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Trudeau meets with Mexican president at critical time in NAFTA talks

From: Lee Berthiaume / The Canadian Press / Times Colonist / 13 April

 

LIMA, Peru — Two of the three political leaders with the most at stake at the NAFTA table huddled Friday behind closed doors, their most senior trade lieutenants alongside, in hopes of unlocking a mutually beneficial solution to the cross-border conundrum posed by U.S. President Donald Trump.

Prime Minister Justin Trudeau and Mexican President Enrique Pena Nieto gathered on the sidelines of a major international summit in Peru’s capital, along with Foreign Affairs Minister Chrystia Freeland and Mexico’s economy secretary Ildefonso Guajardo.

 U.S. Trade Representative Robert Lighthizer pulled out of the summit at the last minute, sending his deputy, C. J. Mahoney, in his place.

The sit-down, the first face-to-face between the two leaders since November, comes at a critical time, with Canada, Mexico and the U.S. all looking for a breakthrough in the ongoing effort to update the North American Free Trade Agreement — and Trump’s wild-card trade strategies doing little to clear the air.

It was also a chance for Trudeau to take stock of Mexico’s position — and perhaps share strategies — before the prime minister heads into a meeting Saturday with U.S. Vice-President Mike Pence.

Pence is in Peru instead of Trump, who was originally scheduled to attend but decided against it at the last minute, ostensibly to deal with the American response to a chemical attack in Syria. Earlier this week, Trump said he was prepared to “renegotiate forever” to get a good NAFTA deal.

Trudeau and Pena Nieto made small talk as members of the media captured the start of their meeting.

But the presence of several senior Mexican trade officials, as well as Freeland — Trudeau’s most trusted point person on NAFTA — left little doubt about the subject that would dominate the agenda once the doors were closed.

Trudeau’s meetings with Pena Nieto and Pence come as the three are attending the Summit of the Americas, which is held every four years and brings together leaders from across the Western Hemisphere.

The prime minister started his day Thursday by meeting Peruvian President Martin Vizcarra, who served as Peru’s ambassador to Canada before the previous president was forced to resign over a scandal last month.

Trudeau delivered a 10-minute address to business leaders from across the Americas encouraging them to invest in Canada, noting that the country has free trade agreements with dozens of countries around the world.

Even as his government struggles to deal with a pipeline crisis at home, one that has forced him to return to Canada on Sunday before resuming his travels to Europe, Trudeau pitched his country as a great place to invest, telling hundreds of business leaders “that big things can get done in Canada.”

More than half the countries with which Canada has free trade agreements are in the Americas, Trudeau said, and the hope is to add a deal with Latin America’s largest trading bloc, Mercosur, to that tally.

“Even in this age where the value of trade is being questioned by some, we have successfully negotiated landmark agreements with Europe and with Asia,” Trudeau added — a not-so subtle dig at protectionists like Trump.

The prime minister went on to emphasize Canada’s skilled labour force, low unemployment and debt-to-GDP ratio, recent federal investments in infrastructure and a new investment agency as proof that Canada is open for business.

The message appeared well received, and Kenneth Frankel, president of the Canadian Council for the Americas, said the region offers a natural opportunity for Canada — particularly as it looks for a northern partner who isn’t Trump.

Yet Siegfried Kiefer, president of Calgary-based engineering firm Atco Ltd., said Latin American leaders have told him they need massive new investments in infrastructure to grow their economies first.

On that front, Canada’s own record on infrastructure and “national-interest projects” has room for improvement, Kiefer said, including Kinder Morgan’s Trans Mountain pipeline, which is at the centre of a fierce battle between the Alberta and B.C. governments.

“The business community is generally looking for proof in the pudding,” he said.

“The public unrest relative to some of these projects is really what you’re trying to deal with. And that in my mind deals with how do you gain the trust of the people of the country that you have looked at the merits of the project objectively.”

Trudeau’s day also included hosting a lunch with representatives from the 15-country Caribbean Community, where he announced $25 million in new funding to help the region deal with natural disasters such as hurricanes.

The prime minister is also scheduled to meet with Chilean President Sebastien Pinera, who took office in March and whose country is an important political and trade partner with Canada.

