Arab League welcomes UN adoption of resolution on Israeli practices

The Palestinian Presidency has welcomed the UN general assembly adoption by a majority of 87 in favor of a Palestinian draft resolution regarding the Israeli practices marring the human rights of the Palestinian people in the Palestinian territories, considering the latest UN-sponsored development a victory for the world justice and the Arab-Islamic-Internationally-supported Palestinian diplomacy alike.

In a statement, Nabil Abu Rudeineh, the spokesman of the Palestinian Authority President Mahmoud Abbas, cited the vote as yet another evidence of the support of the world for the Palestinian people and their historic inalienable rights.

It is time to hold the Israeli occupation accountable according to international law for its crimes, said Abu Rudeineh, noting that the Palestinian people firmly believe that imposing international justice is the only way to achieve peace.

For its part, the Palestinian Foreign Ministry drew the attention that resorting to the International Court of Justice comes in line with the Palestinian story based on the international law and the Palestinian people basic rights in confrontation to the Israeli fake story.

It also confirms that all Israeli policies and practices on the occupied Palestinian territories, including the city of Al-Quds are denounced by the world community and according to the international law.

In Cairo, the secretariat general of the Arab League (AL) welcomed the resolutions issued by the UN General Assembly as regards the Palestinian cause, citing, in particular, the one asking the world court to weigh in on Israeli occupation and annexation since 1967, including the city of Al-Quds.

In a statement, Assistant Secretary General for Palestinian and Arab Territories Affairs at the AL Dr. Saeed Abu-Ali said that the UN-sponsored resolution has constituted an important station and platform to confront the Israeli plots, practices and aggression through legal tracks and holding the occupation accountable of its crimes.

He said that the resolution has reflected the will of the world community through scoring victory for the principles of the international law and legitimacy resolutions, including empowering the legal mechanisms to confront the Israeli practices and plots.

Abu-Ali called on the countries that did not support the resolution to review their positions according to the principles of international law, charters and justice in support for fair peace based on the two-state solution.

In Jeddah, the secretariat general of the Organization of Islamic Cooperation (OIC) welcomed the resolutions issued by the UN general assembly as regards the Palestinian cause, citing, in particular, the one asking the world court to weigh in on Israeli occupation and annexation since 1967, including the city of Al-Quds. OIC paid tribute to the countries that supported the resolution.

Weaker shale oil production forecast for 2023

The shale oil patch this week closes the door on a disappointing year while bracing for weaker output gains in 2023, hamstrung by rising costs, dwindling reserves and pressures to hold down spending.

The US oil production is anticipated to rise by an average of 620,000 barrels per day, according to the latest government estimates, a third less than the roughly one million bpd some forecasts called for at the start of the year. That shortfall has undercut shale's influence on global markets and helped lift prices for the second year in a row.

Gains in 2023 year will be harder to come by, said Scott Sheffield, Chief Executive Officer of top Permian producer Pioneer Natural Resources. He predicted 300,000 bpd to 400,000 bpd of increased shale production in 2023.

"Most companies are drilling tier two and tier three inventories now," having tapped their best prospects, Sheffield said in an interview. "Less quality production is coming out of the Permian, out of the Bakken," he said, referring to the top two US shale basins.

Weakening output gains come despite historically strong demand in the wake of Russia's invasion of Ukraine. Brent futures on Friday December 30, 2022 settled at US$85.91 per barrel, a level that typically would spur producers to pursue higher prices with drilling increases. For the year, Brent is up about 10%, after jumping 50% in 2021.

Sheffield predicts global crude to average about US$90 per barrel in 2023, with a potential upside of about US$120, higher than current levels.

A more optimistic production view from energy technology firm Enverus - which forecasts an about 500,000 bpd increase next year - is still below this year's tepid level.

"These headwinds are expected to persist," said Chetan Sharma, a senior associate with Enverus who cited supply chain constraints and uncertainty over what the OPEC cartel will do.

Denver-based Civitas Resources, Colorado's largest producer, said the regulatory environment also has made it difficult for companies to ramp up production quickly.

"If we want to increase significantly as an industry, we would need to shorten permit cycle times," said CEO Chris Doyle, pointing to an 18-month lead-time for a new drilling permit.

Civitas grew volume about 4% year-over-year and anticipates relatively flat production in the coming year as it prioritizes free cash flow and balance sheet strength over growth.

Pioneer and other shale producers are experimenting with oil recovery techniques that could eventually squeeze more oil out of older wells. The maturing of shale fields became a bigger problem for industry growth year 2023.

In the near-term, Sheffield warned oilfield inflation, which ran around 10% to 15% this year, will persist and limit production growth. Another restraint is investor demands to focus on returns over volume increases.

Pioneer and other oil firms are no longer contracting with drillers or fracking firms to have new equipment built because of the financial demands.

"We're not doing that this year because they would charge another 30% to 40% more, and we don't know what is going to happen in three or four years, by the time we've made that investment," Sheffield said.

 

 

 

Iran: IMF sees a positive outlook in 2023

Drawing a positive outlook for the Iranian economy in 2023, the International Monetary Fund (IMF) has predicted that 10 major indicators of the Iranian economy would experience growth and improvement in the forthcoming year as compared to 2022.

IMF has announced that Iran's foreign currency reserves are more than US$120 billion, but it claims that Iran has access to only a small part of these reserves due to the US sanctions.

According to the IMF data, Iran's Gross Domestic Product (GDP) based on the purchasing power index will grow by US$91 billion or two percent in 2023 to reach US$1.7 trillion.

Meanwhile, Iran's GDP per capita is also expected to increase by US$865 based on the purchasing power index to reach US$19,528 in 2023 from US$18,663 in 2022.

IMF sees Iran's GDP excluding oil grow by 2% in 2023, and the growth of the country’s economy including oil will be 2.1% this year.

The inflation rate in Iran is predicted to be 40% in 2023, registering no change as compared to 2022.

The International Monetary Fund expects the rate of the country’s liquidity growth to slow down in 2023. The liquidity growth that reached 47.5% of GDP in 2022 will decrease to 45.6% in 2023.

The budget deficit of the Iranian government in 2023 will reach 6% of GDP, which is 1.8% higher than the figure for 2022.

The Iranian government’s total revenues will not change in 2023 as compared to the previous year. The Iranian government’s income in 2023 is estimated to be 8.3% of the GDP, registering no change compared to the previous year. However, the government's non-oil incomes will increase from 7.4% of GDP in 2022 to 7.5% of GDP in 2023.

Based on the IMF data, the downward trend of the Iranian government's gross debt will continue in 2023 to settle at 31.9% of the GDP this year.

The fund also predicts Iran's current account balance to be US$30.2 billion in 2023. Iran's current account balance in 2022 is estimated at more than US$32 billion.

Based on the referred data, Iran's foreign currency reserves increase by more than US$11.4 billion in 2023 and reach US$42.2 billion. Iran's available foreign currency reserves in 2022 are estimated at US$30.8 billion.

