vendredi, mars 15, 2013

US paws over Mongolian mining development

Hello my dear followers. I am trying to find some strength to work this morning and saw this news. While reading it something eluded me: why do US gov bother about the environmental and SOCIAL impact on a mining project in a distant country they have few bonds with (in 2006, it's the 175th largest U.S. export market (at $23 million) and its US 123rd largest source of imports (at $114 million)*), and a company they are not evidently related to (Rio Tinto)? Maybe a 5.5 BUSD/year benefit and an almost ready project... only waiting for a World Bank funding (if they dont get the funding they might as well drop the whole thing). It really looks like some international level heist case. Now reading further about Rio Tinto's activity doesn't help to think the company is a trouble maker on its own. So heist or no heist? See for yourself

Anniversary Suez crisis, Mali conflict and oil price

56 years ago today (8th March) Gamal Adbel Nasser reopened the Suez Canal. Just to crunch some numbers: In 1957, the population of the world stood at 2.87 billion and a barrel of oil topped out at $1.90 per barrel. In 2013, the world’s population was 7.13 billion and this morning Brent Crude was worth $111.15 per barrel.
Talking about conflict, here is a littl map that can tell you a lot of why Europe is (questionably) risking it's soldiers in saharian Africa. As I do not know how long this link will remain, I will paste the article below, but I am not the author:
The untold story of Mali and Oil By TOBIAS VANDERBRUCK for OIL-PRICE.NET, 2013/02/11

Mali and oil are as complex as it can get. Though mineral rich, the landlocked country has no- established- oil or gas reserves worth commercial exploitation. Still, the 'unexplored' aspect of the country lends it gravitas as the potential for oil and gas is very promising and could well be a game changer.
Of course, now, the fire is still on and the atmosphere has a definite air of harried complexity. Before looking into the present conflict, an overview of the oil and gas industry in Mali:

Brief History
The quest for oil in Mali, if you may, began in the early sixties with airborne surveys as the first step in oil exploration. Moderate oil exploration took place in Mali until 1983 when the Taoudeni Basin was declared "burnt out" by the exploration company Esso.
During the seventies and early eighties, more than 9,000 kilometers of exploration through 2D-seismic studies was undertaken in the country. Apart from renewed surveys in Taoudeni basin, there were extensive surveys in Gao Graben basin too. The results were far from satisfactory and when coupled with wide security threats, lack of infrastructure and adverse desert and semi-desert climatic conditions (with temperatures reaching easy levels of 40 to 48 degree celsius or 118 F -ouch), the interest declined. That, however, changed in 2004 with the advent of Baraka Petroleum. Thus, in spite of the ground reality of just five exploratory wells so far, the re-awakened interest in Mali is, in a big way, due to the entry of Baraka Petroleum. With high oil prices and new technical means the bluey oil companies are confident in making a profit when they find oil and gas. Also, an oil pipeline from Chad through Cameroon has increased expectations for a similar pipeline from Mali through Algeria to the market of Europe.
So, there's the promise of potential hydrocarbons in the four sedimentary basins in the country. Though the then Prime Minister of Mali, Cisse Mariam Sidibe, said in 2011 that four countries were 'well advanced' in oil exploration in Mali, it still remains a risk prone venture with only minor oil shows. Basically, it's still pretty much in the realm of assumptions that the country would be able to produce oil and gas for commercial exploitation. On the other hand, the recent studies show geological formations very similar to those oil-producing formations in countries like Algeria, Chad and Sudan.

The four important basins in Mali

Taoudeni Basin
If experts are to be believed, you may hear of this basin very soon. Taoudeni Basin is a major geological formation in West Africa spanning Mauritania, Algeria and Mali. Considered as a high potential basin, it is the largest sedimentary basin in NW Africa. In the eighties, a drilling done here managed to penetrate the sedimentary formations to reach potential petroleum systems. In 1982, a well in the basin, Yarba-1, reportedly showed gas, though the subsequent explorations disputed the oil claims. An evaluation in just five blocks of the basin in 2006 held that the blocks could have about 6 MMboe and over 9 Tcf of oil. The seismic data obtained too showed promise for future explorations. Moreover, the infracambrain black shales along the northern margins, and Proterozoic stromatolite beds are expected to hold large amounts of Hyrdocabons. Geologists have noted similarities between the petroleum rich provinces in Algeria, Niger, Sudan and Libya and the Taoudeni basin. The basin has 14 blocks. Since the basin is relatively unexplored, it has added spice to interest of oil companies.

