"Faced with a growing amount of illegal fishing and other countries' unfounded territorial claims of islands in China's EEZ, it has become necessary to step up the fishery administration's patrols to protect China's rights and interests. China will make the best use of its (retired) naval ships and may also build more fishery patrol ships, depending on the need."On March 5, Malaysian Prime Minister Abdullah Ahmad Badawi claimed the Nansha Islands (aka the Spratley Islands) despite Chinese counterclaims. On March 10, Philippine President Maria Gloria Macapagal-Arroyo signed into law a bill which claimed Huangyan Island (aka the Scarborough Shoals) and the Nansha Islands as Philippine territory over Beijing's objections.
(h/t Carlos Tejada at China Journal.)
2. Fu Chenghao at Shanghai Daily reports that he China Iron and Steel Association said in a statement on its website yesterday that steel exports may fall as much as 80% in 2009 from 2008, a sharper contraction than the 50% the organization had previously predicted.
"A survey showed China's 28 largest steel exporters would ship only 299,100 tons this month and 129,600 tons in April, and China would probably become a net importer of steel products in March, it said."(h/t Yves Smith at naked capitalism, who also notes that the Baltic Dry Index has fallen 20% in the last five days.)
Meanwhile, Tian Ying at Bloomberg reports that the Chinese cut in retail taxes has resulted in GM's Chinese minivan venture increasing sales by 32% in the first two months of 2009. The government has also announced the details of a rural auto subsidy program--see Daily Sources 3/16 #3.
"'Every farmer in China wants a new vehicle, all 800 million of them,' said Yale Zhang, a consultant at CSM Asia in Shanghai. 'It looks like the government wants to make that happen.'3. Charles Lee at Platts reports that Korea Gas February sales fell by 22.9% from February 2009.
Vehicle sales in China may rise between 5 percent and 10 percent this year, according to GM, the largest overseas automaker in the country. It had previously forecast sale growth of less than 3 percent. The automaker expects to outperform the wider market by as much as 3 percentage points, helped by sales at SAIC-GM-Wuling Automobile Co., the largest minivan-maker in China. The venture accounts for at least half of GM’s China sales."
"Of the total, [LNG] sales to power generators plunged 35.5% to 731,692 mt, while retail gas companies accounted for 1.7 million mt, down 16.1% from the same month last year."It was the fifth consecutive month of sales contraction.
4. Agence France Presse reported that Kuwaiti Emir Sheikh Sabah al-Ahmad al-Sabah dissolved Parliament yesterday, calling for a snap election in the next two months. The Emir is expected to issue by decree a stimulus bill that had been held up in Parliament for the last six weeks.
5. Takeo Kumagai at Platts reports that Japan's Minister of Economy, Trade and Industry, Toshihiro Nikai, signed today a memorandum of understanding with the Venezuelan Oil Minister, Rafael Ramirez, in Tokyo regarding broad cooperation in the energy sector.
"Details of the MOU were not made public, but sources close to the matter said Japan and Venezuela will form a joint committee to consider opportunities Venezuela's upstream and downstream oil and gas sectors."An unnamed official told Platts that in the light of Japan's downstream investment, Tokyo would likely be looking for upstream natural gas opportunities.
"Earlier this month, Venezuela's state-owned PDVSA, US major Chevron, Japan's Mitsubishi and Mitsui, and a few other oil companies signed an agreement to develop the Delta Caribe LNG project.Ramirez also indicated to the media in Tokyo outside METI that it was the position of Caracas that the market was 1 mb/d oversupplied. Bloomberg reports that Chávez will visit Japan on April 6. Meanwhile, Matthew Walter and Daniel Cancel at Bloomberg report that Venezuela is postponing payments to foreign contractors as the low price of oil cuts into the budget. Brazil's Odebrecht SA indicated last week that it was engaging in a work slowdown on the Caracas subway system because the government was late in payments. The government also is estimated to still owe $10.2 billion on nationalizations it has carried out in pursuit of Chávez's revolution.
The $12 billion project will comprise two 4.8 million mt/year gas liquefaction plants and includes development of dedicated gas fields."
"[PdVSA] has amassed at least $7.86 billion in back payments to oil service companies and suppliers, according to its third-quarter earnings statement. Dallas-based Ensco International Inc. and Helmerich & Payne Inc., headquartered in Tulsa, Oklahoma, idled rigs in Venezuela this year because of payment problems."One wonders what kinds of assurances Ramirez gave Nikai that Japan's investments wouldn't be simply expropriated at a later date--especially given Tokyo's close ties to the US. Are Chevron, Mitsubishi and Mitsui simply betting that Chávez will not be encouraged by future high prices to go on another nationalization spree? That we will not see high prices again any time soon ... and that they will outlast Chávez?
6. The Associated Press reported that Iranian Oil Minister Gholam Hossein Nozari said yesterday in Vienna that Iran was diverting funds from other sectors of its national budget to oil production. The comments suggest that the oil sector, which supplies about 60% of the Tehran's budget, is losing money. In a conversation with AP reporters later, Nozari indicated that a substantial enough share of its oil production is unprofitable at current prices that it is making a net loss. It is unclear why, under those circumstances, that Iran would fail to comply fully with its OPEC quota as of December 17.