From: Lee Berthiaume / The Canadian Press / Times Colonist / 13 April

Mexico’s economy minister says odds of a Nafta deal ‘in principle’ at 80%

From: Market Watch / 9 April

Mexico’s economy minister, Ildefonso Guajardo, said in a TV interview on Monday that the likelihood of signing a renegotiated pact ‘in principle’ on the North American Free Trade Agreement is about 80%. Guajardo, however, said he didn’t expect a Nafta deal would be struck this week, but would likely be signed around the first week of May. He speculated that the U.S. and would be inclined to complete a deal ahead of coming midterm elections. Nafta negotiators are currently meeting in Washington, D.C., for their eighth round of talks. Last week, President Donald Trump said he was looking for a deal in principle at the Summit of the Americas in Lima, Peru, next week. The Mexican peso USDMXN, -0.3324% which started Monday’s session weaker, climbed 0.2% higher versus the dollar, with one buck fetching 18.2450 pesos. The iShares MSCI Mexico ETF EWW, +1.29% was up 0.5% in response.

From: Market Watch / 9 April

 

 

Full list of U.S. products that China is planning to hit with tariffs

FROM: Usatoday / 5 de abril  de 2018

China announced additional tariffs on 106 U.S. products Wednesday, in a move likely to heighten global concerns of a tit-for-tat trade war between the world’s biggest economies.

The effective start date for the new charges will be revealed at a later time, though China’s Ministry of Commerce said the tariffs are designed to target up to $50 billion of U.S. products annually.

More: Stocks fall as China tariff threat hits Boeing, Ford shares as trade war fears intensify

More: Brewing trade war looms over oil markets as tariff battle escalates

Below is the full list of products that are set to be subject to duties.

