PetroChina posts record profit

State-owned energy giant PetroChina, reported a record-high net profit for the first half of the year 2023, driven by increased oil and gas output and resurgent refined fuel sales.

Net profit attributable to shareholders was 85.3 billion yuan or US$11.70 billion, up 4.5% for the same period last year, according to a filing with the Hong Kong Stock Exchange on Wednesday.

Total revenue was down 8.3% to 1.48 trillion yuan, due to a sustained fall in global oil prices after an initial spike in the immediate aftermath of Russia's invasion of Ukraine in February 2022.

The company reported realized crude oil prices of US$74.15 per barrel, having slid 21.7% on the average for the same period last year.

However, PetroChina's total crude oil and natural gas equivalent output was 893.8 million barrels, representing a 5.8% increase on last year, supporting a 3.7% increase in operating profit for the group's upstream segment.

Domestic crude output rose 1.2%, whilst the development of key projects in Central Asia and the Middle East saw overseas crude production leap 27.8% over the period.

Total domestic refinery throughput for the first half was 673 million barrels, a 12.6% increase as compared to last year when extensive COVID-19 lockdowns hammered demand for refined fuel products in the country.

The group previously announced to raise crude throughput to 1.29 billion barrels this year, up 6.6% from 2022.

Operating profit from the group's sales segment jumped 28.4% as compared to last year. Total sales volume of gasoline, kerosene and diesel increased 12.9% to 80.7 million metric tons, with domestic sales accounting for around 74% of this.

While domestic demand for transport fuels such as kerosene and gasoline has rebounded with the removal of travel restrictions, the group saw weaker earnings from petrochemical products such as polypropylene, amid a glut of domestic supply.

Capex for the first half was 85.1 billion yuan, down 7.8% as compared to last year. PetroChina had previously set a capex target of 243.5 billion yuan for 2023, which would represent an 11% drop as compared to last year.

Looking forward to the second half of the year, the group stated it will further deepen cooperation in overseas oil and gas markets, actively acquire large-scale and high-quality projects and continuously optimize asset structure.

 

 

European energy crisis may be back soon

According to the Financial Trend Forecaster, European natural gas prices soared almost 40% on the risk of a global liquefied natural gas shortage. European wholesale power prices remain below the record highs of the energy crisis but have steadily climbed as the volatility in the international commodity spectrum underscores the fragility of the European energy system.

Unfortunately, the European Union bureaucrats declared the end of the energy crisis as if it were the result of decisive policy action, but the reality is that the energy problem in the EU was only diminished by purely external factors: a very mild winter and the decline in global commodity prices due to the central bank rate hikes. Thus, the energy crisis remains, and the problems of security of supply and affordability of the system persist.

The European Union’s dependency on Russian gas has not been solved; it has only been disguised by a massive increase in dependency on coal (lignite) in the case of Germany and expensive liquefied natural gas imported from the rest of the world.

At the end of 2022, Germany’s energy mix was the clearest example of its energy policy failure. Hard coal and lignite accounted for 31.2%, natural gas 13.8%, and mineral oil 0.8%, with nuclear at 6.0%. After almost 200 billion euros in renewable subsidies, Germany needs more coal and imported natural gas.

What did the government decide after facing the mistake of shutting down almost all its nuclear fleet? Double down and continue with the process of closing the remaining ones. No wonder Germany is in recession. Its industrial model requires abundant and affordable energy, and the different governments have made the cost of energy uncompetitive.

Same is the problem with Spain, the government decided to implement an “Iberian exception” that eliminates the cost of gas from the wholesale power price only to charge it back to consumers as a surcharge in the bill. The result is Spain has the fifth highest electricity bill in Europe, which sent hundreds of millions of euros to France and Portugal that purchased the subsidized energy while the Spanish consumer paid the bill to natural gas producers, and its imports of Russian liquefied natural gas (LNG) soared, but the government tried to convince citizens that LNG from Novatek is not Russian gas because it is not a pipeline Gazprom supply, even when the supplier is a leading Russian energy multinational.

Even worse, the consumers have not seen the improvement in commodities in their bills. If we look at the latest reported Eurostat figures of household electricity prices, these increased in all but two EU Member States in the second half of 2022, compared with the second half of 2021, just as commodities slumped in international markets.

The average for the EU stands at 252 euros per MWh and 261 euros per MWh for the euro area. This is 20% to 30% higher than the average residential electricity rate in the United States, according to data from Energy Sage.

The European energy crisis was not solved. It was disguised thanks to a mild winter and the slowdown in coal and gas imports from China. European governments continue to place all their bets on a misguided energy transition that ignores security of supply and competitiveness and will make the EU depend on China for rare earths and metals as well as the US and OPEC for commodities.

The European Union should have abandoned ideological decisions and allowed technology, competition, and industry to provide the optimal solution that delivers a competitive and secure supply of energy.