According to the estimate of the International Monetary Fund, Iran's foreign debt in 2022 will be equal to 0.5% of the GDP and it is expected that this figure will remain the same in 2023.

 

Weak demand persists for US natural gasoline

The natural gasoline market in the US Gulf coast could face headwinds in 2023 as faltering gasoline blending demand undercuts stable export demand, while record production provides ample supply.

One of the primary demand drivers for US natural gasoline is its use as a diluent for bitumen produced in the oil sands in Alberta, Canada. Diluents like natural gasoline are mixed into bitumen so it can more easily be transported on pipelines and railcars.

US natural gasoline exports to Canada totaled 204,000 barrels per day (bpd) in September, up by 4.6% from a year earlier, according to the latest available US Energy Information Administration (EIA) data.

During the first nine months of year 2022, exports averaged 176,555 bpd, down by 13% from the same time last year and down by 3.6% from the five-year average.

Bitumen production remained robust and reached 3.3 million bpd in September, up by 9.3% from last year, according to the Canada Energy Regulator (CER).

Bitumen production in the first nine months of this year totaled 3.12 million bpd, up by 2.3% from the same period last year.

Over the past decade, bitumen production has increased every year apart from the crude demand shock in 2020 that was caused by the onset of the Covid-19 pandemic.

Historical trends suggest bitumen production will continue to increase in 2023 and beyond, providing a stable, if not favorable, outlook for the US natural gasoline export market.

The other primary demand driver for natural gasoline is as a blending component for motor gasoline.

US refinery and blender net inputs of natural gasoline into gasoline blending pools averaged 212,000 bpd in September, up by 18% from a year earlier, according to the EIA.

US blending demand averaged 205,333 bpd through the first nine months the year, up by 41% from the same time last year.

Part of the increase in blending demand can be attributed to favorable margins for gasoline blenders. As a low-octane fuel, natural gasoline is one of many possible fuels that blenders can use in their blending pool. Lower natural gasoline prices relative to motor gasoline prices generally can incentivize blenders to incorporate more natural gasoline in their blending pools.

The premium of Nymex RBOB gasoline futures to natural gasoline prompt-month prices at Mont Belvieu, Texas, for example, averaged 154.17¢/USG from May 02 to August 30 this year, according to Argus data.

Refiners and blenders used on average 216,750 bpd in their blending pools during that time. During the same period last year, the differential averaged 66.89¢/USG and the amount of natural gasoline used in the blending pool averaged 139,000 bpd.

The premium started to narrow again in late-November 2022, a worrying sign for gasoline blending demand. The RBOB-natural gasoline spread narrowed from 105.31¢/USG on November 23 to 73.11¢/USG on December 09, 2022. Should this trend continue into 2023, it could provide downward pressure on natural gasoline prices.

In addition, record natural gasoline production will likely continue to pad inventories and provide ample supply. Natural gasoline production rose to a record 738,000 bpd in September, up by 12% from a year earlier.

Production this year through September was also a record at 662,777 bpd, up by nearly 11% from the same period last year.

Record production has helped to build inventories, which stood at 27.2 million barrels in September, up by 21%YoY.

Persistently elevated production heading into 2023 will likely provide additional downward pressure on prices as caverns will have ample supply to meet buying interest.

 

Pakistan Stock Exchange benchmark index up 1.89%WoW

The benchmark index of Pakistan Stock Exchange (PSX) closed at 40,420 points, up 1.89%WoW on the last day of the week ended on December 30, 2022.

The gain can be largely attributable to renewed interest in the oil and gas sector as the Government of Pakistan (GoP) constituted a new committee for the resolution of circular debt.

Participation in the market improved, with daily traded volume averaging 214.27 million shares during the week, as compared to 180.2 million shares in the prior week depicting a gain of 18.9%WoW.

Pakistan is scheduled to make debt repayments of US$ one billion to two commercial banks early in January 2023. Foreign exchange reserves held by State Bank of Pakistan (SBP) further declined by US$294 million to paltry US$5.8 billion as of December 23, 2022.

Other major news flows during the week included: 1) SBP raised EFS and LTFF rates by 2% to 13%, 2) foreign exchange reserves held by SBP plunged to eight-year low, 3) makers raised steel prices by up to Rs25,000, 4) development spending dropped 38% in July-November period, 5) fertilizer offtake declined by 26.4%YoY during Rabi season, 6) power sector receivables crossed PKR2.5 trillion mark, 7) ADB said Pakistan needed US$62 billion to $155 billion for energy sector until 2030, and 8) FBR reduced duty on import of tractors to 15%.

Top performing sectors were: Food & Personal care products, Leasing Companies, and Leather and Tanneries, while the least favorite sectors were included Woolen, Textile Weaving, and Automobile Parts and Accessories.

Top performing scrips were: PSMC, HACR, NESTLE, PPL, and PGLC, while laggards included: THALL, YOUW, NCL, AICL, and ARPL.

Flow wise, Banks were the major buyers with net buy of US$23.93 million, followed by other organizations (US$3.91 million), while foreign investors were major sellers during the week, with a net sell of US$16.59 million.

The market is expected to remain under pressure in the near future, driven by the weakness in the PKR and the concerns regarding the country’s fiscal health. Pakistan will have to repay around US$8.3 billion in shape of external debt servicing over next three months of current fiscal year.

Additionally, the political uncertainty and any developments regarding the 9th review by the IMF would remain in the limelight, which would unlock inflows from friendly countries.

The market is likely to remain jittery amid uncertainties over economic fronts. Therefore, analysts to advise a cautious approach to investors while building positions in the market.

 

 

 

Pakistan Stock Exchange benchmark index declines 9% in CY22

Economic and political issues badly affected Pakistan Stock Exchange (PSX) in 2022. The benchmark index, KSE-100 index, declined 9% during the year. With PKR depreciating 22% against greenback, Index was down 29% in US$ terms.

According to Pakistan’s leading brokerage house, Topline Securities, 2022 was also a turbulent year for global stock markets as US$18 trillion were wiped out in 2022 with drop of approx 20% in MSCI World Index which is worst performance since the 2008 crisis. MSCI EM fell 22%, while MSCI FM was down 29% in 2022.

According to Bloomberg data, Pakistan’s KSE-100 Index was amongst worst performing market in US$ term in 2022.

Due to macroeconomic issues, activity at PSX also remained dull. Average traded volume (ready/cash) per day at PSX was down 52% to 230 million shares/day.

Similarly, average traded value per day was down 59% to PKR7 billion/day which was lowest since 2019.

In futures market, total traded volume and value per day were also down by 33% and 56% to 94 million shares and PKR3.6 billion, respectively.

KSE-100 Index also underperformed as compared to other asset classes in 2022 including Gold (+45%), one-year US$ denominated Naya Pakistan Certificate (+36%) and greenback (+28%).

T-Bills, Money Market Fund and Property indices posted return in the range of 12% to 14% in 2022.

Initial public offering (IPO) market was also impacted due to eroding equity values as only 3 IPOs raised funds in 2022 as against 8 IPOs in 2021. The number of IPOs was also the lowest in 2019 when Pakistan saw just one IPO at PSX.