Yellow soybean
Black soybean
Corn
Cornflour
Uncombed cotton
Cotton linters
Sorghum
Brewing or distilling dregs and waste
Other durum wheat
Other wheat and mixed wheat
Whole and half head fresh and cold beef
Fresh and cold beef with bones
Fresh and cold boneless beef
Frozen beef with bones
Frozen boneless beef
Frozen boneless meat
Other frozen beef chops
Dried cranberries
Frozen orange juice
Non-frozen orange juice
Whiskies
Unstemmed flue-cured tobacco
Other unstemmed tobacco
Flue-cured tobacco partially or totally removed
Partially or totally deterred tobacco stems
Tobacco waste
Tobacco cigars
Tobacco cigarettes
Cigars and cigarettes, tobacco substitutes
Hookah tobacco
Other tobacco for smoking
Reconstituted tobacco
Other tobacco and tobacco substitute products
SUVs with discharge capacity of 2.5L to 3L
Other vehicles equipped with an ignited reciprocating piston internal combustion engine and a drive motor that can be charged by plugging in an external power source. Cylinder capacity displacement exceeding 2500ml, but not exceeding 3000ml for SUVs (4 wheel drive)
Vehicles with discharge capacity of 1.5L to 2L
Other vehicles equipped with an ignited reciprocating piston internal combustion engine and a drive motor that can be charged by plugging in an external power source. Cylinder capacity displacement exceeding 1000ml, but not exceeding 1500ml for SUVs (4 wheel drive)
Passenger cars with discharge capacity 1.5L to 2L, 9 seats or less
Other vehicles equipped with an ignited reciprocating piston internal combustion engine and a drive motor that can be charged by plugging in an external power source. Cylinder capacity displacement exceeding 1000ml, but not exceeding 1500ml for 9 passenger cars and below
Passenger cars with discharge capacity of 3L to 4L, 9 seats or less
Other vehicles equipped with an ignited reciprocating piston internal combustion engine and a drive motor that can be charged by plugging in an external power source. Cylinder capacity displacement exceeding 3000ml, but not exceeding 4000ml for 9 passenger cars and below
Off-road vehicles with discharge capacity of 2L to 2.5L
Other vehicles equipped with an ignited reciprocating piston internal combustion engine and a drive motor that can be charged by plugging in an external power source. Cylinder capacity displacement exceeding 2000ml, but not exceeding 2500ml for off-road vehicles
Passenger cars with discharge capacity of 2L to 2.5L, 9 seats or less
Other vehicles equipped with an ignited reciprocating piston internal combustion engine and a drive motor that can be charged by plugging in an external power source. Cylinder capacity displacement exceeding 2000ml, but not exceeding 2500ml for 9 passenger cars and below
Off-road vehicles with discharge capacity of 3L to 4L
Other vehicles equipped with an ignited reciprocating piston internal combustion engine and a drive motor that can be charged by plugging in an external power source. Cylinder capacity displacement exceeding 3000ml, but not exceeding 4000ml for off-road vehicles
Diesel-powered off-road vehicles with discharge capacity of 2.5L to 3L
Other vehicles equipped with an ignited reciprocating piston internal combustion engine and a drive motor that can be charged by plugging in an external power source. Cylinder capacity displacement exceeding 2500ml, but not exceeding 3000ml for diesel-powered off-road vehicles
Passenger cars with discharge capacity of 2.5L to 3L, 9 seats or less
Other vehicles equipped with an ignited reciprocating piston internal combustion engine and a drive motor that can be charged by plugging in an external power source. Cylinder capacity displacement exceeding 2500ml, but not exceeding 3000ml for 9 passenger cars and below
Off-road vehicles with discharge capacity of less than 4L
Other vehicles equipped with an ignited reciprocating piston internal combustion engine and a drive motor that can be charged by plugging in an external power source. Cylinder capacity displacement not exceeding 4000ml for off-road vehicles
Other vehicles which are equipped with an ignited reciprocating piston internal combustion engine and a drive motor and can be charged by plugging in an external power source
Other vehicles that are equipped with a compression ignition type internal combustion engine (diesel or semi-diesel) and a drive motor, other than vehicles that can be charged by plugging in an external power source
Other vehicles which are equipped with an ignition reciprocating piston internal combustion engine and a drive motor and can be charged by plugging in an external power source
Other vehicles that are equipped with a compression-ignition reciprocating piston internal combustion engine and a drive motor that can be charged by plugging in an external power source
Other vehicles that only drive the motor
Other vehicles
Other gasoline trucks of less than 5 tons
Transmissions and parts for motor vehicles not classified
Liquefied Propane
Primary Shaped Polycarbonate
Supported catalysts with noble metals and their compounds as actives
Diagnostic or experimental reagents attached to backings, except for goods of tariff lines 32.02, 32.06
Chemical products and preparations for the chemical industry and related industries, not elsewhere specified
Products containing PFOS and its salts, perfluorooctanyl sulfonamide or perfluorooctane sulfonyl chloride in note 3 of this chapter
Items listed in note 3 of this chapter containing four, five, six, seven or octabromodiphenyl ethers
Contains 1,2,3,4,5,6-HCH (6,6,6) (ISO), including lindane (ISO, INN)
Primarily made of dimethyl (5-ethyl-2-methyl-2oxo-1,3,2-dioxaphosphorin-5-yl)methylphosphonate and double [(5-b Mixtures and products of 2-methyl-2-oxo-1,3,2-dioxaphosphorin-5-yl)methyl] methylphosphonate (FRC-1)
38248600a articles listed in note 3 to this chapter containing PeCB (ISO) or Hexachlorobenzene (ISO)
Containing aldrin (ISO), toxaphene (ISO), chlordane (ISO), chlordecone (ISO), DDT (ISO) [Diptrix (INN), 1,1,1-trichloro-2 ,2-Bis(4-chlorophenyl)ethane], Dieldrin (ISO, INN), Endosulfan (ISO), Endrin (ISO), Heptachlor (ISO) or Mirex (ISO). The goods listed in note 3 of this chapter
Other carrier catalysts
Other polyesters
Reaction initiators, accelerators not elsewhere specified
Polyethylene with a primary shape specific gravity of less than 0.94
Acrylonitrile
Lubricants (without petroleum or oil extracted from bituminous minerals)
Diagnostic or experimental formulation reagents, whether or not attached to backings, other than those of heading 32.02, 32.06
Lubricant additives for oils not containing petroleum or extracted from bituminous minerals
Primary Shaped Epoxy Resin
Polyethylene Terephthalate Plate Film Foil Strips
Other self-adhesive plastic plates, sheets, films and other materials
Other plastic non-foam plastic sheets
Other plastic products
Other primary vinyl polymers
Other ethylene-α-olefin copolymers, specific gravity less than 0.94
Other primary shapes of acrylic polymers
Other primary shapes of pure polyvinyl chloride
Polysiloxane in primary shape
Other primary polysulphides, polysulfones and other tariff numbers as set forth in note 3 to chapter 39 are not listed.
Plastic plates, sheets, films, foils and strips, not elsewhere specified
1,2-Dichloroethane (ISO)
Halogenated butyl rubber sheets, strips
Other heterocyclic compounds
Adhesives based on other rubber or plastics
Polyamide-6,6 slices
Other primary-shaped polyethers
Primary Shaped, Unplasticized Cellulose Acetate
Aromatic polyamides and their copolymers
Semi-aromatic polyamides and their copolymers
Other polyamides of primary shape
Other vinyl polymer plates, sheets, strips
Non-ionic organic surfactants
Lubricants (containing oil or oil extracted from bituminous minerals and less than 70% by weight)
Aircraft and other aircraft with an empty weight of more than 15,000kg but not exceeding 45,000kg

