s final approval.

It remains unclear how U.S. and Mexican negotiators would make public the completion of work on their bilateral issues, given that Mexican Economy Minister Ildefonso Guajardo has signaled that the nation won’t make an announcement on Nafta until Canada also signs on to a new deal.

White House Press Secretary Sarah Huckabee Sanders said Sunday morning that the administration has “no announcements or anything finalized at this time.”

Five Weeks

The administrations of Trump and Enrique Pena Nieto have been working for five weeks to resolve their bilateral issues so Canada can rejoin the talks to update the decades-old trade pact. The U.S. and Mexico are pushing for an agreement this month that would give the countries time to sign the pact before Mexico’s President-elect Andres Manuel Lopez Obrador takes office in December.

Guajardo press office didn’t immediately respond to a request for comment. A Canadian official declined to comment and referred back to remarks last week from Prime Minister Justin Trudeau, who said he was encouraged by optimism coming from the U.S. and Mexico but won’t sign just any deal.

Jesus Seade

Photographer: Al Drago/Bloomberg

On Saturday, Lopez Obrador’s envoy Jesus Seade told reporters upon arrival at a meeting with Lighthizer in Washington that the nations have resolved concerns that the deal had too many restrictions on how the next government can treat foreign oil companies investing in Mexico.

Guajardo, going into the same meeting, said that he expected Saturday to be an “important day” for the negotiations. Neither Seade or Guajardo commented when they emerged from the talks some hours later.

Factory Jobs

The U.S. and Mexico in recent weeks had largely focused on the thorny issue of car manufacturing, as the Trump administration pushes for a deal that would boost factory jobs in America. The U.S. has proposed tightening regional content requirements for car production and having a certain percentage of a car manufactured by higher-paid workers.

While a U.S. proposal to increase tariffs on cars imported from Mexico that don’t meet stricter new content rules was a sticking point as recently as last week, that issue appeared to be resolved by Thursday.

The U.S. agreed to keep the 2.5 percent tariff currently applied under World Trade Organization rules if the cars are made at factories that already exist, according to two people familiar with the plans, who asked not to be named discussing private negotiations.

That would leave open the possibility that cars that don’t meet the rules and are built at new plants could face tariffs of 20 percent to 25 percent, pending the results of a Section 232 national security investigation that Trump ordered in May, the people said.

While Trump has floated the idea of negotiating bilateral trade accords — finalizing one with Mexico before moving on to Canada — both Mexico and Canada have said they want to keep a three-nation deal.

https://www.bloomberg.com/news/articles/2018-08-26/u-s-mexico-said-poised-to-reach-nafta-deal-as-soon-as-monday

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Trump Says Mexico Trade Deal May Be Near as Oil Looks Solved

August 26, 2018

President Donald Trump said the U.S. may be on the verge of a “big Trade Agreement” with Mexico as the Nafta representative of that nation’s president-elect signaled that the thorny issue of rules for the energy industry seems to be resolved.

Mexican Foreign Minister Luis Videgaray, left, and Mexico Secretary of Economy Ildefonso Guajardo leave the Office of the U.S. Trade Representative in Washington this week.
Mexican Foreign Minister Luis Videgaray, left, and Mexico Secretary of Economy Ildefonso Guajardo leave the Office of the U.S. Trade Representative in Washington this week. PHOTO: ERIC BARADAT/AGENCE FRANCE-PRESSE/GETTY IMAGES

Trump emphasized the collaboration with the current and incoming Mexican administrations. “Our relationship with Mexico is getting closer by the hour,” he tweeted early Saturday. “Some really good people within both the new and old government, and all working closely together.”

Jesus Seade, the envoy from incoming Mexican leader Andres Manuel Lopez Obrador, arrived at a meeting with U.S. Trade Representative Robert Lighthizer saying the nations have resolved concerns that the deal had too many restrictions on how the next government can treat foreign oil companies investing in Mexico.

“It was a rich, fun, important negotiation, from which everything emerged in a very satisfactory way for all involved,” Seade told reporters after returning to Washington following meetings with the incoming administration in Mexico City on Thursday.