Selling by foreigners continued in 2022 with net selling of US$127 million. In last 7-years, foreign corporates have sold shares worth of US$2.5 billion at PSX.

Local Mutual Funds and Insurance Companies also trimmed their position in 2022, with Mutual Funds selling US$166 million, while Insurance Companies sold US$128 million.

Selling was absorbed by Local Individuals, Banks and Companies with net buying of US$138 million, US$117 million, and US$78 million respectively.

 

Oil set to end turbulent 2022 directionless

On the last trading day of year 2022, oil prices are inching higher and are on track to post their second straight annual gains, albeit modest, in a stormy year marked by tight supplies due to the Ukraine war, a strong dollar and weak demand from the world's top crude importer China.

Next year is set to be another year of uncertainty, with plenty of volatility.

Brent crude futures rose 20 cents to US$83.66 a barrel by 0445 GMT, after settling 1.2% down in the previous session. Brent looked set to end the year with a 7.6% gain, after jumping 50.2% in 2021. Prices surged in March to a peak of US$139.13 a barrel, a level not seen since 2008, after Russia invaded Ukraine, sparking supply and energy security concerns.

US West Intermediate crude (WTI) was traded at US$78.63, after closing 0.7% lower on Thursday. It is on track to rise 4.5% in 2022, following a 55% gain last year.

While an increase in year-end holiday travel and Russia's ban on crude and oil product sales are supportive of oil prices, declining consumption due to a deteriorating economic environment next year will offset supply tightness, said CMC Markets analyst Leon Li.

The global unemployment rate is expected to rise rapidly in 2023, restraining energy demand. So I think oil prices may fall to US$60 next year," he said.

Oil prices cooled quickly in the second half this year as central banks across the world hiked interest rates to fight inflation, boosting the US dollar. That made dollar-denominated commodities costlier investment for holders of other currencies.

Also, China's zero-COVID restrictions, which were only eased in December, squashed oil demand recovery hopes for the world's No. 2 consumer. While China is expected to slowly recover in 2023, a surge in COVID cases in the country and global recession concerns are clouding the commodities demand outlook.

"The recent easing of travel restrictions was expected to boost oil demand; however, the sharp increase in COVID cases in China has raised serious concerns over a potential global outbreak," John Driscoll, director at consultancy JTD Energy Services, said.

In response to China's surge in COVID cases, several countries including the United States, South Korea and Japan have imposed mandatory COVID tests on travellers from China.

A health data firm estimated that around 9,000 people in China are probably dying from COVID each day, as infections spread in the world's most populous nation.

Looking ahead on supplies, western sanctions will push Russia to divert more crude and refined products exports from Europe to Asia.

In the United States, output growth in top oil-producing states has slowed despite higher prices. Inflation, supply chain snags and economic uncertainty have led executives to lower their expectations, the latest survey by the Federal Reserve Bank of Dallas found.

"This year has been an extraordinary year for commodity markets with supply risks leading to increased volatility and elevated prices," ING analyst Ewa Manthey said.

 

 

 

Uzbekistan links child deaths to Indian syrup

According to Saudi Gazette, Uzbekistan's health ministry has said that 18 children have died after drinking a cough syrup manufactured by Indian drug maker Marion Biotech.

The ministry said that preliminary tests showed a batch of the medicine contained ethylene glycol, a toxic substance.

The children were given the Dok-1 Max syrup without a doctor's prescription, it said. The amount they consumed also exceeded the standard dose for children.

The allegation from Uzbekistan comes weeks after The Gambia also linked child deaths to cough syrups made by another Indian firm.

India's health ministry said in a statement that its officials have been in regular contact with the national drug regulator of Uzbekistan regarding the matter since December 27, 2022.

It added that health officials have conducted an inspection of Marion Biotech's facility in Noida in Uttar Pradesh state.

"The samples of the cough syrup have been taken from the manufacturing premises and sent to Regional Drugs Testing Laboratory, Chandigarh for testing," the statement added.

News agency ANI has quoted a Marion Biotech executive as saying that the company has halted production of the syrup temporarily. He added that the government was conducting an enquiry and that the firm would take action accordingly.

Marion Biotech is based in Noida, near India's national capital Delhi. Its website is currently down, but the company's LinkedIn page says it was founded in 1999 and that its products are household names in Central Asian countries, Central and Latin America, South East Asia and Africa".

India produces a third of the world's medicines, mostly in the form of generic drugs.

The country, home to some of the fastest-growing pharmaceutical companies, is known as the world's pharmacy and meets much of the medical needs of developing countries.

The Uzbek ministry statement, dated December 27, says that Dok-1 Max tablets and syrup have been sold in the country since 2012.

"It was found that the deceased children, before admission to hospital treatment, took this drug at home for 2-7 days, 3-4 times a day, 2.5-5ml, which exceeds the standard dose of the drug for children," the ministry said.

The statement did not specify over what time period the deaths occurred. BBC Monitoring had reported on December 23, citing news website Gazeta.uz, that Uzbek authorities were investigating claims that 15 children died in central Samarkand region over the past two months after taking a cough syrup made in India".

On December 26, Podrobno.uz news website reported that 21 children - 15 of them under the age of three - were treated for acute kidney failure allegedly caused by the India-made cough syrup Dok-1 Max between September and December". Three of the patients recovered.

The ministry also said that preliminary laboratory studies have shown that this series of Dok-1 Max syrup contains ethylene glycol.

In October 2022, the World Health Organization (WHO) had sounded a global alert and linked four India-made cough syrups to the deaths of 66 children from kidney injuries in The Gambia. It said tests on samples of the syrup showed that they contained unacceptable amounts of toxic substances diethylene glycol and ethylene glycol.

Both the Indian government and the company, Maiden Pharmaceuticals, have denied the allegations.

India said earlier in December that tests on the four syrups showed that they complied with specifications, and a government official told the BBC that the WHO had been presumptuous in blaming the syrups. But the WHO said it stood by the action taken.

Last week, a parliamentary committee in The Gambia recommended the prosecution of Maiden Pharmaceuticals after weeks of investigation. The committee also recommended banning all products by the firm in the country. 

Pakistan Refinery: Corporate Briefing

To recall during FY22, sales of Pakistan refinery (PRL) grew to its highest ever level of PKR 191 billion. Gross profit increased to PKR20 billion due to high cracking margins globally. Despite a provision of PKR1.6 billion related to super tax, profit after tax and EPS increased to PKR 12.6 billion and PKR 19.96, respectively.

During 1QFY23, sales grew to PKR73 billion. Moreover, gross profit increased to PKR1.6 billion as cracking margins are on a decline globally. This led to an increase in net profit to PKR1.00 billion and EPS of PKR 1.63. 

PRL is a subsidiary of PSO with 63.6% holding. Plant’s annual capacity is 50,000bpd which is run on hydro skimming technology with Crude distillation, Hydrotreating, Platformer and Isomerisation units.

PRL product mix and margins: mainly comprises of HSD and MS, constitute 70% of the refined products and have higher margins than the rest. However, negative margins in FO has made it unviable for exports.