Nara Trough
Nara Trough is the most western of the four basins and is supposed to be a sedimentary basin of Mesozoic origin (The Mesozoic age has been proved by wood fossils). Still unexplored, the region has been mapped using gravity and aeromagnetic data suggesting sediments as thick as 14km, similar to the Precaspian basin in Kazakhstan. Also, the cetaceous reservoir found here is similar to the one in Chad and the Paleozoic seems more related to Algeria. Nara Trough includes 7 blocks and all of them have been granted to oil companies. The promising signs: competent TOC of three percent in shale, intracratonic rift/sag basin of 14000m magnetic depth and deep structures still to be measured.

Tamesna Basin
Found in the east of Mali, extending into Niger and Algeria. Here, the Creataceous is Niger like, while the Paleozoic is like those in Libya. Though drilled in 1983, there remain dire needs for further studies in the region. Yet, the presence of oil-prone source rocks promises more investigations in the basin.

Gao Graben
Gao Graben, a part of the Central African Rift system extends from Nigeria and Mali in the West to Sudan and Kenya in the East, and while extending into Chad has oil fit for commercial use. One of the wells drilled in this basin turned to be a dry one. Still, 'minor shows' of oil and gas has been found in the basin, and thus, almost 37,500 km2 have come under exploration. (If you are asking, the Creataceous are analogues to those in Chad). Gao Graben has four blocks- 10, 11, 21 and 28. There were minor oil and gas show in the wells. The source rock here is lacustrine Cretaceous shales, while the reservoir rocks are deltaic syn and post. The basin also shows depositional rift sands and fault block traps, all promising signs from an exploratory point of view.

Current Oil Exploration in Mali
If anything Malians have been clever not only in luring the oil companies but also getting guarantees of minimum investment- the present situation, notwithstanding. There is hunger for oil and Mali offered glimpses of it. As a result, there are big and small companies in Mali with the baggage of huge investment in their search for oil and gas.
  •     Baraka: An Australian company which changed its name to Baraka Energy and Resources Limited in 2011. Indeed, this Perth based company is almost solely responsible for putting Mali in the oil map of the world. In 2005, the company signed agreements for five permits for an area totalling 193,200 sq km, stretching from the Algerian border in the East to Mauritania in the west. Progressing fast, in 2008, the company had exploration rights in eight blocks of Taoudeni basin covering an area of more than 272,000 sq km.
  •     Sonatrach- Algeria's national oil company has interest in the Taoudeni basin and explorations in the North of Mali. Sonatarch has promised investment worth US$ 11.5 million in the next four years.
  •     Selier Energy: The Canadian Company has interest in block 18, an area of 19,259 square kilometre in Macina Graben in the Taoudeni basin. Selier Energy has pledged US$ 11.2 million for explorations.
  •     Another Australian company Sphere Investments Ltd., operates in Block 8 in the Taoudeni basin and Block 10 in Gao Graben.
In the past, Malaysian company Markmore Group had also applied for blocks 5 and 6 in the Taoudeni. The other companies with interest in Mali include London based Centric Energy (block 7 and 11), Italian company Eni, Canadian oil and gas company, Africa oil corporation as well as Jersey based Heritage Oil. Canadian company Simba Energy has secured oil exploration leases in block 3. The state owned Norwegian company, Statoil has important stakes in the region, also.

War in Mali
Jihadists who overthrew Gaddhafi raided his weapons depots and joined with Al Qaeda. They are now spreading the Islamic revolution in neighboring countries and the relatively peaceful oil-rich north of Mali was a low hanging fruit for them. Indeed, France's intervention to expel Islamists motivated by security as well as Mali's potential resources.
The present conflict began in the summer of last year with the Tuaregs fighting for an independent country in Northern Mali. It gained traction later on with many Islamic militants joining forces to establish a country governed by sharia laws. In fact, the militants do not want to stop with Mali, but are ambitious for a sprawling Islamic Caliphate. Imposing severe Islamic standards the militants severed communication lines and imposed severe punishments for disobedience, interpreting Islamic laws suiting their needs. Should the world have remained mute to the human rights violations in Northern Mali? Don't forget, there were enriched Uranium nearby. France depends on oil and uranium from neighbouring Nigeria and couldn't possibly tolerate Mali to become another Afghanistan. Moreover France and Mali have had a defence agreement in place for years.
Also, after have its military deployed in Afghanistan for over a decade France understandably will do whatever it takes to prevent another Afghanistan to be created within a 2 hour flight. When Malian president requested help from its former colonial master, France obliged, stressing it would be under the UN mandate. And so the French intervened. (And, thanks to the presence of Canadian oil companies in Mali, Canada was one of the first countries to lend a helping hand France.) Further, on January 16, a gas facility in Algeria was attacked by militants. After four days, more than forty oil workers, mainly foreigners, were killed. Allegedly, the militants were the ones fighting previously in Northern Mali.
And guess what: the oil-rich Taoudeni Basin is located at the north, the area seized by islamists. Neo-colonial agenda or not, the fact is that Timbuktu has been wrestled back. Yes, the Islamists could use the time to regroup in the mountains. After all, Islamist fighters are extremely well equipped and funded. In fact they they are known to offer cash for Malian child-soldiers to join them. According to French Intelligence sources they are funded by the oil-rich nation of Qatar which also funds fundamentalists in Egypt, Libya and Tunisia. Moreover, the Qatari influence of Tuareg separatist and other Islamic groups were speculated as early as in June last year. Qatar has vested interest in spreading extreme Islamic Ideology in Africa, not to mention the potential oil and gas resources.