“We’ve adjusted the focus very well, but without changing the content, the substance, and we’ve arrived at a solution that should be satisfactory for everyone,” Seade said. “We still need to check technical texts, and I want to be respectful of everyone, but it’s now substantially agreed, with the correct focus.”

Seade also predicted that the nations will agree on a method to update Nafta without the threat of a so-called “sunset clause,” an automatic expiration after five years — as the U.S. has sought since October.

“We’re negotiating, and it’s going to come out,” Seade said. “It’s no longer what it was for the U.S. in any way. It’s focused on evaluation and continuation.”

Lighthizer’s media office declined to comment on Seade’s statement, and another person close to the talks, who asked not to be identified, said that an automatic expiration after five years remains the U.S.’s negotiating demand. Guajardo has consistently said that he expects the issue to be one of the final ones to be ironed out, because it requires Canada’s participation.

Big Day

Mexican Economy Minister Ildefonso Guajardo and Foreign Minister Luis Videgaray also attended Saturday’s meeting with Lighthizer, which Guajardo called “an important day” for the long-running negotiations.

Talks are poised to spill into next week, pushing up against the goal for a deal by the end of the month. The U.S. and Mexico are trying to work out their bilateral issues before Canada rejoins the talks in an attempt to update the decades-old three-nation agreement.

https://www.bloomberg.com/news/articles/2018-08-25/trump-says-mexico-trade-deal-may-be-near-as-oil-appears-resolved

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Wall Street Journal

The U.S. and Mexico are getting close to reaching a bilateral agreement on key issues holding back a renegotiation of the North American Free Trade Agreement, removing a hurdle to completing a deal that would eventually include Canada, according to people closely tracking the negotiations.

Trump administration officials and their Mexican counterparts are debating a proposal to exempt some industries from dispute-settlement provisions, which would remove one of the most difficult issues, the people said.

The negotiations have also included discussions over how much local content a car should have, and the cost of labor to produce a car, to qualify for tariff-free treatment under Nafta. The auto-related discussions are at an “advanced” stage, said one official familiar with the matter.

Donald J. Trump

@realDonaldTrump

Our relationship with Mexico is getting closer by the hour. Some really good people within both the new and old government, and all working closely together….A big Trade Agreement with Mexico could be happening soon!

“Our relationship with Mexico is getting closer by the hour,” tweeted President Trump on Saturday morning, as negotiators continued their work. “A big Trade Agreement with Mexico could be happening soon!”

One of the sticking points throughout the last year of Nafta negotiations between the U.S., Mexico and Canada has been Washington’s desire to weaken or remove a provision in Nafta known as investor-state dispute settlement, or ISDS, in which companies can bring claims to an international tribunal when they believe their overseas investments were unfairly treated by an action from another Nafta government.

The U.S. has argued that the tribunals erode national sovereignty. But many U.S. companies have pressured the administration to preserve the dispute-settlement provisions, arguing that otherwise their international investments would be exposed and unprotected. Mexico and Canada have also favored keeping the provisions, believing they bolster the confidence of investors.

The Chamber of Commerce, Business Roundtable, National Association of Manufacturers, and American Petroleum Institute are among major industry groups that have fought to preserve the dispute-settlement provisions.

An idea to resolve the impasse is for only certain industries to remain covered by dispute settlement. Negotiators have floated the idea with different industries, according to three sources from industries closely tracking the negotiations. Mexico and the U.S. don’t appear to have reached any agreement on the idea to exempt some industries but not others.

While a compromise on dispute settlement may bring some industry groups along, it could spark further opposition from the exempted industries that believe they are losing meaningful protection of their international investments. The strategy could split the united front that many business groups have advanced, with some major industries potentially welcoming a resolution, leaving behind a smaller group with objections.

The U.S. Trade Representative’s office didn’t respond to a request to comment. Mexican officials, approached as they entered a negotiating venue in Washington, declined to comment.

One idea that has been discussed is to retain industries that bid for government concessions as a crucial part of their business, including energy, utilities, mining, telecoms and services under the dispute-settlement process. Other major industries, including manufacturing and agriculture, wouldn’t be covered by the dispute-settlement provisions in this version of the proposal.