Wood plc was awarded to conduct a FEED study for the upgrade of the plant. Further, JS Global and UBL are hired as financial advisors for the arrangement of financing for the project. This deep conversion refinery upgrade project will allow the Company to produce Euro-V compliant fuel at the same time enhancing capacity to 100,000 bpd. 

The Company has altered its sources to lighter crudes which has resulted in higher profitability. It was mainly due to less reliance on ADNOC due to its lower grade and increasing the share of ARAMCO and KPC. In turn FO proportion in the production mix has declined to 22% which was more than 30% in FY19.

Higher of ACT (based in higher of accounting income and taxable income), normal corporate tax or the minimum turnover tax (0.5% on local and 1% on exports) is applicable on the Company.

During 1QFY23, taxation was provided on turnover tax which included PKR100 million deferred tax.

After the Sindh High Court decision on super tax, the Company is hopeful that its reversal would augment profitability going forward.

 Future outlook

Despite delays in the issuance of the new refinery policy, the Company remains committed to upgrade project as the country is reducing its reliance on FO for power generation and better margins are offered by HSD and MS.

The Company also changed its logo to reflect its contribution for the sustainable development of the country.

Key challenges include subdued refinery margin which is currently declining from its peak. Also, high interest rate and PKR depreciation will continue to dampen profitability. Lastly, low FO upliftment may hamper cash flows in the coming months.

UN halts some programs in Afghanistan after ban on women aid workers

Taliban seized power in August in 2021. They largely banned education of girls when last in power two decades ago but had said their policies had changed. Taliban-led administration has not been recognized internationally.

The United Nations said on Wednesday that some time-critical programs in Afghanistan have temporarily stopped and warned many other activities will also likely need to be paused because of a ban by the Taliban-led administration on women aid workers.

UN aid chief Martin Griffiths, the heads of UN agencies and several aid groups said in a joint statement that women's participation in aid delivery is not negotiable and must continue, calling on the authorities to reverse the decision.

“Banning women from humanitarian work has immediate life-threatening consequences for all Afghans. Already, some time-critical programs have had to stop temporarily due to lack of female staff," read the statement.

"We cannot ignore the operational constraints now facing us as a humanitarian community," it said. "We will endeavour to continue lifesaving, time-critical activities ... But we foresee that many activities will need to be paused as we cannot deliver principled humanitarian assistance without female aid workers."

The ban on female aid workers was announced by Taliban-led administration on Saturday. It follows a ban imposed earlier on women attending universities. Girls were stopped from attending high school in March this year.

"No country can afford to exclude half of its population from contributing to society," said the statement, which was also signed by the heads of UNICEF, the World Food Program, the World Health Organization, the U.N. Development Program, and the UN high commissioners for refugees and human rights.

Separately, 12 countries and the EU jointly called on the Taliban to reverse the ban on female aid workers and allow women and girls to return to school.

The statement was issued by the foreign ministers of Australia, Canada, Denmark, France, Germany, Italy, Japan, Norway, Switzerland, the Netherlands, Britain, the United States and the EU.

The ban on female aid workers "puts at risk millions of Afghans who depend on humanitarian assistance for their survival," the statement said.

Four major global groups, whose humanitarian aid has reached millions of Afghans, said on Sunday that they were suspending operations because they were unable to run their programs without female staff.

The UN statement said the ban on female aid workers "comes at a time when more than 28 million people in Afghanistan ... require assistance to survive as the country grapples with the risk of famine conditions, economic decline, entrenched poverty and a brutal winter."

The UN agencies and aid groups - which included World Vision International, CARE International, Save the Children US, Mercy Corps and InterAction - pledged to remain resolute in our commitment to deliver independent, principled, lifesaving assistance to all the women, men and children who need it.

Taliban seized power in August last year. They largely banned education of girls when last in power two decades ago but had said their policies had changed. Taliban-led administration has not been recognized internationally.

 

 

 

 

Moscow considering gas export to Pakistan through Iran

Russian Deputy Prime Minister Alexander Novak has said his country is considering export of natural gas to Pakistan and Afghanistan through Iran.

Novak said that in the long run, Russia can send its natural gas to the markets of Afghanistan and Pakistan, either using the infrastructure of Central Asia or by swapping from the territory of Iran.

Back in November, Iranian Oil Minister Javad Oji had announced a plan for cooperation with Russia and Pakistan on gas export to Islamabad.

Under the mentioned plan, Iran can tap Russian gas for a revival of its long-installed pipeline project to neighboring Pakistan.

As reported by Iranian media, Russia has agreed to supply gas to Iran for the purpose of delivery to Pakistan via the Iranian pipelines.

Russia has also agreed to build pipelines in Pakistan that were supposed to be built by the Pakistani side of a 1995 gas supply contract with Iran.

Russia’s contribution to the scheme comes as the country is trying to find new markets for natural gas supplies that were removed from the European markets because of Western sanctions on Moscow over the war in Ukraine.

Iran is also keen to partner with Russia in supplying gas to Pakistan as the country could benefit financially from the project while increased gas supplies from Russia will help the country address potential gas shortages in its northern regions.

Under a proposed swap scheme, Iran will import gas from Russia either through Turkmenistan or Azerbaijan to consume the supplies in its northern regions while committing to deliver the same amount of gas on the border with Pakistan.

Iran has another option to buy Russian gas for domestic consumption in its north without committing to any swap delivery of the same amount to other countries.

That will enable Iran to meet the growing domestic demand for natural gas and increase its gas supplies for the purpose of exports to other countries.

Experts believe both scenarios could benefit Iran although some prefer the swap model because it will lead to more Russian contribution to the Iran-Pakistan gas pipeline project.

 

Decoding Pakistan’s Circular Debt

Recent government estimates point towards the gas sector circular debt to have increased to PKR900 billion by end November 2022, compared to PKR719 billion as of March 2022. The companies affected by the debt include OGDC, PPL, SNGP, SSGC, and PSO.

The increasing quantum of circular debt in the gas sector has been detrimental to the energy security of the country in the recent past. Not only has it constricted the liquidity positions of the companies in the energy chain, but has also become a point of contention with the IMF.

The circular debt can be traced to: 1) diversion of costlier RLNG to Natural Gas consumers, 2) hike in UFG Losses, primarily theft, and 3) delayed gas tariff revisions.

Rising circular debt has put Pakistan in a vicious cycle. It has been widely documented that the increasing quantum has resulted in liquidity constraints, especially for the Exploration & Production companies, OGDC and PPL.

The stock of receivables on the companies’ books has increased from a collective PKR306 billion at the end of FY18 to PKR892 billion at the end of the September 2022 quarter.

With the mounting receivable burden on the companies, exploration activity has been subdued, leading to an inability to arrest the fall in production due to natural decline in reserves.

Gas production in the country has fallen from 3,997 MMCFD in FY18 to 3,390 MMCFD in FY22. This comes at a time when the demand for gas and energy is increasing.

