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Trade and Industry

U.S-China trade war spreads fears on LNG project

There are fears that the U.S-China trade battle is hampering efforts to line up buyers needed to move ahead with multi-billion-dollar U.S. Gulf Coast liquefied natural gas (LNG) export project.

The United States is positioning itself as the dominant provider of the super-cooled fuel as Asian nations shift away from dirtier power sources like coal, and this month’s approval of a giant Canadian project led by Royal Dutch Shell bolstered enthusiasm for the sector overall in North America.

That optimism took a hit when Australia’s LNG Ltd delayed until next year a planned decision on whether to build its Louisiana-based Magnolia LNG plant due to problems lining up Chinese customers.

And it comes when bankers and analysts in the sector had already questioned whether the next wave of projects in the pipeline would pass muster with investors.

“Chinese LNG demand growth is the largest piece of demand growth out there, and Chinese buyers have got to feel reluctant to commit to U.S. capacity when the U.S. government sees trade as a means of exerting political leverage,” said Bob Ineson, managing director of North American natural gas at IHS Markit.

China set a 10 percent tariff on U.S. LNG imports last month, extending a trade scuffle in which U.S. President Donald Trump imposed tariffs on $250 billion worth of imported Chinese goods and China retaliated with duties on $110 billion worth of U.S. goods.

China’s LNG demand has skyrocketed in recent years on Beijing’s pollution crackdown, with imports nearly tripling since 2015. Last year it overtook South Korea as the world’s No. 2 importer of LNG.

That boom, along with rising demand from other Asian nations, has helped gobble up an anticipated LNG glut and boosted spot prices to near four-year highs, breaking a multi-year freeze on new project investment.

By the mid-2020s, global LNG demand is forecast to range from 360 million to 450 million tonnes, up from about 290 million tonnes in 2017. With China leading that growth, signing deals with its companies is viewed as imperative to get larger projects done.

But the tariffs are having a chilling effect, according to two U.S. industry sources. China is not signing any long-term deals with U.S. projects until the spat is resolved, they said.

That’s not good news when there are at least six other new builds or expansions in North America on the cusp of a construction decision, with a handful more eyeing go-aheads by 2020, representing more than $100 billion worth of potential construction.

The first wave of U.S. LNG projects was able to leverage underutilized infrastructure and cheap gas to get a foothold in what had been a closely held global market.

But second-wave newcomers like Tellurian Inc, NextDecade Corp and Venture Global LNG face a range of challenges from financing to contract pricing to pipeline access, experts told Reuters.

With so many horses in the race, big builds backed by established players or expansions of existing export facilities will likely fare better than upstarts.

This favors energy giants like Shell, Exxon Mobil Corp and Qatar Petroleum, all of which have projects in the works, along with Cheniere Energy, the leading independent U.S. LNG company.

Shell and its partners this month approved the C$40 billion ($31 billion) LNG Canada mega project, promising 14 million tonnes per annum of new capacity before 2025, with the option to double that output.

“My instinct would tell me that the larger companies have the resources and relationships to get these things approved, because they’re just enormous projects,” said Charlie Cone, an LNG analyst with energy data firm Genscape.

LNG Canada’s chief executive, Andy Calitz, said last week that U.S. rivals could end up “dead in the water” as long as China keeps its tariff on U.S. imports. That could be a boon for Canada’s tiny Woodfibre LNG on the west coast and Pieridae Energy Ltd’s Goldboro LNG on the east coast.

Non-Chinese buyers are also cautious about long-term deals due to changing trade policy, said IHS’s Ineson. “This conflict could lead to many developers of U.S.-based projects missing this window,” he said.


Source: Hellenic shipping news



Don’t create petroleum scarcity , DPR warns dealers  

Nigeria has warned petroleum marketers against the creation of artificial scarcity during the Christmas and New Year.

The Department of Petroleum Resources (DPR) issued the warning to stall efforts to hoard petroleum products by greedy marketers.

Mr Asuquo Antai, the Warri Zonal Operations Controller of DPR, gave the warning when he led a team of the regulatory agency on a sensitisation to some petroleum marketers in Asaba.

Antai said that the exercise was to sensitise the public and the retail outlets on why they should not hoard the product so as to have a hitch-free festivity.

He said that Federal Government had made sufficient arrangement to ensure availability of fuel throughout the festive period and beyond.

The controller appealed to the public not to panic or hoard petroleum and underdispensed the product, but should sell at the approved price of N145 per litre.

“You will recall that last year, we had a terrible experience in terms of fuel scarcity, and we do not want same to repeat this year.

“The department has deemed it fit to send DPR to the field to sensitive the public and marketers to ensure that they buy and sell at the government approved pump price of N145 per litre.

“We expect the public not to panic buy; the product is available, government has made sufficient arrangement to have enough petroleum for the festive period and beyond.

“The pump price would not be adjusted upward  for any reason.