Mexico and the U.S. have signaled in recent days that they are making significant progress resolving their remaining disagreements. But they have stressed nothing is final. Talks are set to continue over the weekend.

One source of delay could be a rift emerging between the current Mexican negotiating team, and that of President-elect Andrés Manuel Lòpez Obrador, who wants Mexico’s newly opened energy sector to be exempt from dispute resolution.

Geoffrey Gertz, a fellow at the Brookings Institution who has studied dispute settlement, said that the system is more important for some industries than others.

“There is a logic to focusing on industries with high sunk costs and extensive regulation, as this is where investors are potentially most exposed to reversals in government policy,” he said.

But companies that aren’t covered might still be convinced to support the deal if it allows the Nafta negotiations to be resolved, he said.

“What I suspect matters most for firms considering investing in Mexico is stable, predictable, comprehensive access to the North American market, more so than the right to bring ISDS cases,” said Mr. Gertz.

Even if the U.S. and Mexico agreed to only retain dispute settlement for certain industries, Mexico and Canada could still agree bilaterally to keep the provisions for all their industries.

Mexico’s chief trade negotiator, Ildefonso Guajardo, said Friday that the U.S. and Mexico are “very far” down the list of issues needing to be worked out between the two countries, but said “even if you are extremely engaged, there is always a last-moment thing that can come between you and your goals.”

He said conclusion of the talks, including some of the most difficult remaining issues, would require the inclusion of the Canadians.

Asked about the U.S. position that Nafta should include a “sunset clause” which causes the deal to expire in five years, Mr. Guajardo responded that “it’s clear that there are trilateral issues that have to be solved in a trilateral context.”

Write to Josh Zumbrun at Josh.Zumbrun@wsj.com and Robbie Whelan at robbie.whelan@wsj.com

https://www.wsj.com/articles/u-s-mexico-close-to-resolving-issues-holding-up-nafta-talks-1535214739

Trump Says Secretary of State Mike Pompeo Won’t Go to North Korea

August 25, 2018

President signals frustration with deadlocked nuclear talks

Secretary of State Mike Pompeo, right, and Kim Yong Chol, a North Korean senior ruling party official and former intelligence chief, in Pyongyang in July.
Secretary of State Mike Pompeo, right, and Kim Yong Chol, a North Korean senior ruling party official and former intelligence chief, in Pyongyang in July. PHOTO: ANDREW HARNIK/ASSOCIATED PRESS
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WASHINGTON—President Trump canceled Secretary of State Mike Pompeo’s scheduled weekend trip to North Korea in a series of tweets Friday after a briefing, signaling for the first time frustration with deadlocked nuclear talks.

“I have asked Secretary of State Mike Pompeo not to go to North Korea, at this time, because I feel we are not making sufficient progress with respect to the denuclearization of the Korean Peninsula…” Mr. Trump said on Twitter.

Mr. Trump’s decision appeared to take State Department officials by surprise. Mr. Pompeo named a new special representative for North Korea, Stephen Biegun, to lead the talks only a day earlier, and staffers were preparing for the trip to go ahead on Sunday as planned.

Mr. Pompeo was in a meeting with Mr. Trump in the White House when the president wrote the tweets calling off the meeting, a person familiar with the matter said. The president made the decision after talking to Mr. Pompeo and getting an update on the state of negotiations, which have been gridlocked since Mr. Trump met North Korean leader Kim Jong Un in June.

“I’m not satisfied with the progress,” Mr. Trump said at the meeting with his top diplomat, the person familiar with the matter said.

Mr. Trump appeared to blame China for the lack of progress on the negotiations, even though Beijing doesn’t have a direct role in the process. Officials say progress has stalled because the U.S. wants North Korea to take concrete steps before making any concessions, while Pyongyang wants Washington to reciprocate as it moves toward denuclearization.

Mr. Trump suggested in one tweet that China was no longer cooperating on denuclearization as a way to punish the U.S. over tariffs that have triggered a tit-for-tat trade dispute between the two countries. He said Mr. Pompeo would travel to North Korea after the trade dispute is resolved.