This gap is being filled by imported RLNG, which is diverted to natural gas consumers and billed at lower rates, adding further to the stock of gas circular debt—putting the country in a vicious cycle.

Trade debt leads to lower exploration activity, ultimately leading to lower production levels, increasing the diversion of RLNG to natural gas consumers, which leads to lower cash collection, adding to the receivables, and the cycle continues.

Government is succumbing to the peculiar situation. Thanks to IMF’s impending ninth review, the government has finally taken notice of the situation in the gas sector and constituted a team to address the circular debt situation.

However, the agenda for the committee is short-term as it only aims to address the circular debt that has built up over the years, while not addressing the greater issue of policy measures required to arrest the buildup of the circular debt going forward.

The government would have to hike gas tariffs if it hopes to reduce the buildup going forward—a measure that has also been stressed by the IMF. Prime Minister Shehbaz Sharif has hinted towards the same in his recent address, paving the way for euphoria in the market.

From the vantage of E&P companies, specifically OGDC and PPL, any resolution of the receivables on the companies’ balance sheets would result in valuations being unlocked for the juggernauts.

If the government is able to overhaul the balance sheets of OGDC and PPL, it may lead to a re-rating in the multiples, unlocking upside potential.

Pakistan Refinery ready to resume production

Pakistan Refinery (PRL) is ready to resume its production on December 31, 2022 after receiving the cargo of crude oil. The refinery has received 70,000 tons crude oil. PRL had announced a shut down on December 10, 2022 to carry out annual maintenance.

According to sources privy to details, apart from annual maintenance, PRL was not able to carry out production as it was facing problems in opening of letters of credit for the import of crude oil, a must for smooth operations.

Sources said that PRL went for shutdown despite the instructions of the Oil and Gas Regulatory Authority (OGRA) that the refinery should continue with its operations in the month of December.

OGRA wrote a letter to the PRL at the start of the month, after review meeting of supplies of oil in the country.

The PRL representative in the meeting told that the refinery would be shut down because of the issue related to the opening of letters of credit for the import of crude.

Despite PRL’s reluctance, OGRA had directed the refinery to adhere to its directives by not shutting down till February 2023 as it expected shutting down would create oil supply issues in the country.

In response to the PRL letter for shut down, OGRA said that the request of PRL for temporary shutdown has been examined by the OGRA’s Oil Supply Chain Department in the light of current demand-supply trend of POL products.

Keeping in view the high demand of diesel in winter and significant contribution of PRL therein, it said that the PRL was requested to reassess its technical and HSE issue and reschedule the proposed shutdown to the first half of February 2023.

PRL, on the other hand justified the shutdown on the ground that it was already planned. Sources said that apart from carrying out technical annual maintenance work, PRL managed to secure the opening of a letter of credit for crude oil.

Oil marketing companies and refineries have been struggling to open letters of credit due to the extreme scarcity of dollars in the country, despite government policy to give preference to the oil sector for imports to ensure energy security.

PRL received 70,000 tons crude oil and the next cargo would come on January 13, 2023, the sources said.

 

Iran to improve transit infrastructure

The head of the Iran Chamber of Commerce, Industries, Mines and Agriculture (ICCIMA) has stressed the need to increase efforts for improving the country’s transit infrastructure in order to benefit from the recent developments in the region, the ICCIMA portal reported.

Speaking at a meeting of the Mashhad Chamber of Commerce and Industry’s Transport Committee, Gholam Hossein Shafeie mentioned the competitiveness of the transit market in the region, saying, “Competitors are creating alternative routes by spending huge amounts of money to replace Iran in the transit market.”

Stating that Turkey has made several efforts to strengthen the Trans-Caspian Corridor for transiting goods between East and West, he added, “With the integration of the Trans-Caspian Corridor in the Silk Road Project, this corridor will be connected with the China-Central Asia-West Asia corridor that passes through Iran.”

Shafeie further referred to the recent changes in the world including the war between Russia and Ukraine, saying, “In this period, due to the change in the global transport routes, new opportunities have been provided for Iran and we should take full advantage of such opportunities.”

The Islamic Republic has been taking serious measures for the development of its railway network as well as its ports and shipping infrastructure in order to encourage more countries to join the project.

Using the capacities of the International North-South Transit Corridor (INSTC), Iran will be able not only to expand the volume of trade with Russia and the countries of the region, it can also gain a huge share of the mentioned countries’ annual transit.

Currently, Russia has proposed to take part in some railway projects in Iran in order to accelerate the development of the Islamic Republic’s railway network along the mentioned route.

The row between Europe and Russia over the Ukraine war, which resulted in harsh sanctions being imposed on the country made Russia look for new ways for distributing its goods across the world, especially in Asia and mainly through the INSTC.

According to official data, one of the major advantages of INSTC is that the cost of transporting goods through this corridor is cheaper by 30%. It also halves the time it takes to transport Indian goods to Russia via the Suez Canal.

Iran can use this transit route to distribute European commodities in the shortest possible time and at a lower cost than other routes to the Indian Ocean and the Persian Gulf.

 

Netanyahu gets closer to forming government

Israeli Prime Minister-designate Benjamin Netanyahu moved one step further on Tuesday toward establishing a government after parliament approved divisive legislation agreed with his far-right coalition partners.

Already facing criticism on policy before taking office, Netanyahu has vowed to govern for all Israelis even as he will head one of the most right-wing governments in the country's history with key ministries in the hands of hardliners.

Despite a clear election win in November for his right-wing and religious bloc of parties, it has taken Netanyahu almost two months to reach deals with his allies, who have demanded a significant share of power in return for their support.

Tuesday's amendments to Israel's government law will ultimately enable the pro-settler Religious Zionism party to take up a post of second minister within the defence ministry, granting it broad authority over expansion of Jewish settlements in the occupied West Bank - land Palestinians seek for a state.

A second amendment will allow Aryeh Deri, leader of the ultra-Orthodox Shas party, to serve as a minister despite a conviction for tax fraud.

Deri is expected to serve as finance minister in two years, in a rotation deal with Religious Zionism leader Bezalel Smotrich.

But soon after the legislation was passed, Israel's Supreme Court said it would hear an appeal against Deri's appointment by a group of scientists, academics and former diplomats called "Democracy's Bastion."

Netanyahu is expected to swear in his new government on December 29, 2022 after advancing legislation to grant new powers over the police to Itamar Ben-Gvir, head of the ultra-nationalist Jewish Power party, as a national security minister.

The legislation, along with pledges to curb Supreme Court powers, anti-gay statements from coalition members and calls to allow a business to refuse services to people based on religious grounds, have alarmed liberal Israelis as well as Western allies, while drawing criticism from rights groups, businesses and  serving officials.

In response, Netanyahu has repeatedly said that he will safeguard civil rights and will not allow any harm to the country's Arab minority or to the LGBTQ community.

 

Pakistan State Oil Co. warrants closer watch

Pakistan’s largest oil marketing company, Pakistan State Oil Company (PSO) is expected to suffer from increased circular debt build up during FY23 amidst volatile LNG prices due to current geopolitical scenario, alongside with rapid depreciation of Pak Rupee, in the near term. I am inclined to share with my readers the latest review by Pakistan’s largest brokerage house, AKD Securities.