Tomorrow's oil wars started today
As pointed out in previous articles the Arab spring is nothing more than fundamental Islam's hostile takeover of oil resources, with financial support from theocratic oil-rich nations such as Qatar and Iran. (Many analysts, even those based in Mali, haven't taken the oil potential of Mali under consideration (think Canada, France) and so their analysis have remained over Islam and insurgency, only-you need to know.)
Predictably a confrontation with the West over said resources and fundamental cultural differences was bound to happen. This is likely the start of something bigger, a new world paradigm where former colonial powers return not as oppressors but as liberators and protectors of freedom and liberty.


This article was written by Oil-Price.net which provides free information on crude oil.

lundi, mars 04, 2013

Brazil's economic policies seen from abroad

Quite an interesting Monday! A very interesting article from Reuters that, for once, seems to understand the complexity of the economical of a recently industrialized country. See for yourself Reuter's paper or the copy-pasted text from their page below (your choice):

There is talk of investments, and the need for shared prosperity - a favorite topic of Rousseff's. But in these meetings, the conversation inevitably comes back to the severe bottlenecks that have brought the economy back to earth after a historic boom last decade.
"Brazil needs to focus now on issues like productivity and reducing costs, because that's the only way we can grow in a sustainable fashion," said Marcelo Odebrecht, who runs a global conglomerate that bears his family's name.
"I think we've realized that, and the president is moving in that direction," he said in an interview. "That's her focus - looking at these obstacles, and getting Brazil growing again."
The meetings, which have intensified in recent weeks, are a critical part of Rousseff's efforts to convince Brazilian executives to start investing again and help lift the economy following two straight years of disappointing growth.
The chats with well-known figures such as Odebrecht and mining and energy tycoon Eike Batista come as Rousseff, a Marxist guerrilla in the 1970s who evolved into a pragmatic leftist, struggles with a perception that she is unfriendly or even hostile toward the private sector.
Just past the halfway point of her four-year term, the 65-year-old daughter of a Bulgarian aristocrat has indisputably made many enemies in the business world. She has condemned banks for charging high interest rates, intervened heavily in Brazil's exchange rate, and undertaken contentious reforms such as a cut in electricity rates that wiped billions of dollars from the market value of foreign and locally owned companies.
Rousseff has said all her decisions respected existing contracts and laws, and were necessary to try to return Brazil's economy to its glory days of fast growth in the late 2000s.
Her ability to convince business leaders that's true will be key to the rest of her presidency.
Without a rebound in investment, which has steadily fallen since Rousseff has been in office, Brazil will not have the resources to address supply-side bottlenecks in infrastructure and labor that caused the economy to grow just 0.9 percent in 2012.
A persistent economic slump could, in turn, endanger Rousseff's expected bid for re-election next year.
Reuters spoke with several ministers, presidential aides and business leaders who have participated in the meetings, trying to determine why executives have generally not yet heeded Rousseff's call to take risks and let their "animal spirits" flourish - a reference to a term used by the British economist John Maynard Keynes, one of her favorite historical figures.
Business leaders say that Rousseff seems receptive to their feedback and focused on the right problems. But she is also not shy about defending her strong belief that the state must try to shape the economy so that all Brazilians can prosper.
That philosophy has guided Brazil for the past 10 years under Workers' Party rule, and helped make it one of the few countries where inequality fell as the economy grew. Yet it may also explain why some of her decisions have backfired, some say.
"She always challenges these guys - You have to think as a business, but you have to think about Brazil too," said Trade and Industry Minister Fernando Pimentel, one of Rousseff's closest aides, who sits in on some of the meetings.
"You want to earn money, that's natural. But how is everybody going to earn money? How will everybody get better? It can't get better just for one group, only for you," Pimentel said in an interview.
A VERY POPULAR LEADER
Since taking office on New Year's Day in 2011, Brazil's first woman president has earned mostly high marks from voters. Her personal approval rating has hovered in the high-70s, thanks largely to record-low unemployment levels that have been sustained despite the lackluster economic growth.