FROM: Usatoday / 5 de abril  de 2018

 

 

The economic relationship between Mexico and the United States

FROM: Oup Blog / Roderic Al Camp / 17 de febrero de 2018

Mexico and the United States share a highly integrated economic relationship. There seems to be an assumption among many Americans, including officials in the current administration, that the relationship is somehow one-sided, that is, that Mexico is the sole beneficiary of commerce between the two countries. Yet, economic benefits to both countries are extensive.

Mexico has played a significant role in the rapid expansion of US exports in the 1990s and 2000s. It alternated between the second and third most important trade partner of the United States in the last decade. In 2014, the United States exported a total of $240 billion worth of goods to Mexico, with the largest  products coming from the computers and electronics, transportation, petroleum, and machinery sectors. By contrast, China only purchased $124 billion of US exports. Exports to Mexico accounted for approximately 1,344,000 jobs in the United States.

California alone, boasting the eighth largest economy in the world, exported more than 15% of its products to Mexico by 2014, exceeding what it trades with Canada, Japan, or China. As of 2014, Mexico’s purchases of California exports supported nearly 200,000 jobs in the state. In fact, 17% of all export-supported jobs in California, which account for a fifth of all individuals employed in the state, are linked to the state’s economic relationship with Mexico. More than half of those export-related positions can be traced to the North American Free Trade Agreement. California and Texas – the two largest economies in the United States, and two of the three largest state/provincial economies in the world – are significantly influenced economically by Mexico.

In 2014, a heavy portion of exports from six US states were purchased by Mexico: 41% in Arizona, 41% in New Mexico, 36% in Texas, 25% in New Hampshire, 23% in South Dakota, and 23% in Nebraska. As Senator John McCain noted several weeks ago, the Trump administration’s decision to renegotiate, rather than withdraw from NAFTA, prevented a horrific economic impact on Arizona. The GDP of the United States and Mexican border states accounts for a fourth of the national economy of both countries combined, exceeding the GDP of all the countries in the world except for the United States, Japan, China, and Germany.

The United States provides the single largest amount of direct foreign investment in Mexico, but what I want to stress, and to educate Americans about, is that Mexican entrepreneurs and venture capitalists invest heavily in the United Sates. By 2013, Mexico had invested $33 billion, the only emerging economy among the top fifteen countries with direct foreign investments in the United States. In 2015, Pemex, the government oil company, opened the first retail gasoline station in the United States, in Houston, and plans on opening four more in that city. This is a pilot project to test the American market nationally. OXXO, another Mexican firm, has opened two convenience stores in Texas, and plans on investing $850 million to open 900 stores in the United States.

Finally, Mexico also influences the US economy through tourism in the same way that American tourists play a central role in Mexico’s economy. In 2014, 75 million foreigners visited the United States, generating $221 billion dollars. Canada accounts for the largest number of visitors each year, followed by Mexico, which provided 17 million tourists in 2014, who spent $19 billion. Along the border, at the end of the decade, Mexican visitors generated somewhere around $8 billion to $9 billion dollars in sales and supported approximately 150,000 jobs.

Another way to look at the relationship between Mexico and the United States is through cultural influences.  Mexico exerts impact through music, food, film, and language. For example, there are multiple fast-food chains that spe­cialize in Mexican food. Grocery stores stock more items originating from Mexico than any other ethnic cuisine in the world, including beers, beans, hot sauces, peppers, and torti­llas. Corona is the best-selling foreign beer in the United States. Mexican foods such as guacamole and caesar salad are so com­monplace that they have lost their identity as Mexican cuisine.