The brokerage house after revisiting its investment case for Pakistan State Oil (PSO) has revised December 2023 share target price to PKR215, from PKR240, providing a total return of 66% from last close.

Its models incorporate risk-free rate of 17%, PKR/US$ of 240/270 and Arab Light of US$95/90 per barrel during FY23/FY24. More specifically, with the crop season likely to be impacted by the recent catastrophic floods (affecting HSD offtakes), reduced auto sales in the coming quarters and overall fallen retail sales due to lower affordability amidst higher prices.

Industry’s total POL demand is expected to cumulatively fall by 15% during FY23 (previous estimate 8%), due to an overall depressed economic outlook.

To note, PSO’s volumetric offtakes were down by 18%YoY as against industry’s overall decline of 20% during 5MFY23.

The much awaited revision in OMC margin provides significant impetus to the valuation. The brokerage house has incorporated uniform OMC margins of PKR6/liter for both MS and HSD from January 2023 onwards, up 61%/51% from current levels for MS/HSD, respectively.

The aforementioned increase is expected to result in gross margins for retail fuels to stand at 2.6%/2.5% (assuming current POL prices) from 1.6%/1.7% on MS/HSD, respectively.

Historically, OMC margin increases were done generally benchmarking with the core CPI (NFNE), increasing by 6% on an average, annually. Going forward, the brokerage house assumes an annualized growth in OMC margin by 8%, to be revised at the start of every fiscal year.

With regards to the company’s working capital issues, measures taken by the GoP in order to meet with conditions set out by the IMF may be a breath of fresh air for the company.

As the global lender pushes the GoP into fiscal consolidation by increasing power and natural gas tariffs, this is expected to reduce the financial burden on the cash-starved sector and consequently PSO.

The company may be the primary beneficiary of these hikes as repayments of its overdue receivables and LPS surcharges may begin flowing through from its two biggest defaulters SNGPL (overdue receivables: PKR305 billion) and power sector (overdue receivables: PKR92 billion) as per latest quarter, inducing increased collections from customers.

Ongoing winters may pose  risk because in the near term, the national petroleum company is expected to suffer from increased circular debt build up during FY23 amidst volatile LNG prices due to current geo-political scenario, along with rapid depreciation of PKR/US$.

This subsequently results in increased working capital needs for the company and finance costs (82% short term in foreign currency, rising rates globally pose a risk).

Overall, the brokerage house expects belligerent build up of LNG receivables from Sui companies (as seen in the past) to gradually slowdown/ halt on the back of shrinking tariff differential between indigenous and imported gas assuming biannual gas price increase is incorporated in timely manner going forward.

The brokerage house liking for Pakistan State Oil (PSO) is due to: 1) gas and power tariff adjustments may prove to be cash-positive, 2) Modernization plans in refinery subsidiary (PRL) to enhance productivity, and 3) Phasing out of RFO coupled with increasing share of retail fuels, resulting in stable margins to drive unhampered future cash flow.

Key Event of Maritime Trade in 2022

As year 2022 draws to a close it is pertinent to look back at some of the biggest stories that have been covered by Seatrade Maritime News over the last 12 months. For the readers interest we have chosen six major themes.

Tanker market boom

A geopolitical Black Swan supercharged the tanker market. The risk of a major confrontation between Russia, Europe and the United States completely redefined oil trade. Assessing the impact of a possible oil embargo on Russia is a near impossible task. But undoubtedly global oil trade and prices were severely impacted.

By the end of October it was an extremely different picture. As the cliché goes, the tanker sector was on fire. Charter hires reached stratospheric levels on the back of longer voyages for crude oil and for refined products, as well as small and large gas carriers.

As the latest phase of sanctions against Russian oil exports came into force in early December things continue to look extremely good for the tanker sector.

Impact of war in Ukraine

Much of what caused the boom in the tanker market has been the war in Ukraine, which of course has impacted more than shipping. But the invasion by Russia also left over a thousand seafarers stranded on vessels at Ukrainian ports.

Over the coming months seafarers were gradually evacuated from stranded vessels. However, a blockade of Ukrainian ports quickly started to have a serious impact on global food markets and prices as the country is major exporter of wheat and grain. Over a period of months much work was done to create an international corridor for grain exports from Ukraine with a humanitarian corridor and was up and running by the end of July.

“Inchcape Shipping Services (ISS) reported the ports of Odessa, Chornomorsk and Pivdennyi opened as of July 27. ‘We can expect the first vessel sailing by the end of the week, as it’s critical to release the vessels which are still blocked in ports,’ said ISS. Once blocked vessels are cleared, activity will continue via convoy, accompanied by a lead vessel.”

The humanitarian corridor has continued to provide a vital lifeline for grain exports, on occasion it has been threatened with closure. Meanwhile the war continues to have other impacts on shipping such as the growing dark fleet of tankers aimed at busting sanctions against Russian oil exports.

P&O Ferries mass firing

Switching gears considerably and at the start of 2022 the name Peter Hebblethwaite would have meant little to most, but he was in few short months to hit global headlines. Peter Hebblethwaite is of course the CEO of P&O Ferries who was to be branded Britain’s most hated boss.

The branding of P&O Ferries boss as the most hated was a result of the mass firing of 800 seafarers over Zoom on March 17. “Video circulated online of the moment P&O notified some of its staff by Zoom call that their employment was ending the same day.”

Somewhat ambitiously P&O Ferries had planned to have its fleet back in service with agency crew within seven to ten days of the mass seafarer sackings. However, the return to service of P&O Ferries did not go remotely to plan and by the end of May it was still struggling to get it all its vessels back into service.

On May 26 it was reported the UK Maritime & Coastguard Agency clearing the Pride of Canterbury in a Port State Control inspection. One vessel in the P&O Ferries fleet still needed a Port State Control inspection before it can return to service. The whole fleet of 10 ships required inspection after P&O Ferries sacked 800 of its seafarers without warning by Zoom call on March 17.

The fleet did all get back into service, but the backlash continued and in October Hebblethwaite was forced to drop off a panel at the annual Interferry conference and in November voted the world’s worst boss by the International Trade Union Confederation.

Container shipping mega-profits

Container shipping enjoyed unprecedented earnings in 2021 and 2022 but as this year has progressed it has become clear that this is not going to last. We started out 2022 reporting that analysts Drewry had upped their annual forecast for container shipping’s EBIT in 2021 to US$150 billion to US$190 billion. As 2022 continued the profits reported by lines were to get even more staggering and in August we reported on the results of Maersk in Q2 just as they were hitting their peak.

Maersk reported an underlying EBIT of US$8.9 billion for the second quarter but behind the 15th consecutive quarter of on-year earnings improvements, there were signs of change. Profitability in the group’s ocean segment rose ‘significantly’ compared to Q2 2021, as softening volumes and short-term rates were comfortably offset by higher contract rates.”