By cracking down on corruption and embracing some free-market policies such as the privatization of airports and highways, Rousseff has moved beyond the shadow of her popular predecessor, Luiz Inacio Lula da Silva, who plucked the career civil servant from relative obscurity and helped her win her first-ever campaign - for the presidency - in 2010.
In a region characterized by charismatic leaders such as Lula and Venezuela's Hugo Chavez, Rousseff stands out for being gray - or intimidating, depending on the beholder.
Aides say she detests ceremonial aspects of the presidency, eschewing dinners and the schmoozing with congressmen and foreign visitors that Lula excelled at.
She rarely gives news conferences, and she abandoned Twitter almost immediately after she won the election. "Let's chat more often in 2011," her most recent tweet says.
Yet, for the most part, Brazilians see these as the signs of a serious, hard-working leader. Especially among the poor, whose lives have improved dramatically in the past decade, Rousseff is seen as a kind of stern benefactor - the "mother of Brazil," as Lula baptized her in 2010.
In the corporate suites of Sao Paulo, the country's business and financial capital, executives tend to take a dimmer view.
While virtually no one accuses Rousseff of being a hard leftist in the vein of Chavez or Bolivia's Evo Morales, many say she has taken too heavy-handed a role in managing Brazil's $2.2 trillion economy - and scared off some investors who never quite know what she'll do next.
"I think most investors understand she's not reintroducing old-style socialist ideas. That's not what this is about," said Paulo Vieira da Cunha, a former deputy governor at Brazil's central bank who is now a partner at Tandem Global Partners, a hedge fund in New York.
"What it is about is her belief in central planning, in an active industrial policy, where the government makes critical decisions," he said. "That's not unique to Brazil, by the way ... But it has bothered some people."
A HEAVY HAND
Indeed, there is no big economic sector that Rousseff hasn't touched in a meaningful way in the past two years.
Brazil's banking industry was turned upside down by the central bank's surprise decision, starting in Rousseff's eighth month in office, to slash its benchmark interest rate, which has since fallen from 12.5 percent to an all-time low of 7.25 percent.
Rousseff publicly shamed private-sector banks for not cutting their lending rates fast enough to match the benchmark's declines, calling their actions "inadmissible." Meanwhile, monthly inflation hit its highest level in almost eight years in January, leading some investors to say the cuts went too far.
Rousseff has also been personally involved in the management of the exchange rate, which has oscillated between 1.52 and 2.13 per dollar during her term. The government has tried to alternately strengthen or weaken the currency in unpredictable ways, playing havoc with companies' business plans.
Even the business world's favorite policy tactic - cutting taxes - has generated uncertainty under Rousseff.
Instead of announcing an across-the-board cut, Rousseff has moved sector-by-sector, implementing targeted tax reductions of sometimes uncertain duration for industries like autos or home appliances. Her government has made more than two dozen separate announcements of stimulus packages.
Finally, Rousseff has made some decisions that openly work against the interests of private capital. They include forcing state-run oil giant Petrobras to import gasoline and sell it at a loss, a policy that has jeopardized the company's investment plans and contributed to a 30 percent decline in its publicly traded shares since she took office.
All told, Brazil's main stock index has tumbled 20 percent during Rousseff's presidency - compared to an 18 percent gain in Mexican shares and a 20 percent rise in the Dow Jones Industrial Average in the United States during the same period.
The Eurasia Group, a think-tank, said in a note in February that the government's policies and poor communication have led to "a credibility problem with the private sector."
The result: Investment fell 4 percent in 2012, and now stands at just 18.1 percent of gross domestic product.
That gives Brazil the lowest such ratio among big Latin American economies, well behind the rates of 28 percent or so in Peru, Colombia and Chile. As a result, some among Rousseff's economic team fear Brazil's potential economic growth rate may be capped at a mediocre 3 percent or so for years to come.
TRYING HER BEST?
Inside the Palacio do Planalto, Rousseff's modernist palace on the high plains of central Brazil, one word best describes the reaction to the way some investors are behaving: bewilderment.
To hear her ministers and aides tell it, Rousseff has spent much of her presidency explicitly catering to Brazil's business community. In fact, many of the policies for which she has been most criticized were the results of feedback she received from executives, they say.
