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Delicate Balancing Act for Western Oil Firms in Iraq

November 14, 2012 by Leave a Comment

But the more immediate tensions are between the federal government in Baghdad and the semi-autonomous Kurdistan Regional Government, which is headquartered in Erbil in the north of the country.

The Kurds, who suffered terribly under Saddam Hussein, are determined to maintain their autonomy from Baghdad — not least by developing their own oil resources. Baghdad insists that only it has the authority to grant access to the country’s natural resources. But the Kurds are succeeding in bringing in the world’s top oil companies against Baghdad’s wishes.

Strains between the two governments were on display Wednesday at the Oil and Money Conference convened by the International Herald Tribune and Energy Intelligence Group, a provider of independent analysis and data to the global energy industry.

Hussain Al-Shahristani, the Iraqi deputy prime minister, who has been instrumental in devising contracts to rehabilitate Iraqi oil fields, confirmed in a session with reporters that Exxon Mobil was in the advanced stages of organizing a sale of its 60 percent stake in a premier Iraqi project, the West Qurna-1 field, to buyers approved by the Iraqi government.

Exxon and Iraq have been at loggerheads since Exxon signed an exploration deal with the Kurdistan government last year. Baghdad, and Mr. Al-Shahristani in particular, does not recognize Kurdish contracts with the oil companies and says they are illegal.

Mr. Al-Shahristani also warned the French giant Total and other companies that they faced being forced out of their Iraqi projects for having feet in both camps. “They must either decide to present their contract to the federal government or they are in breach of their contract” with Iraq, he said.

But Mr. Al-Shahristani is losing the battle. Exxon, Total, Chevron and Gazprom have all decided that Kurdish oil deals have sufficient profit potential to be worth risking Baghdad’s ire.

Philip Lambert, who heads the London-based advisory firm Lambert Energy, said in a talk at the conference that the boom in deals in Kurdistan, compared to a relatively moribund environment in Iraq proper, was a sign that the environment in Kurdistan is healthier.

One reason: As Mr. Al-Shahristani acknowledged, Baghdad’s contracts are among the toughest in the world. They offer such low returns that — along with continued security risks and infrastructure problems — companies are figuring that they would be better off making deals with the Kurds.

Under Kurdistan contracts oil companies can earn $3 to $5 per barrel, compared to about $1 per barrel on those in southern Iraq, according to Wood Mackenzie, a consulting firm in Edinburgh. So far the large companies have been signing exploration deals with Kurdistan, leaving several years for the two governments to reach deals before their blocks start producing.

Iraq, of course, is far more important to the global oil picture today, with more than 3 million barrels a day of production, while Kurdistan is struggling to export 200,000 barrels per day. But exploration in Kurdistan is still at a relatively early stage, having only started after Saddam’s ouster in 2003. Companies looking for oil there have enjoyed a high success rate.

Despite Mr. Al-Shahristani’s prickliness, there are signs that Baghdad and the Kurdistan government could be reaching an accommodation. Under an agreement reached last summer, Kurdistan has been putting oil into the main Iraq-Turkey pipeline. These exports had been suspended over payments disputes between Baghdad and Erbil, leaving companies like Genel Energy, now headed by the former BP chief Tony Hayward, with no other option but to sell their oil cheaply in the Kurdish market or truck it to Turkey.

Baghdad has also begun making payments and is counting on the Kurds to supply 250,000 barrels per day to the pipeline in 2013. A Kurdish adviser, who asked not to be named, said in an e-mail that by all appearances both sides want the arrangement to work.

Kurdistan’s success in attracting the big oil companies does seem to be influencing thinking in Baghdad. Mr.Al-Shahristani said there was nothing in Iraqi law that prevented Iraq from awarding so-called production sharing contracts that give companies a slice of the output of fields for exploration. Companies prefer these contracts to the service deals that Baghdad has offered so far, which give companies a per-barrel fee for renovating old fields like West Qurna and Rumaila, the largest field, where BP has already produced a billion barrels.