“Because of our much tougher Trading stance with China, I do not believe they are helping with the process of denuclearization as they once were,” Mr. Trump wrote.

The U.S. has been calling on China to strictly enforce wide-ranging United Nations sanctions targeting North Korea’s economy. The sanctions were designed to exert painful economic pressure on Pyongyang and drive North Korea’s Mr. Kim to enter into talks over the country’s nuclear program.

Beijing initially appeared to work closely with the U.S. to enforce the U.N. sanctions, but in recent weeks U.S. officials have protested, citing a reported increase in trade between China and North Korea, and they warned that it could ease pressure on Pyongyang to negotiate.

Trade talks between the U.S. and China ended on Thursday without any sign of progress toward a solutionThe U.S. put in place tariffs on $16 billion in Chinese goods on Thursday, raising the total to $50 billion. The Chinese have matched them dollar for dollar. The U.S. is eyeing tariffs on an additional $200 billion in Chinese imports, about half the total from China, that could start taking effect as early as September.

Mr. Pompeo and his newly appointed special representative to North Korea, Mr. Biegun, were due to leave for Pyongyang on Sunday and then travel to Beijing.

It wasn’t immediately clear why Mr. Trump linked China’s lack of help on sanctions to the decision to cancel the talks with North Korea. Administration officials have often said that economic issues related to China and North Korea are kept on separate tracks, even though Mr. Trump sometimes treats them as related.

The purpose of the trip was to introduce Mr. Beigun, who will be taking over responsibility for the talks, and to push Pyongyang to do more to show commitment to its promise to move toward giving up its nuclear weapons.

Mr. Trump has long insisted the talks with North Korea were progressing well, and Friday’s tweets were the first indication that progress was going slower than expected.

As recently as last month, Mr. Trump tweeted that the U.S. was having “many good conversations with North Korea-it is going well!”

Mr. Pompeo has made several trips to Pyongyang, but talks have been gridlocked over opposing demands. The U.S. wants North Korea to front-load its promises to denuclearize and take concrete steps to dismantle its assets before offering any concessions. North Korea wants the U.S. to make reciprocal, step-by-step concessions as a show of good faith.

Mr. Biegun was appointed to take over the nuclear talks on Thursday, after Mr. Pompeo’s relationship with the North Koreans appeared to sour. North Korea’s foreign ministry described Mr. Pompeo’s approach as “gangster-like” after a visit in July, and avoided a bilateral meeting with the secretary during a regional meeting earlier this month.

Despite the lack of progress at the lower level, Mr. Trump and Mr. Kim have continued to send each other friendly signals. On Friday, Mr. Trump repeated a previous promise to see Mr. Kim again. The two leaders met at a summit in Singapore in June.

“In the meantime I would like to send my warmest regards and respect to Chairman Kim. I look forward to seeing him soon!,” Mr. Trump said in another Tweet Friday.

The Chinese Embassy in Washington didn’t respond to a request to comment. The State Department didn’t immediately comment either.

Write to Jessica Donati at jessica.donati@wsj.com and Peter Nicholas at peter.nicholas@wsj.com

https://www.wsj.com/articles/trump-says-secretary-of-state-mike-pompeo-wont-go-to-north-korea-1535132989

Related:

Trump: Pompeo Trip To North Korea Next Week Cancelled — China Not Doing Enough To Enforce Sanctions

August 24, 2018

CNN and Fox News are reporting that a Tweet from President Donald Trump this afternoon says that Secretary of State Mike Pompeo will not be going to North Korea next week…

We are told that President Trump wants to see obvious progress, verifiable by national intelligence, that North Korea is making measurable headway toward denuclearization — and that China is rigorously enforcing sanction on North Korea….

More follows…

Image may contain: 2 people, people standing, ocean and outdoor

Kim Jong-un and Xi Jinping in Dalian, May 8, 2018

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Saudi showdown spotlights Canada’s energy insecurity

August 21, 2018

In mid-August, Khalid al-Falih, Saudi Arabia’s energy minister, announced that the diplomatic rift with Canada wouldn’t affect the flow of Saudi crude oil to the Irving refinery in Saint John, N.B.