The use of Spanish words and Mexican slang is evident in ev­eryday language in the United States; such terms range from “mano a mano” to “macho,” “enchilada” to “margarita,” and “rancho” to “hacienda.” According to a Pew Center study in 2011, 38 million individuals in the United States five years or older showed that the majority of them were Mexican, and were speaking Spanish at home. Spanish is also the most widely spoken non-English language among Americans who are not from a Hispanic country. The size of the Spanish-speaking audience in the United States has also influenced the growth of Mexican films. The musical influence has kept pace with cuisine. In 2010, the New Yorker magazine ran an extensive article about Los Tigres del Norte, a musical group from San Jose, California, who represent the norteño musical style. They boast a huge following among music fans. Selena, who died two decades ago, has sold more than 60 million albums, including songs representing the mariachi and ranch­era genres, and the number of copies of her posthumous best-selling album of all time, Dreaming of You, reached five million by 2015. Among young adults (18 to 34 years of age) who listen to the radio, Mexican regional music ranks seventh in popularity.

The relationship between the United States and Mexico has become more complex over time, incorporating cultural, musical, economic, familial, political, and security relationships beneficial to both countries and its citizens. But the most dramatic change in those many facets of our relationship with each other is the degree to which Mexico’s impact on and within the United States has grown in importance. Equally important to consider is that in spite of President Trump’s public criticisms of Mexico, our relationship at numerous levels, public and private, remains strong.

 

 

FROM: Oup Blog / Roderic Al Camp / 17 de febrero de 2018

The Economic Yield Curve Is the One to Watch

From: Bloomberg / Joseph Carson / 21 de noviembre

 

The difference between the federal funds rate and economic growth is unusually wide, consistent with a positive outlook. The rapid flattening of the U.S. Treasury yield curve is raising concern about the economy’s prospects. That’s to be expected, since the slope of the curve has gained in importance as a forecasting tool due to its consistent and reliable track record. In short, a narrow curve is associated with a slowdown in growth.

The economic signal is even stronger when there is an outright curve inversion, which is when short-term yields exceed those on longer-dated Treasuries. We’re not there yet, but what has everyone up in arms is that at 63 basis points, the difference between two- and 10-year Treasury yields has collapsed from 128 basis points in January and is now the narrowest since 2007, just before the start of the last recession.

For some, changes in the Treasury yield curve are sufficient to warrant a change in the view on the future path of the economy. Right now, though, it’s not. It is important to balance the changes taking place in the financial market’s yield curve with the economy’s yield curve.
The economy’s yield curve is the spread between the federal funds rate and nominal gross domestic product. This relationship is most important since it’s the ability of the consumer and businesses to carry or afford the higher borrowing costs that could eventually impact economic growth.

Based on third-quarter data, the economy’s yield curve is close to 300 basis points, which is calculated by taking the 4.1 percent annualized rate of growth in nominal GDP less the quarterly average for the federal funds rate of 1.15 percent. The gap has expanded by 65 basis points from a year earlier. Even if the Federal Reserve, as expected, raises rates by 25 basis points at its December meeting the spread should widen based on estimates of 4.5 percent to 5 percent growth in nominal GDP.

In a historical perspective, the economy’s yield curve is unusually wide, consistent with a positive growth outlook. To be sure, the average spread during the 1990s growth cycle was 100 basis points and in the 2000s it was 200 basis points. Moreover, history also shows that a flat or an inverted spread between the federal funds rate and the growth in nominal GDP always precede an economic slowdown or recession.

In contrast, the traditional financial market yield curve, or the spread between the federal funds rate and the 10-year Treasury, stood at 110 basis points in the third quarter. It will likely end 2017 with the narrowest quarterly spread since the start of the last recession, sending the same signal as the two- to 10-year part of the curve.

It is quite possible that the narrowing of the traditional yield curve reflects technical factors more so than fundamental ones. The quantitative bond buying programs by the Fed and other central banks have no doubt produced an anchoring effect at the long-end of the bond market that was not present in prior cycles.

Also, changes in monetary policy often influence investor expectations on the outlook for growth and inflation. Given the current low-inflation environment, it could well be investors are betting that current path of monetary policy will dampen future inflation risks and possibly to lead to a reversal in short rates at some point down the road.

In all likelihood, the signaling effect from changes in the yield curve to the economy may not be as robust today and limited to the financial markets. The economy, meanwhile, will be supported by the wide and positive spread between the federal funds rate and nominal GDP growth, helping to support corporate profits and equities. The outlook for the fixed-income market is less sanguine because the positive growth environment will compel the Fed to continue to normalize monetary policy by boosting rates further.