At the conference, Mr. Al-Shahristani dismissed suggestions that Iraq would have trouble replacing Exxon, saying that serious international companies were interested. But Baghdad’s “our way or the highway” approach could threaten Iraq’s huge oil ambitions. During his talk in London, Mr. Al-Shahristani suggested that he had dialed back his expectations for Iraqi oil production over the next few years to about 9 million barrels per day from the unrealistic 12 million barrels per day that Iraq would achieve if the oil companies delivered on the contracts they have signed.

Iraq is a member of the Organization of Petroleum Exporting Countries but does not have a quota, in recognition of its need for revenue to rebuild. Mr. Al-Sharistani said that once Iraq had reached 4 million to 5 million barrels per day, it could start discussing its production with the other OPEC members.

“We don’t think that Iraq is going to be squeezing any country out of the market,” he said.

Article source: http://www.nytimes.com/2012/11/15/business/global/delicate-balancing-act-for-western-oil-firms-in-iraq.html?partner=rss&emc=rss

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Thwarted Travelers

January 17, 2012 by Leave a Comment

The waiting time to obtain a visa in some countries can be up to 100 days, according to the trade group U.S. Travel Association, and travelers who do not live in or near a city where an American consulate is located may have to spend hundreds of dollars in travel expenses for mandatory face-to-face interviews.

“There is nothing, absolutely nothing, about a 100-day wait time to make us any more secure,” Geoff Freeman, chief operating officer of the association. “That is costing our economy dearly.”

Global long-haul travel grew by 40 percent from 2000 to 2010, the association said, but the United States’ share fell to 12.4 percent from 17 percent. The association calculated that by failing to keep pace, the United States lost 78 million potential visitors who would have generated $606 billion in spending.

The association is pushing for legislation that would reduce waiting time for visas by adding personnel and reassigning consular officers to high-demand markets, waiving the in-person interview for applicants who are renewing visas, introducing a pilot videoconferencing program to conduct interviews and expanding the visa waiver program.

In recent months, members of both the Senate and the House have introduced eight bills to stimulate travel to the United States.

In an interview, Deputy Secretary of State Thomas R. Nides said the correlation between visa issuance and spending is undisputed. “We’re very much focused on an ongoing dialogue” that would facilitate legitimate travel and job growth, he said. “But it is a balancing act.” Every decision “has to be made in light of national security,” he added.

But despite increased demand — visa processing jumped 48 percent in China and 63 percent in Brazil in the last three months of 2011 compared with the period a year earlier — the waiting time for visa interviews has decreased. In the meantime, other countries are aggressively courting travelers from countries not part of the waiver program. In July, Canada introduced 10-year multiple entry visas for all countries that require a visa, including Brazil and China, and in August announced the opening of three new visa application centers in Brazil, according to the Tourism Industry Association of Canada, a trade group. “Previous policies were based on our views of the 20th century world and need to evolve,” said David F. Goldstein, president and chief executive.

Shane Downey, director of public policy for the Global Business Travel Association, said a speech at the group’s recent annual convention in Denver that included discussion of visa reform touched a nerve. “We immediately started receiving e-mails” about members’ frustrations, he said.

Steven Hacker, president of the International Association of Exhibitions and Events, said: “When international buyers and sellers try to come and can’t, they go to other countries,” he said. “Ten years ago emerging countries like China, Brazil and India were not nearly as sophisticated as they are today, so there wasn’t much demand.”

He told of a recent exhibition of the Association of Equipment Manufacturers, an event for the construction industry held every three years, when the visa application for one person in a large group was rejected at the last minute, so the whole group was unable to attend.

Gary Shapiro, president of the Consumer Electronics Association, said his organization also loses many visitors at its annual show from markets like China. “I believe the U.S. consulates and embassy in China have been responsive but are understaffed and under-resourced,” he said. “Still, we hear of many visa denials for unknown reasons.”