The extent of the plunge in container spot rates to come was to take even the most pessimistic by surprise. In mid-October we reported: “In a research note entitled ‘Fast and furious’ HSBC noted spot rates reported by the Shanghai Containerized Freight Index (SCFI) had fallen by 51% since the end of July – a decline of 7.5% per week. It was also highlighted that spot rates were now well below the levels of contract rates entered into at the start of 2022, especially on the Transpacific trade.

“In fact, at this pace of a 7.5% week-on-week decline, spot rates may hit the average spot rates of 2019 by the end of 2022, a level where we expect capacity discipline to meaningfully emerge, especially when rates go below cash costs.”

As spot rates head back down to 2019 levels this is particularly concerning for container lines as they negotiate long term contracts for 2023, and there can be little doubt that earnings will be considerably impacted.

Decarburization in focus

It's hard to talk about 2022 without mentioning decarburization and emissions. The industry’s ambitions, regulation and IMO targets have gone well beyond their traditional realms of the trade press. Watching the mainstream press trying to cover week-long bureaucratic meetings at the lumbering beast that is the IMO is not something we ever expected to see.

While the focus has more often than not been on regulation it is moves the industry itself is taking in terms of investing in alternative fuels that are the single most concrete actions. Over the last year we’ve seen growing traction around ammonia and methanol as a marine fuel, the latter attracting significant ship orders. However, while ships are on order the availability of green fuels is another matter. In July we covered an interesting story on potential source of cheap sustainable methanol.

In a September episode of the Seatrade Maritime Podcast it talked to Chris Chatterton of the Methanol Institute. Amid all the talk on regulation and targets the most significant change is the coming into force of the IMO’s EEXI and CII regulations, latter for carbon intensity proving particularly controversial.

These were covered in depth by correspondent Paul Bartlett in a November In Focus episode and as Paul commented, “The pressure is already on however, as ship-owners and operators should have drawn up new ship energy efficiency management plans (SEEMP by the end of this year.”

The December meeting of the IMO’s Marine Environment Protection Committee (MEPC) saw some long-awaited progress on a revision of the IMO’s GHG strategy. IMO Secretary-General Kitack Lim said at the close of the meeting, “It cannot be stressed enough how crucial it is that we keep the momentum and deliver an ambitious and fair, revised IMO GHG Strategy at MEPC 80 next year.”

The return of live events

Moving into the final topic for year-end review without a doubt 2022 was the year the of the in-person event with a huge bounce back in conferences, exhibitions, seminars and cocktail parties.

Winding back to March and CMA Shipping in Connecticut was one of the first larger gatherings followed Singapore Maritime Week in April although the latter was still restricted to some extent by Covid measures.

But revving it up a whole different level was the return of Posidonia in Greece in June. As noted at the time in monthly Maritime in Minutes podcast, “If anyone had any doubts about the appetite for inputs and events post pandemic Posidonia clearly spelled these, the exhibition halls packed with visitors from around the globe. There were huge traffic jams against the venue. And of course, there were the parties.”

It was quickly nicknamed Partydonia and it wasn’t hard to see why. But there was plenty of serious stuff going on as well including for ourselves at the Seatrade Maritime News with a raft of live event coverage as well as recording episodes podcasts with Stealthgas CEO Harry Vafias and Vassilios Demetriades the Shipping Deputy Minister of the Republic of Cyprus.

September saw the massive SMM event in Hamburg back on the calendar.  The event was hugely well attended and had strong theme of decarburization running across both the exhibition and conference content. Our Europe Editor Gary Howard summed up the whole event in a piece entitled Drowning in Decarburization.  It drowned out every other topic at SMM 2022, but most of the maritime industry still awaits direction.

US sanctions prevent ships from reaching Iran

According to a Reuters report dozens of merchant ships carrying grain and sugar are stuck outside Iranian ports due to payment issues as a result of Western sanctions.

While United States and other Western sanctions technically have exemptions for food and other humanitarian goods, the Reuters report said the impact of the sanctions on Iran’s financial system have created complex and erratic payment arrangements with international companies.

The ships cannot enter Iran due to payment issues. The payment issues have left 40 ships stuck outside Iranian ports, which are estimated to be holding about US$1 billion worth of cargo.

Iran's Ports and Maritime Organization said in a report in November that some 37 ships loaded with 2.2 million tons of goods had not been able to unload due to "documentation and hard currency payment issues at Bandar Imam Khomeini.

Iran is expected to import 5.5 million tons of wheat in the 2022-23 season, down from 8 million in the prior season but still well above normal levels, based on the US Department of Agriculture data.

Alena Douhan, a UN special rapporteur, issued a report in September detailing how the US and other Western sanctions harm Iranians.

She said since US sanctions were reimposed in 2018, food insecurity has soared in Iran, reaching 60% in certain areas.

Douhan said that the sanctions have severely undermined the delivery of medicine and medical goods to Iran.

She said that licenses that are supposed to be issued by the US Office of Foreign Assets Control to ensure exemptions appeared to be ineffective and nearly non-existent.

There’s no sign that US sanctions on Iran will be lifted anytime soon, as video surfaced of President Biden saying the Iran nuclear deal, known as the JCPOA, is dead. 

Since JCPOA talks fell apart in September, the US has increased sanctions on Iran.

BOJ Kuroda dismisses near term chance of exiting easy policy

Haruhiko Kuroda, Governor, Bank of Japan (BOJ) on Monday brushed aside the chance of a near-term exit from ultra-loose monetary policy but voiced hope that intensifying labour shortages will prod firms to raise wages.

Kuroda said the BOJ's decision last week to widen the allowance band around its yield target was aimed at enhancing the effect of its ultra-easy policy, rather than a first step toward withdrawing its massive stimulus program.

"This is definitely not a step toward an exit. The Bank will aim to achieve the price target in a sustainable and stable manner, accompanied by wage increases, by continuing with monetary easing under yield curve control," Kuroda said in a speech delivered to a meeting of business lobby Keidanren.

He also said Japan's average consumer inflation will likely slow below the BOJ's 2% target in the next fiscal year as the effects of soaring import costs dissipate.

But Kuroda said wage growth will likely increase gradually due to intensifying labour shortages and structural changes in Japan's job market, which are leading to higher pay for temporary workers and a rise in the number of permanent workers.

"Labour market conditions in Japan are projected to tighten further, and firms' price- and wage-setting behaviour is also likely to change," Kuroda said.

"In this sense, Japan is approaching a critical juncture in breaking out of a prolonged period of low inflation and low growth," he said.

The strength of wage growth is seen as key to how soon the BOJ could raise its yield curve control (YCC) targets, which are set at -0.1% for short-term interest rates and around 0% for the 10-year bond yield.

The BOJ shocked markets last week with a surprise widening of the band around its 10-year yield target. Kuroda had described the move, which allows long-term rates to rise more, as aimed at easing some of the costs of prolonged stimulus rather than a prelude to a full-fledged policy normalization.

With inflation exceeding its 2% target, however, markets are rife with speculation that the BOJ will raise the yield targets when the dovish governor Kuroda's term ends in April next year.