 

From: Bloomberg / Joseph Carson / 21 de noviembre

 

China’s promised energy revolution

From: Financial Times / Nick Butler / 19 de noviembre

 

Can China transform its energy economy? For the last 30 years rapid economic growth – based on heavy industry, manufacturing and construction – has been sustained by hydrocarbons. Coal remains dominant; what has changed is the volumes involved. In 1990, China used some 446m tonnes of coal. This year the figure will be around 2.8bn tonnes. In parallel, oil demand has grown with the dramatic expansion of car numbers. Oil consumption was 2m barrels a day in 1980. Now it is almost 12m b/d, making China the largest oil importer. But growth has come at a cost. China, as last week’s announcement from the Global Carbon Project reminded us, is the largest single source of emissions and suffering badly from the low level pollution that covers many cities in smog. President Xi Jinping has promised dramatic change – an energy revolution “to make the skies blue again”.

The rhetoric is great but are the promises deliverable? A comprehensive study of the Chinese energy market published last week as part of the International Energy Agency’s new World Energy Outlook is a great place to start for anyone wanting to understand what is happening and what might happen next. The facts are remarkable: China consumes 25 per cent of energy used globally each day. Coal continues to dominate Chinese energy use – in industry, power generation and heating – providing almost two-thirds of total demand. The country produces and uses over 50 per cent of all the coal burnt globally. Power generation has grown dramatically to meet electricity demand that has quadrupled since 2000. Gas use is relatively small but growing – mostly relying, for now, on imported LNG. China is the leading producer of wind and solar power. Advances in technology and production efficiency have cut costs and made the country the dominant supplier of solar panels to the rest of the world. China is building dozens of new nuclear plants – more than a third of the global total. Its nuclear industry is developing its own reactor technology, aiming to create a world-class export industry. The country leads the global electric vehicle industry. Of the estimated 2m electric vehicles on the world’s roads by the end of this year, at least 40 per cent will be in China. Remarkable advances in energy efficiency have been made, and the amount of energy used for each unit of China’s gross domestic product has fallen 30 per cent since 2000 but emissions remain a challenge. After three years when reported emissions were flat, renewed industrial growth has pushed them up again.

Each of these facts reflects a dramatic change in the last 10 to 15 years. But they do not represent an end point. The party Congress in Beijing endorsed the latest plan – a sweeping statement of intent entitled “Energy Production and Consumption Revolution Strategy”. The plan describes a transformation of the whole energy sector over the next decade and a half. The share of non-fossil fuels will rise to 15 per cent by 2020, and to 20 per cent by 2030, meeting most if not all incremental demand. By 2030, 80 per cent of all remaining coal-fired power stations will have ultra low emissions as old capacity is retired. GDP energy intensity will fall by 15 per cent and the amount of carbon required will fall by 15 per cent. Further improvements will come over the following decade to 2030 The target is to ensure that emissions peak by 2030. The long-term goal for 2050 is to reduce the share of fossil fuels to less than half the total, to rebase the whole system on leading-edge energy technologies and equipment and make China an important player in global energy governance. History suggests it is unwise to underestimate China’s ability to deliver on its plans but in this case there are good reasons for doubt. Infrastructure and market structures are needed to support the changing energy mix.

As the IEA analysis makes clear, the absence of infrastructure and a supportive regulatory regime already limit the potential of natural gas. The same problems could constrain wind and solar. Electric vehicle numbers are growing but the odds are still that the bulk of the electricity they use will be produced from coal for a long time to come. An excellent post by Simon Goess for the Energy Collective website spells out the reality. In addition, industrial changes have to be managed. In coal and the major manufacturing sectors many workers and whole communities remain dependent on activity that is likely to be transformed or eliminated by technology. The Chinese coal industry, for instance, employs 4m. Trade dependence also poses risks. The target of 80 per cent net self-sufficiency is probably achievable with the combination of coal, new nuclear and renewables, including hydro. But the remaining 20 per cent involves the critical supply of oil where import dependence has doubled in the last five years. On the IEA’s estimate, China will need to invest $6.1tn – $250bn a year on energy supply between now and 2040, two-thirds of which will go into the power sector. Another $2.1tn ($90bn a year) will be needed to deliver the required gains in energy efficiency. China is a dominant force in the global energy market. Next week I will look at the international implications of what is happening. But energy also matters for the survival of the regime in Beijing. The political process has not been ended by Mr Xi’s triumphant re-election. A sustained improvement in living standards over the last three decades has helped to keep the Communist party in power. That would not have been possible if the energy system had not been adapted to meet growing demand in what is now a consumer society. The “iron rice bowl” now extends beyond employment and food to mobility and increasingly to the demand for a cleaner environment. As ever, energy and power are inseparable.