Article source: http://feeds.nytimes.com/click.phdo?i=dd144bd6732b49aa14614e13fc63046d

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Bucks Blog: The Ever-Shifting Balance Between Resources and Dreams

September 21, 2011 by Leave a Comment

Carl Richards

Carl Richards is a certified financial planner in Park City, Utah. His sketches are archived here on the Bucks blog and on his personal Web site, BehaviorGap.com.

Most of us have limited resources, like time, money, energy and skills. At the same time, we have needs, goals and dreams. All too often they exceed the limited resources we have, so balancing these two areas of our personal economy can be tricky. We also need to understand that over time both of these circles change.

Sometimes the resources we have will be greater and allow us to do more of the things we want. Other times our needs and wants will seem to dwarf the limited resources we have to throw at them.

But it’s not something that we decide once and then check off the list. It’s a challenge we have to revisit regularly. So here’s how to think about both of the circles.

First, we need to stop focusing on things outside our control. When we do that, we miss opportunities during both good times and bad (like now) to find our financial balance.  Don’t put off making important and necessary adjustments, because no one else will do it for you.

Second, we need to be honest about whether our goals are realistic given our resources. You may want to retire at 50, but if you haven’t been saving money regularly, that’s not likely to happen. Aim for things that really matter to you, but don’t set yourself up to fail before you ever start. Remember: your goal is maintaining balance, not achieving perfection.

Finally, look for new ways to make the balancing act work for you. Only you know your goals and only you understand what resources you can dedicate to achieving your dreams. Get the help you need to figure out the details, but it’s up to you to keep these two areas in balance.

It’s amazing the changes that I see in people once they figure out how to match their dreams with their resources. They worry a lot less day to day about things they have no control over. They spend more time with the people they love and doing things that make them happy. Even if their balance between resources and goals doesn’t look like anyone else’s, it’s still getting them where they want to go.

And that is all that matters.

Article source: http://feeds.nytimes.com/click.phdo?i=a32ff25cee8c6623ee1c122c48b71014

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AT&T to Woo and Fight Justice Department on Antitrust Lawsuit

September 3, 2011 by Leave a Comment

WASHINGTON — ATT plans to approach the Justice Department to discuss conditions, including the sale of assets or the transfer of subscribers to other companies, that would allow its merger with T-Mobile to be completed, people close to the transaction said Friday.

ATT has a strong incentive to determine how many conditions the Justice Department might impose on the proposed merger. If the costs of those conditions are “reasonably likely to be more than $7.8 billion,” according to the merger agreement, ATT can walk away from the transaction without having to pay a breakup fee to T-Mobile of $3 billion in cash plus wireless airwaves worth an estimated additional $3 billion.

Those are among the many tea leaves that watchers of the telecommunications industry have been poring over in the two days since the Justice Department filed a lawsuit seeking to block the proposed merger on antitrust grounds.

It will be a delicate balancing act for ATT to both fight the Justice Department in court, as it has vowed to do, and to try to cozy up to the antitrust officials and regulators by promising to shed assets and to agree to monitoring and regulation that the antitrust division would be likely to require for the merger to proceed.

But two people close to the transaction, who spoke only on condition of anonymity, say ATT has already started traveling down those dual tracks. While no date has been set for a settlement meeting with the Justice Department, those people said, ATT intends to begin laying out its case later this month.

Drafting a deal that will satisfy the Justice Department will not be easy. In the antitrust lawsuit it filed on Wednesday to block the deal, the Justice Department noted that ATT and T-Mobile competed head-to-head in 97 of the top 100 cellphone markets in the United States. Even if ATT offered to give up customers in one-third of those markets, it would still be eliminating one of its biggest competitors in a wide swath of the country.

“It’s hard to imagine conditions that would accommodate Justice’s concerns that wouldn’t leave the deal unacceptable to ATT and T-Mobile,” Melissa H. Maxman, co-chairwoman of the antitrust practice group at Cozen O’Connor, a law firm in Washington, said Friday.