There are at least two reasons why this decision should not have come as a surprise:

Image result for Khalid al-Falih, photos

Khalid al-Falih

Firstly, in 2017, Saudi crude exports to the Irving refinery netted Saudi Arabia about $2.5 billion. This was a small but undoubtedly useful contribution towards their support of pro-government forces in the Yemeni civil war.

Secondly, more than half of the Irving refinery’s production is exported to the United States. Cutting supplies to the refinery would have caused shortages of gasoline and other fuels in the U.S. and resulted in unnecessary friction between Saudi Arabia and the U.S.

Although Saudi exports of crude oil to the Saint John refinery are small (37.3 million barrels in 2017) compared with their exports to other countries, they’re significant for the Maritimes. For example, in 2017, Saudi Arabia exported 346 million barrels to the U.S. and about 465 million barrels to Japan. Yet the contribution to the Saint John refinery amounts to almost 40 per cent of the refinery’s supply.

The region needs to think more seriously about its reliance on Saudi crude oil and consider replacing these supplies with those from trusted sources.

Maritime oil demand

On the downstream side, approximately one-third of the refinery’s output meets most of the Maritime provinces’ demand for refined petroleum products such as gasoline, home-heating oil and diesel fuel. While unlikely, if Saudi Arabia ever did cut off its oil exports to Canada, the impact would be felt across the Maritime provinces.

Oil tanks for the Irving Oil refinery sit outside Saint John, N.B. The refinery produces more than 320,000 barrels of fuel. Shutterstock

In the immediate aftermath of such an event, demand would have to be met from existing stocks of crude oil at the refinery and with refined product stored within the Maritimes. Any threat of shortages would have to be managed by several different levels of government.

To relieve these shortages, crude oil or refined product — or both — would need to be purchased on the spot market, probably resulting in higher prices for petroleum products for consumers.

Pipeline to the east

Prior to the Saudis’ announcement, a number of political pundits suggested that improving the East Coast’s energy security would simply be a matter of reviving the Energy East pipeline. Once built, Western Canadian crude could then reach the Saint John refinery to help meet the oil demand in the Maritimes and other countries.

This argument overlooks the fact that it will take years to get the necessary federal and provincial approval before construction of the pipeline could begin. At present, there are very few ways in which Canadian crude oil could improve energy security in the Maritime provinces.

Read more: The major trade implications of the Canada-Saudi Arabia spat

One could be Enbridge’s Line 9B pipeline, which sends 300,000 barrels per day from western Canada via Westover, Ont. to Montréal. About one-third of Line 9B’s daily capacity, shipped by tanker from Montréal to Saint John, would be sufficient to replace Saudi supply.

Despite this, Line 9B’s entire supply is destined for refineries in Québec: Suncor in Montréal, and to the Valero refinery in Lévis, by a pair of Panamax ice-certified tankers that operate year-round.

Other Canadian sources

With Line 9B’s supply spoken for, the Maritime provinces are limited to two other possible sources of Canadian crude: Western Canada (by rail) and offshore Newfoundland and Labrador (by ship).
The Irving refinery has a railway yard with capacity for rail tank cars holding about 145,000 barrels of crude oil. Since the railway yard already handles crude from across North America, there may be limitations on how much additional crude-by-rail it could deal with safely.

Over half of Newfoundland and Labrador’s annual production of about 80 million barrels of crude oil is exported to the U.S. and elsewhere. However, contractual obligations mean that very little of this oil is available to the Maritimes.

Read more: The Saudi-Canada spat: Both countries are wrong

Events of the past few weeks have shown that the Saudis can act unpredictably. Had maintaining a supply of crude oil to Canada not been in the Saudis’ interest, the situation in the Maritime provinces would be quite different today.

The reliance on Saudi crude oil continues to threaten energy security in the Maritimes. The region needs to improve its energy security by replacing Saudi crude oil with supplies from Canadian and other trusted sources.

http://theconversation.com/saudi-showdown-spotlights-canadas-energy-insecurity-101560