 

 

From: Financial Times / Nick Butler / 19 de noviembre

Record Year for Europa Oil & Gas

 From: Rigzone Staff / Monday, October 30, 2017

 

2016/17 was a record year for Europa Oil & Gas (Holdings) plc in terms of corporate activity, according to the company’s CEO Hugh Mackay.

During this time, Europa achieved a successful farm-out to Cairn of a 70 percent interest in one of the company’s South Porcupine licenses, two separate sales of Europa’s interest in the Wressle oil field in the East Midlands, the acquisition of Shale Petroleum, and the farm-out of a 12.5 percent stake in the upcoming Holmwood well in the Weald basin.

“In our view, this activity is testament to the quality of the technical work we have carried out on our licenses, the excellent location of our assets both offshore Ireland and onshore UK, and the major uptick in industry interest and activity in new plays across our areas of focus,” Mackay said in a company statement.

“The year ahead should see more of the same. We remain focused on securing farm-outs for the remainder of our Irish licenses with partners with whom we can advance our assets towards drilling. At the same time, we are looking forward to commencing drilling activity at the conventional Holmwood prospect in the Weald, an area that is generating considerable excitement following the opening up of the Kimmeridge limestone play,” he added.

Europa registered revenues of $2.1 million (GBP 1.6 million) for the 12 month period ended July 31, 2017. This marked a slight increase over last year’s figure of $1.7 million (GBP 1.3 million). Net cash balance as at July 31, 2017 stood at $4.7 million (GBP 3.6 million), compared to $2.2 million (GBP 1.7 million) last year.

 

 

 From: Rigzone Staff / Monday, October 30, 2017

Increased Automation to Create New Roles in Oil, Gas

Increased automation and digitalization in the oil and gas industry will shake up employment opportunities and create new roles in the sector, suggests Thomas Sparks, head of strategy at Siemens Oil & Gas.

“Traditional job profiles in the oil and gas industry will change,” Sparks told Rigzone.

“Onshore training, remote operations centers, manufacturing based on 3D design and online monitoring will become critical game changers,” said Sparks, offering some insight into which industry segments are likely to see the most benefit through a growing shift towards automation and digitalization.

This shift won’t necessarily be bad news for oil and gas professionals though, according to Sparks, who believes new opportunities will emerge as a result of the change.

“It is not a question of whether oil and gas jobs will lose out to automation and digitalization in the future,” said Sparks.

“The question is how the industry will be able to translate huge quantities of information into better operational decisions and how this will lead to new job profiles and job opportunities for the workforce,” he added.

The primary goal of automation is not to replace workers, but to improve the productivity, safety and reliability of operations,” Andrew Hird, vice president and general manager of Honeywell Process Solution’s digital transformation unit, said.

“Forward-thinking organizations seek to empower people through automation, not replace them. By automating basic, repetitive tasks, people can be freed up for more productive, creative work,” he added.

Highlighting a current example of this trend, Hird said that technologies using internet connectivity are creating opportunities for roles such as data scientists, while improving the consistent gathering and analysis of a fast-growing amount of operational data. As automation is used to gather and present data, Hird stated that people are needed to interpret this information and make business-critical decisions based on it.

As many oil and gas companies around the world are facing a shortage of qualified personnel to operate multi-billion production facilities, Hird suggests that the challenge in the current oil price environment is not how to reduce the number of employees. Rather Hird implies that companies must now figure out how to increase production with a declining workforce, as well as attracting and retaining a new generation of workers.

“The only way many … [companies] are able to do so is through improved automation, which again allows them to deploy employees in more productive areas,” Hird said.

Automation Demand Increasing

The demand for automation software in the upstream oil and gas industry was in a period of decline late last year, according to Ali Raza, the vice president and general manager of advanced solutions at Honeywell Process Solutions.

A key reason for the decline was the fluctuating low oil price environment, Raza told Rigzone. The Honeywell VP added that interest in these types of systems first began to fall drastically when the oil price dropped in 2014.