The surprise lawsuit has also left many on Wall Street wondering what became of ATT’s vaunted lobbying operation. Already one of the top five corporate spenders in the country over the last five years, according to the Center for Responsive Politics, ATT raised its spending even further in the first half of 2011.

According to Senate records cited by Bloomberg news, ATT spent nearly $12 million on lobbying efforts in the first half of this year, up 30 percent from a year earlier. The Center for Responsive Politics said that ATT also gave more money to federal candidates this year than any other corporation.

But relatively few members of Congress objected loudly when the government announced its lawsuit.

Some of ATT’s harshest critics among consumer advocacy groups, as well as competitors like Sprint Nextel, say that there are essentially no conditions that would satisfy their concerns about the merger and its effect on competition in the wireless industry.

“No, there is no way to condition this merger in a way that preserves competition and also provides the supposed benefits that ATT says the merger will provide,” Gigi B. Sohn, president of Public Knowledge, an advocacy group, said. No matter what conditions the Justice Department might agree to, she said, a merger would eliminate one of only four national wireless companies. And the top two of those — ATT and Verizon — would together control 80 percent of the market.

At least one competitor is not opposed to trying to find a way for the merger to work, however. MetroPCS, which currently ranks a distant fifth among wireless companies, has laid out in filings at the Federal Communications Commission several conditions that it believes could allow smaller wireless companies to compete with a merged T-Mobile and ATT.

Those include the sale of wireless spectrum — the airwaves over which cellphone signals are carried — to one of the smaller, regional carriers; roaming arrangements that allow regional providers to use the network of the combined ATT and T-Mobile at specified rates; and guarantees that the smaller companies will be able to negotiate fair deals for access to new handset technology with hardware providers.

Because of the unusual breakup clause that would allow ATT to escape the deal, “It’s in ATT’s interest to negotiate heavily with both the F.C.C. and Justice” over possible conditions or divestitures that might let the merger go through, said Susan Crawford, a professor at the Benjamin N. Cardozo School of Law at Yeshiva University.

There is little doubt that ATT was actively engaged in recent days in discussions with the Justice Department before the government filed its case. In the two weeks before the antitrust lawsuit was filed, ATT met at least three times with Justice Department lawyers, F.C.C. officials and representatives of state attorneys general to review aspects of the mergers, according to documents filed with the F.C.C.

In those meetings, “ATT was just refusing to accept the idea that the government might say no to them,” said one person who attended several of the meetings, but who spoke on the condition of anonymity because the meetings were confidential.

But it is also almost certain that the lawsuit came as a surprise to ATT. Just hours before the Justice Department’s lawsuit was announced on Wednesday morning, the company’s chief executive, Randall Stephenson, was interviewed on CNBC’s “Squawk Box.”

On that program, he said that he still expected the merger to close in the first quarter of next year. “We’re deep into the analysis with the Department of Justice,” Mr. Stephenson said, “and it’s all the data-gathering and analysis you might expect.”

Article source: http://feeds.nytimes.com/click.phdo?i=f1bb783f02d26000f6d5d5e236998511

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China’s Economy Slows Slightly, but Inflation Remains a Worry

May 12, 2011 by Leave a Comment

But data released on Tuesday and Wednesday leaves unclear whether the slowing is enough to bring down inflation — particularly as long as the central bank is pumping tens of billions of renminbi into the economy each week to keep the Chinese currency from rising more quickly against the dollar.

Chinese policy makers now face a delicate balancing act. They must try to divine how much more currency appreciation the country’s highly successful export industry can withstand, before the stronger renminbi makes Chinese goods less competitive on the global market.

Printing fewer renminbi to buy dollars would be the most direct step that China could undertake to fight inflation, Western and Chinese economists say. But policy makers have feared that doing so would let the renminbi rise too quickly and cause layoffs at export factories — even though the latest data shows a surge in exports.

Instead of crimping the money supply, policy makers have resorted to domestic measures, like raising interest rates and forcing commercial banks to park more of their assets at the central bank instead of lending them. But those moves are now starting to slow the domestic economy in China.