7. Platts reports that Eni CEO Paolo Scaroni told reporters in Vienna today that it had been tendered Iraq's Nassiriya field in a no-bid contest with Japan's Nippon Oil and Spain's Repsol. The field, which is estimated to have sustained production capacity of about 300 kb/d and 4.4 billion barrels of proven reserves, would be developed by the winner on a an engineering, procurement and construction (EPC) basis. Meanwhile, Upstream online reports that Scaroni told the conference that industry needs oil prices above $60/b to maintain investments, but that economic growth cannot be maintained at prices above $75/b. Meanwhile, Keith Johnson at Environmental Capital reports that Saudi Oil Minister Ali al Naimi told that $40/b oil only affects the investment plans of marginal producers.
"Despite the current economic situation and other challenges to the energy sector, Saudi Arabia will stay the course with our long-term capital investments for oil and gas expansion."Some corporations expect upstream costs--which are about 2.2 times higher than they were in 2000--to fall precipitously in 18 months or so. Their investment plans are centered around that forecast.
"Just one problem with those hopes, says OPEC secretary general Abdullah Salem El-Badri: 'We have not seen costs coming down.'"8. The Associated Press reports that al-Qaeda has posted a new tape by Osama bin Laden which urges Somali militants to overthrow the new government in Mogadishu. Bin Laden's 11 1/2 minute message was entirely focused on Somalia.
9. Sangar Rahimi and Carlotta Gall at the New York Times report that a spokesman for the Afghan National Security Directorate said in a news briefing yesterday that the February 11 attack on the Justice Ministry in Kabul was organized in Pakistan's tribal areas. The spokesman also
"suggested that Pakistani intelligence had a role in planning the attacks. 'I would like to say specifically that the intelligence agency of our neighboring country is involved and behind these attacks and organizing these activities.'"Sens. John McCain and Joe Lieberman have an op ed in today's Washington Post arguing that a "minimalist" strategy in Afghanistan would be a mistake. Key excerpt:
"Loose rhetoric about a minimal commitment in Afghanistan is counterproductive for another reason: It exacerbates suspicions, already widespread in South Asia, that the United States will tire of this war and retreat. These doubts about our staying power deter ordinary Afghans from siding with our coalition against the insurgency. Also important is that these suspicions are a major reason some in Pakistan are reluctant to break decisively with insurgent groups, which, in a hedging strategy, they view as integral to positioning Pakistan for influence 'the day after' the United States gives up and leaves Afghanistan. That is why it is so important for the president to reject the temptations of minimalism in Afghanistan and instead adopt a fully resourced, comprehensive counterinsurgency strategy, backed by an unambiguous American commitment to success over the long term. In doing so, he must invest the political capital to remind Americans why this fight is necessary for our national security, speak openly and frankly to our nation about the difficult path ahead, and--most of all--explain clearly to our fellow citizens why he is confident that we can prevail."Well worth reading in full.
10. Platts reports that Nigerian militants sabotaged a second Shell-operated pipeline in the Niger Delta today. The volume of oil lost has yet to be confirmed.
11. Matthew Saltmarsh and David Jolly at the New York Times reports that French unions have gone on strike today in the rail, airports, utilities and public sector.
"Two-thirds of the country’s high-speed TGV trains were canceled. Air France said most of its flights were operating normally from Roissy Charles de Gaulle International Airport, while about one-third of its flights from Orly Airport had been canceled. Traffic on the Paris Métro and bus networks were close to normal, according to transit officials, but suburban rail line service was disrupted."The unions are calling upon the government to protect jobs and worker purchasing power. A poll has found that 78% of the French support the strikes. Workers have stopped six Total refineries, but the company claims that the impact on production is limited. Eurointelligence reports that the French Parliament has proposed a rider which would place a tax surcharge of 5% on top income earners for the next two years.
12. Tracy Rucinski at Reuters reports that Spain will withdraw its 600 troops in Kosovo. Spain has yet to recognize Kosovo as an independent nation. Spain, once known as Las Españas, or "the Spains," has several secessionist movements of its own to contend with--especially in the Basque region and Catalonia.
13. Tony Barber at the Financial Times reports that European Commission president, José Manuel Barroso, told reporters that EU member nations should spend more on stimulus programs if they could afford to.
14. Rebecca Wilder at News N Economics has a weekly world economic update for March 12-18 which has graphs demonstrating that the unemployment rate is "surging in every corner of the world," that industrial production is similarly "cliff diving," that retail sales are "anemic" globally, and that inflation is in full retreat. Worth a look. She also points out that Canada and the US, each others largest trade partners by far, are reporting extremely limited demand for imports.
15. Christine McGourty at BBC News reports that the UK's chief scientist forecast that by 2030 global resource demand will create a crisis akin to a "perfect storm."
"Demand for food and energy will jump 50% by 2030 and for fresh water by 30%, as the population tops 8.3 billion, he told a conference in London.Grim reading.
Climate change will exacerbate matters in unpredictable ways, he added."