There is truth to that. In a keynote speech in 2010 prior to the presidential campaign, Armando Monteiro Neto, then the head of Brazil's main industrial lobby group CNI, cited taxes, interest rates, an overvalued real, and high input costs such as electricity as the economy's main problems.
Rousseff has made faster progress on all those issues than any economist or political analyst predicted, although some initiatives - including her recent plan to force electricity costs down - have caused heavy losses for certain companies.
"I think she's done what business people have asked for, and with a certain speed," said Luiza Helena Trajano Rodrigues, the chief executive of retailer Magazine Luiza and another executive who has met frequently with Rousseff.
"Some of the criticism seems a little strange," Rodrigues said in an interview. "She's done a lot of difficult things."
Despite being elected primarily as a figure of continuity, Rousseff has made some pro-business moves that were unthinkable under Lula, who rose in politics as a labor union leader.
She stood up to criticism from the left wing of her Workers' Party to privatize airports in Sao Paulo, Rio de Janeiro and elsewhere. She also moved to cut pension benefits for incoming government workers - a decision that will help shore up Brazil's finances, which she has maintained in orderly shape.
One interpretation of Brazil's struggles is that after the last decade's boom lifted some 30 million people from poverty, the policies that worked under Lula had run their course.
Namely, there was no more room to grow the economy by expanding consumer credit - the main engine of growth from 2007 to 2010. So it has fallen to Rousseff to make tough structural reforms that could eventually open up a new era of economic growth - but have generated uncertainty in the short term.
The minister, Pimentel, who has known Rousseff for four decades, said the dire global economy also caused her to become more reformist around the one-year mark of her presidency.
"She clearly saw the bottlenecks that the Brazilian economy had, and has," he said. "She knew we couldn't put off facing these bottlenecks because in a world totally convulsed by the European crisis, we could risk totally losing our competitiveness."
SHARING THE WEALTH
Racing to prevent such a scenario, Rousseff has thrown open her doors to a variety of business leaders from finance, steel, aviation and elsewhere - and has won over some executives who were skeptical of her.
She is mostly listening for new policy ideas and trying to gauge the economy's health. But she is also not shy about asking her guests to part with their money.
For example, in a January 10 meeting with Odebrecht, she asked him to consider investing in upcoming airport concessions, an aide said. In a January 16 sit-down with Batista, whose holdings include oil company OGX, Rousseff urged him to participate in a major round of oil auctions later this year.
Rousseff has also gathered two dozen or so top executives at a time for regular "CEO forums" inside the palace, with the next pow-wow scheduled for March 19.
Still, giving executives face time has been no guarantee of convincing them to invest.
Rousseff's closest contact in the business world is arguably Jorge Gerdau Johannpeter, a 76-year-old steel magnate whom she appointed to lead the Chamber of Management and Competitiveness, another nexus between government and the private sector. Gerdau is often in Brasilia, and sat down with Rousseff for four hours in one meeting in January.
Yet on February 21, the company which he chairs - Gerdau SA, the world's No. 2 maker of steel for builders - said it was cutting its five-year investment plan by 17 percent.
It said it slashed capital spending by 24 percent in the fourth quarter alone, and attributed its decisions to "uncertainties hurting the global economy." A spokeswoman for Gerdau did not respond to multiple requests for an interview.
The malaise in Brazil's private sector explains why Rousseff may be vulnerable to a more market-friendly candidate, such as PSDB party Senator Aecio Neves or Pernambuco state Governor Eduardo Campos, in next year's election.
Yet polls indicate that, for now, Rousseff is popular enough to win easily. Meanwhile, an unexpected 0.5 percent rise in Brazil's overall investment in the fourth quarter of 2012 suggests that some business leaders, too, may be coming around.
Odebrecht, who after meeting Rousseff said his company would invest $8.5 billion this year, up a third from 2012, said executives may learn to live over time with some discomfort.
"People may argue - 'Oh, I would have done this a different way,'" he said. "But the concepts and intentions, I think it's tough to criticize her. What she's doing is right for Brazil."

(Additional reporting by Ana Flor; Editing by Todd Benson, Kieran Murray and Tim Dobbyn)

Reuter's original paper