Any curb on the domestic economy directly contradicts the government’s long-term goal of shifting from export-led growth to more self-reliant growth with a greater emphasis on domestic consumption.

Even though prices at the consumer and producer levels rose a little less quickly last month than they had in March, the slight slowdown at the consumer price level was less than many economists had expected. Consumer-price inflation edged down to 5.3 percent in April, from 5.4 percent the month before.

Retail sales and construction barreled ahead in April, but not quite as quickly as the month before.

Industrial production slowed last month, but that was partly because factories had expanded so vigorously that they surpassed the electricity supply in some areas. Another factor was that some parts were in short supply from Japan after the natural and nuclear disasters there.

Meanwhile, the purchasing managers index has inched down, although it is still forecasting continued economic growth.

Taken together, the welter of economic data released Tuesday and Wednesday suggests that the Chinese economy is “cooling, but still hot,” said Hongbin Qu, HSBC’s chief economist for greater China.

As a move against inflation, Mr. Qu predicted in a research note, the government could tighten monetary policy further for the domestic economy.

Some economists are starting to ask whether the government might have gone too far in raising interest four times since October. But interest rates on bank deposits remain far below consumer price inflation, while interest rates on corporate loans remain below inflation at the producer level.

Many Chinese business executives say that their sales are still strong, and some are still finding credit readily available.

“Orders are strong from stores within China, and we see the potential for the domestic market ever expanding,” said Stan Hu, the sales manager at the Xigo Electric Group Company, an air-conditioner manufacturer in Nantuo, in southern China’s Guangdong Province. “It is true that banks have tightened their lending to companies, but we have not been affected given our healthy financial situation.”

Others, though, are struggling for loans — particularly smaller businesses, as well as exporters of low-margin products like mass market clothing.

The worried include Colin Cheng, sales manager of Ningbo Yinzhou Gold-Sun Garments Company, which makes T-shirts, skirts and other knitted garments in Ningbo, in east-central China.

“The banks have tightened lending, especially to enterprises such as ours,” he said. “We still have a three-year loan outstanding from the banks. But once it expires, we have already been informed that it is not likely the loan will be rolled over.”

The strongest facet of the Chinese economy these days is also in many ways the least welcome: exports. China’s exports jumped 25.9 percent last month from a year earlier.

That was a contrast to overall industrial production, which rose only 13.4 percent, as companies devoted more factory capacity to filling orders from overseas, rather than focusing on goods for domestic consumption.

China’s trade surplus in April, at $11.43 billion, was nearly three times what economists had expected, as exports surged past their previous record, set in December.

Countries like India, Singapore and Brazil have been dismayed at the extraordinary success of Chinese companies in grabbing business and seizing a large share of the jobs and prosperity created by the world’s gradual recovery from the economic downturn.

A cornerstone of that export success has been the huge intervention in currency markets. The People’s Bank of China issued renminbi to buy an average of $15 billion a week worth of dollars and other currencies during the first quarter, pushing its foreign exchange reserves over $3 trillion for the first time.

The central bank has tried to limit the inflationary effects of this monetary intervention by selling notes to banks at low interest rates, which allows it temporarily to take renminbi back out of circulation.

Forcing banks to park as much as a fifth of their assets with the central bank also reduces the amount of money in the economy, while enabling the central bank to use much of that money to pay for further purchases of dollars.

But this week’s data contained a warning of a possible threat to the central bank’s delicate balancing act: bank lending grew faster than expected, as banks were quick to use cash not tied up at the central bank.

At the same time, Chinese households actually reduced their deposits at banks. That is a sign many families may have concluded that earning an interest rate below the rate of inflation is a bad idea — and that spending on already high-priced real estate, gold and other physical assets may still be a better bet. Even if such spending is likely to add to inflationary pressures.

Hilda Wang contributed reporting.

Article source: http://feeds.nytimes.com/click.phdo?i=4f811f76f8e76d45898367fa983b63a8

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