“If there is any adjustment, it should be downward, but the pump should dispensed accurately, it is very important.

“Also, the depot owners should ensure they sell at the government approved price to the marketers to enable them to sustain the current N145 per litre.

“We check the gauge of some petrol stations and discovered that they are dispensing accurately.

“We also check the undertanks of a petrol station who claimed not to have product and it was true,” he said.

Antai advised the managers of the filling stations inspected not to sell for consumers with 20, 25 or 50 litres of Jerry cans as that could lead to hoarding and by implication creating artificial scarcity.

He expressed satisfaction with the services of the petrol stations visited, urging them to keep it up.

The News Agency of Nigeria (NAN) reports that some of the petrol stations inspected included: Rainoil, Cherry Investment, NorthWest and Echemas Oil.

Mr Larry Onwochei, the Manager of Rainoil, said he had improved on his services to the customers by way of operating 24 hours daily. 

Onwochei said that he had regular supply of petroleum products.


Nigeria to host Africa Trade Forum

The United Nations Economic Commission for Africa (ECA), has said Nigeria is set to host the Africa Trade Forum 2018.

The communication section of the commission said that the forum would hold between November 2 and November 3 in Lagos.

It also said that the forum was being organised by the Ministry of Industry, Trade and Investment, and co-organised by the ECA, The Rockefeller Foundation and the African Union Commission (AUC).

According to the commission, the forum is expected to bring together stakeholders from across the continent, political and governance spheres, the private sector and entrepreneurs, philanthropists, academia, researchers and development partners.

It added that the forum was aimed at discussing the process for realising the AfCFTA.

“The AfCFTA was signed in March 2018 by 44 African countries and if ratified, would become one of the world’s largest trading blocs.

“It is also the biggest trade agreement signed since the World Trade Organisation (WTO) was established, bringing together 1.3 billion people with a combined Gross Domestic Product (GDP) of more than two trillion dollars in a single market.

‘“The agreement aims to provide improved competition and lower business costs.’’

The ECA said that the forum’s purpose was to look into the challenges and opportunities of the AfCFTA in individual African states.

“It is to also better understand how AfCFTA can drive economic development and prosperity on the continent for all African citizens.

“It will also provide a platform to discuss Africa’s participation and ownership of the AfCFTA objectives and examine how intra-regional trade can enable prosperity in Africa.

“The forum will bring together stakeholders to determine how nations can move from a signed AfCFTA to real action and implementation.’’

It also quoted the Executive Secretary, ECA, Ms Vera Songwe as saying “in an age of trade wars, Africa is sending a strong message’’.

“That trade deals and reforms can be approached through consensus-building and cooperation, leaving no one behind.

“In order to ensure the AfCFTA has a game-changing impact on African economies, we must now develop clear strategies for product diversification and inclusive implementation.

“The speed at which countries have signed and are now ratifying the AfCFTA agreement underscores the momentum behind this African flagship initiative,’’ she said.

The AUC says the AfCFTA is critical for Africa’s economic competitiveness and development, according to the statement.

It said that once the AfCFTA becomes fully operational, African enterprises would be exposed to large economies of scale and scope.

“With expanded production and competitiveness, as well as increased investment, our enterprises will be able to increase Africa’s share of global trade, creating opportunities for economic development and the prosperity of African countries.”

Dr Okechukwu Enelamah, Minister of Industry, Trade and Investment, said that the idea of an integrated African market to industrialise Africa, spur growth, enhance welfare and create jobs had been around for a long time.

“However, with the actual emergence of the AfCFTA in 2018, the decision was taken by the government to mobilise stakeholders in the Nigerian economy.

“To understand its details, interpret its opportunities and reorganise our economic system for coherence and coordination if the opportunities of the AfCFTA are to be realised and maximised.

“This forum is a unique opportunity to proactively engage with a wide range of stakeholders to ensure that AfCFTA works for Nigeria,” he said.

Mr Mamadou Biteye, the Managing Director, Africa, The Rockefeller Foundation said the foundation was delighted to support the ECA and AUC to set the table and steer the conversation on the AfCFTA with Africa’s leaders.

He said the forum was an opportunity to work together to address challenges, discuss solutions and increase awareness about the agreement’s ability to be a transformative tool that improves the lives of millions of Africans, especially the most vulnerable.

Labour rejects minimum wage proposal, opts for strike

The Nigeria Labour Congress (NLC) has rejected the US$72 (N22,500) proposed by the state governors as the New National Minimum Wage for workers and opted to continue with its planned industrial action.

Mr Ayuba Wabba, NLC president, said: “We wish to reiterate our position adopted at our National Executive Council (NEC) meeting on Oct. 23 that any figure below US$79 (N30, 000) will not be accepted by us.’’

“We call on our members to continue to mobilise in preparation for the commencement of an indefinite strike on Nov. 6, if by then necessary steps are not taken to adopt the recommendation of the Tripartite Committee,” Wabba said.