 “Although, some of the bigger companies … slowed down their projects they still wanted to continue, because I think one of the major concerns was cost optimization and basically trying to get savings out of cost optimization,” he added.

In spite of the decline, Raza predicted that demand in these systems would pick up towards the end of 2016.

Looking further ahead, IDC Energy Insights, a market provider of intelligence for the global technology industry, forecasted earlier this year that the top 50 percent of oil and gas companies will double down on oilfield operation automation, to double the productivity of those operations, by 2020.

“Oil and gas companies realize they must be more aggressive and consistent in how they run their operations,” Chris Niven, research director for IDC Energy Insights, told Rigzone.

“Many companies are now implementing proven approaches and techniques used over years by manufacturing to run operations more effectively and efficiently,” he added.

17 Octubre_shutterstock_274192052

Copyright: Rig Zone

U.S. economy looks good but Fed remains cautious: Dudley

U.S. economic conditions are “mostly favorable” yet the Federal Reserve remains cautious in raising interest rates because threats loom, New York Fed President William Dudley said on Monday.

Dudley, a permanent voter on rates and a close ally of Fed Chair Janet Yellen, repeated his views in a speech, saying “policy adjustments are likely to be gradual and cautious, as we continue to face significant uncertainties and the headwinds to growth from the financial crisis have not fully abated.”

Addressing a conference at the New York Fed, he repeated he was confident that too-low inflation would rise to a 2 percent goal over the next few years, and that “economic conditions have finally warranted the start of U.S. monetary policy normalization.”

The Fed raised rates modestly from near zero in December, its first policy tightening in nearly a decade. Most economists predict it will move again in June.

 

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Copyright: Reuters

Environmental engineers develop method to ID cause of sour hydrocarbons in wells

Rice University researchers have developed a technique to model oil and gas formations to determine the cause of souring. Credit: Jason Gaspar/Alvarez Lab

In at least one—and probably many—oil and gas drilling operations, the use of biocides to prevent the souring of hydrocarbons wastes money and creates an unnecessary environmental burden, according to researchers at Rice University.

The Rice lab of environmental engineer Pedro Alvarez reported that soured hydrocarbons found in the Bakken Formation underneath the Northwest United States and Canada are caused by primarily geochemical reactions rather than microbial ones; the researchers questioned the need to pump costly biocides into the well to kill sulfide-producing microbes.

The team’s finding offers a way to cut costs at wellheads where biocides may be unnecessary while keeping them out of the environment, where they may promote the development of biocide-resistant bacteria, Alvarez said.

The research appears in the American Chemical Society journal Environment Science and Technology Letters.

Soured hydrocarbons are those with high concentrations of hydrogen sulfide gas. The hydrogen sulfide gives oil and natural gas the smell of rotten eggs, can be toxic to breathe and is highly corrosive. For this reason, the gas has to be removed from crude oil before it can be transported or refined.

Curtailing the use of biocides when the source of souring is not from microbes would reduce operation costs and mitigate potential impacts to microbial ecosystems, Alvarez said.

The Rice-led team set out to solve a long-standing puzzle over what in an individual formation makes hydrocarbons go sour. Either microbial life or the geochemical environment can catalyze the reaction, but engineers are rarely able to determine which is happening.

Alvarez and his co-authors developed an improved map of temperatures to about 2 miles below the surface in eight representative Bakken Formation fracture wells. They showed that downhole temperatures in the formation are equal to or exceed the upper known temperature limit—252 degrees Fahrenheit—for microorganisms’ survival.

The team also analyzed isotopes of sulfur isolated from hydrogen sulfide taken from the wells. They found all of the isotopes tested suggested geochemical origins. Water samples from the same wells failed to yield DNA concentrations that would indicate the presence of microorganisms.

“The combination of temperature, sulfur isotope and microbial analyses makes scientific, environmental and financial sense,” said Jason Gaspar, a Rice graduate student and lead author of the paper. “Using our method, we could characterize hydrogen sulfide for dozens of wells in a given shale play for less than the cost of adding biocide to one well alone.”

More information: Jason Gaspar et al. Biogenic versus Thermogenic H S Source Determination in Bakken Wells: Considerations for Biocide Application , Environmental Science & Technology Letters (2016). DOI: 10.1021/acs.estlett.6b00075

Copyrigth: Phys  Org.