While more companies are starting to hike prices to pass on higher costs to households, the BOJ must examine whether such changes in corporate price-setting behaviour will take hold as a new norm in Japan, Kuroda said.

The outcome of next year's spring wage negotiations between big companies and unions will also be key to the outlook for wage growth, he said.

Speaking at the same meeting, Prime Minister Fumio Kishida called for business leaders' help in achieving wage growth high enough to compensate households for the rising cost of living.

Japan's core consumer inflation hit a fresh four-decade high of 3.7% in November this year as companies continued to pass on rising costs to households, a sign that price hikes were broadening.

But wages have barely risen for permanent workers, as companies remained cautious about increasing fixed costs amid an uncertain economic outlook.

Making Pakistan-Iran Trade Possible

Pakistan Must Opt for Oil for Food was the title of my first blog posted on June 17, 2012. I am tempted once again to talk about the same, as Pakistan continues to suffer from the worst balance of payment crisis. Iran is not only Pakistan’s next door neighbor but has repeatedly assured its capability to meet Pakistan’s energy demand.

The reason I am raising this issue again is that European Union member countries and India are allowed to import oil and gas from Russia, facing sanctions. If those countries are not barred from buying energy products from a “Sanctions Ridden Country” why can’t Pakistan buy energy products from Iran?

For decades the United States is saying “Iran is busy in producing nuclear warheads”. However, it hasn’t come up with any credible proof. Many critics say it is a hoax call. They remind of the similar allegation against Iraq that was busy in production of weapons of mass destruction.

After United States, withdrew from JOCPA during Donald Trump era, the perception is getting credence that the super power considers Iran a hurdle in creation of its hegemony in the region, the major supplier of crude oil and gas.

There is also growing feeling among Pakistanis that due to the US pressure on the ruling junta the country not only stopped buying crude oil from Iran, but also stopped construction of Iran-Pakistan gas pipeline. The people privy to information also says that even supply of wheat and rice to Iran has been put on hold.

 They refer to Iraq which was allowed to export oil under “oil for food program”.

The US is fully aware that Pakistan’s GDP growth being pegged due to looming energy crisis and the country needs low cost energy products immediately. However, Pakistan is not being allowed crude oil and gas from Iran.

The time has come Pakistan should assert itself and convince the US that buying energy products from Iran bodes well for Pakistan. If India can pay Iran in Rupee, Pakistan should be allowed to buy energy products from Iran against supply of wheat and rice.

 

Airlines cancel thousands of US flights

Airlines canceled nearly 2,700 US flights as of Saturday afternoon after a massive winter storm snarled airport operations around the country, frustrating thousands of holiday travelers, reports Reuters.

There were flight delays within, into or out of the United States totaling about 6,200 as of Saturday afternoon, according to flight tracking website FlightAware, which showed total US flight cancellations at around 2,700.

The cancellations as of Saturday afternoon included over 750 from Southwest Airlines and nearly 500 from Delta Air Lines.

The flight disruptions came as an arctic blast gripped much of the United States on Saturday, causing power outages and car wrecks. Plummeting temperatures were predicted to bring the coldest Christmas Eve on record to several cities from Pennsylvania to Georgia.

Temperatures were forecast to top out on Saturday at just 7 degrees Fahrenheit (minus 13 Celsius) in Pittsburgh, surpassing its previous all-time coldest Christmas Eve high of 13 F, set in 1983, the National Weather Service (NWS) said.

Winter storms have increased in frequency and intensity over the past 70 years, according to the US Global Change Research Program.

This is in part due to climate change, according to the Environmental Defense Fund, because the planet evaporates more water into the atmosphere as it warms, leading to more overall precipitation.

On Friday, US flight cancellations were reported at 5,936, according to FlightAware.

“Increased air traffic volume and winter weather affecting the northern half of the US could still cause delays to holiday travel," the Federal Aviation Administration (FAA) said on Saturday, though travel conditions were expected to improve.

An NBC News affiliate reported that inclement weather canceled over 130 flights as of Saturday morning at the Seattle-Tacoma International Airport. Some passengers told the news outlet they were not notified before coming to the airport.

An ABC News affiliate showed long lines at the Denver International Airport on Saturday morning, where over 150 flights were delayed and nearly 130 were canceled.

Passenger railroad Amtrak canceled dozens of trains through Christmas, disrupting holiday travel for thousands.

 

Indonesia confirms ban on bauxite export

Indonesian President Joko Widodo has confirmed an export ban for bauxite starting in June 2023 to encourage domestic processing of a material used as the main ore source of aluminium.

The resource-rich nation has surprised markets with its commodity exports policies, including brief but controversial bans earlier this year on shipments of palm oil and coal, of which Indonesia is the world's biggest exporter.

It is also among the world's top suppliers of bauxite, with China its key buyer. The timing of Indonesia's ban, however, is in line with its current mining law.

The president said the bauxite ban aimed to replicate Indonesia's success in developing its nickel processing capacity after halting exports of its raw form in January 2020, which enticed foreign investors, mostly from China, to build local smelters.

The measure, which led to a dispute at the World Trade Organization (WTO), also helped boost the value of Indonesia's exports.

"The government will remain consistent in implementing down streaming so the value add can be enjoyed domestically for the country's development and people's welfare," said Widodo, who is popularly known as Jokowi, emphasizing the importance of jobs creation.

China was the biggest importer of Indonesia's bauxite until Jakarta introduced a mineral export ban in 2014, which it lifted in 2017.

According to Wen Xianjun, a former head of the aluminium department at the China Nonferrous Metals Industry Association, Indonesia's 2014 ban prompted China to boost its efforts to develop aluminium resources in Africa instead.

"Compared with then, China's imports of bauxite are more diversified now," Wen said.

China imported 17.8 million tons of Indonesian bauxite in 2021, and 17.98 million tons in the first 11 months of year 2022, about 15.6% of its total imports, according to customs data.

Lately, three-month aluminium futures contract on the London Metal Exchange rose 0.6% at US$2,386.50 a ton, while the most-traded aluminium contract on the Shanghai Futures Exchange was up 0.2% to 18,595 yuan a ton.

The announcement by Indonesia is not expected to have significant impact on prices.

"It won't cause any major supply headwind as Indonesia now only accounts for a relatively small share of China's supply, Guinea and Australia will immediately make up the lost volume (after the ban)," an aluminium trader at a large trading house in China said.

Indonesia has four bauxite processing facilities with 4.3 million tons of alumina output capacity, while more are under construction with collective capacity of nearly 5 million tons, said chief economic minister Airlangga Hartarto.

Indonesia's bauxite reserves are enough for up to 100 years production, he said.

The country's mining law also states exports of other unprocessed minerals such as copper will also be stopped. Jokowi did not specify the timing of shipment bans on the other materials.

He said there was a possibility that legal action could be pursued against Indonesia for banning bauxite exports, but it would not deter him.

The WTO last month ruled in favour of the European Union in a dispute on nickel ore exports, which Indonesia is appealing.