The Nigeria Governors Forum (NGF) had issued a communique after its meeting claiming that state governors can only pay N22, 500, as the new national minimum wage.

The NLC president also said that the NGF was not a negotiating body but merely a party in the negotiation for the convenience of state governors.

He also noted that the Tripartite Committee from inception sent letters to each state government to send their memorandum as their contributions to the new national minimum wage negotiating process.

The President, however, said that 21 states sent in their memorandum quoting figures.

“Second, the demand of organised labour is not N30, 000. Our initial demand is N66, 500. N30, 000 is the compromise figure arrived at the end of negotiations by the tripartite partners, which are the governors, employers and organised labour.

“The new minimum wage was a product of intense negotiation that lasted for almost one year,” he said.

He also noted that the governors had six representatives on the tripartite committee; one state governor represented each of the geo-political zones.

He said that the representatives of the state governors were part and parcel of the negotiating committee from the beginning to the end.

Wabba said, “It is important to note that the National Minimum Wage is not an allocation to workers but a product of negotiation by the tripartite partners.”

He said that the unilateral pronouncement by governors is an abuse of every known principle of industrial relations, laws, processes and international best practices.

“Third, the NGF, erroneously, stated that the population of salaried workers is five per cent of the general population in Nigeria.

“This five per cent represent the nation’s workforce including teachers, health workers, police personnel, military men and women and among other workers labouring for the development of our country.

“Of what benefit are roads, rails and bridges without human beings to run them?

“Fourth, we are also very concerned about the huge pressure being brought upon the Organised Private Sector (OPS) to compromise their stand on the N30, 000 New National Minimum Wage.

“This pressure by enemies of the Nigerian people was what led to the recent statement by NACCIMA that sought to cast aspersion on an already negotiation on the New National Minimum Wage.

“I have spoken to the Head of NACCIMA and she has disputed what has been published by many newspapers.

“I am also aware that the Nigeria Employers Consultative Association (NECA) will also issue an official statement, “Wabba added.

He explained that labour demands that the constitutional, legal and morally right step to be taken at this point is for the Chairman of National Minimum Wage Tripartite Negotiating Committee to submit the report of the already concluded negotiations to Mr President.

He also advised all the governors to return to their respective states and gather their workers and tell them reason they cannot pay N30,000 not just coming to Abuja to announce they cannot pay.

Oil marketers to get promissory notes for payment

The Debt Management Office (DMO) has started the fast track of settlement of arrears through promissory notes to Nigerian oil marketers.

The DMO said in Abuja at a meeting with the Senate Committee on Downstream Petroleum Sector to discuss the issue of the outstanding payments to oil marketers.

According to the statement, the implementation is in line with the process approved by the Federal Executive Council (FEC).

It also quoted Sen. Kabiru Marafa,the Chairman of the Senate committee, as calling the meeting to ascertain the status of the implementation of the approvals given by the National Assembly for the settlement of arrears to oil marketers.

The meeting was attended by representatives from the Ministry of Finance, DMO, Central Bank of Nigeria (CBN), Petroleum Products Pricing Regulatory Agency (PPPRA) and representatives of oil marketers.

The obligations due to the oil marketers represent interest accruals and foreign exchange differentials, it said.

“The committee also requested the CBN to confirm the position on a statement by oil marketers that there was an agreement to stop the accrual of interest on loans owed by the oil marketers to banks.

“The Senate committee had earlier approved an amount to be paid to the oil marketers in July, but the complete approval of NASS, required by law for the issuance of government debt securities, was only received when a resolution conveying the approval of the House of Representatives was issued on September 26.

“On the strength of the provisions of the law, therefore, implementation could not have commenced prior to September 26.”

The DMO said that the current administration as one of its strategies to address inherited arrears to various contractors, approved the issuance of promissory notes to various categories of creditors.

It added that after the approval by FEC, President Muhammadu Buhari presented a request to NASS, as required by the Fiscal Responsibility Act, 2007.

“The categories of creditors for whom the settlement of arrears was approved by FEC include pensioners and staff, contractors, construction companies, exporters, DisCos, GenCos, State Governments, Judgement Debts and the petroleum marketers.

“To ensure transparency and value for money to the Federal Government in the settlement of these arrears, FEC had specified the processes to be adopted in the issuance of the promissory notes, one of which is the validation of the claims by an international accounting firm operating in Nigeria.

“The benefits of this initiative by the current administration include the return by contractors to project sites, thereby improving infrastructure and creating jobs.”

The DMO noted that another benefit was that there would be an improvement in the ability of banks to lend to the real sector.

This is because since some of the creditors to be settled are indebted to banks, the issuance of the promissory notes will enable them to repay their debts to the banks.

The DMO also said at the hearing that it would meet with the oil marketers in November.