Deciding to forbid the development of domestic resources and focus on intermittent and volatile sources of energy before the battery technology is fully operational is an enormous mistake that condemns the European Union to suffer higher costs and lower growth. Environmental policies must be considered from a global perspective.

The EU accounts for less than 10% of global emissions but almost 100% of the cost. It needs to focus on competitiveness, security of supply, and respect for the environment from an industrial perspective. Ignoring the importance of making the most of nuclear, hydroelectric, gas, and all other available sources is dangerous.

In China or the United States, affordability, security of supply, and competitiveness are the drivers of energy policy.

In Europe, it is a misguided view of “not in my backyard” that is making the continent more dependent on others, not less. Subsidies are delaying the necessary development of intermittent and volatile energy sources because policymakers reject the importance of creative destruction and competition as driving forces of progress. Interventionism is not delivering better or cheaper energy; it is making the European Union lose in the technology and energy security race.

What does BRICS entry mean for Iran?

On August 24, 2023 BRICS adopted Iran together with five other countries as new members defying Western rhetoric and discourse. The historic enlargement of BRICS will create new opportunities and will enhance global efforts against hegemony and unilateralism.

The year 2023 marks the 17th anniversary of BRICS inception. Albeit different in geopolitical locations, political systems and cultural backgrounds, members of BRICS do share development-oriented agendas. Members are either newly emerging economies featuring high economic growth or developing countries aspiring for development.

This is sharply different from the approach of the United States and the West to shape the world with a democratic model defined by their own. In addition, they all enshrine the principle of independence in their foreign policy.

BRICS member states have been very clear that the mechanism will be inclusive adhering to the principle of multilateralism and cultural diversity. The practices of BRICS had particularly demonstrated respect for all member states. That should be one of the reasons why BRICS had proved to be attractive, particularly for countries that had long been oppressed and humiliated by Western hegemonic powers.

The development of BRICS reflected a very strong global trend of anti-hegemony and anti-unilateralism. Most BRICS members, like China, Russia and Brazil, had been vociferous about their dissatisfaction against US financial hegemony and the weaponization of dollar as a payment channel. None of the BRICS members had shared with the US and the West their discourse on the Russia-Ukraine conflicts, and none of them had sided with the US on its efforts to provoke the fire.

The Johannesburg Summit had sufficiently demonstrated the attraction of BRICS. Six countries had been admitted into the mechanisms, more than 20 countries had formally applied to enter the mechanism, more than 40 countries had expressed their wish to be part of the mechanism, and more than 60 countries across the world had participated in various activities of the Summit, which was about 30 percent of the member states of the UN.

The enlargement will predictably make BRICS more important in international affairs as the share of member states in world economy will increase significantly and the political representation of the mechanism will grow. Therefore, BRICS will not only serve to maintain the right direction of global governance in a variety of areas including trade and financial cooperation, which had become dysfunctional as a result of confrontational mentalities of some Western countries. BRICS will also boost business opportunities for both old and new industries of all their members, and will create opportunities for its member states to reshape and even reverse the unreasonable narratives of some western powers on various issues including Russia-Ukraine conflicts and other issues.

Iran’s membership will especially enhance Iran’s international status in the international community. Over the last decades, Iran has made friends across the world in defiance of the efforts of certain hegemonic powers to isolate Iran. Entering BRICS will mean new opportunities for Iran to improve its standing.

Presence of Iranian President Ebrahim Raisi at the Johannesburg summit with delegates from more than sixty countries across the world had signified another breakthrough in its diplomacy against Western efforts to isolate the Islamic Republic.

With the dual memberships in SCO and BRICS, Iran as a nation of great civilizations and economic potentials will see more opportunities to increase its international status. The leaders of BRICS countries have a valuable opportunity to leverage the space that has been created and enhance their mutual and multilateral interactions. If Iran holds SCO and BRICS summits, it will mean that dozens of heads of state and governments will travel to Tehran, which will naturally make Tehran a center of global politics and focus of international media, which will extremely nullify the efforts of the West to isolate Iran.

Multilateral diplomacy will mean natural economic opportunities. By presence at the summits, members have the opportunity to promote their business relations. Iran will also benefit from the joint efforts of de-dollarization judging by the consensus reached on this issue in Johannesburg. It should be considered that economic benefits would not come as soon as political achievements. However, it assumes that the policies adopted by Iran will contribute to the future strengthening of the country's economy.

Iran’s accession into BRICS is also a milestone in China-Iran relations. Iran’s application for BRICS membership, as well as SCO membership, not only demonstrated Iran’s identification with the principles and spirits of the BRICS, which could be generally categorized as inclusiveness, diversity and respect, but also trust for China as a major leading actor of BRICS.

China’s support for Iran’s accession very well indicated that China had been very serious in helping Iran to get further integrated with international community. Mutual trust between the two will be further enhanced after Iran’s dual memberships.

Iran’s accession will secondly enhance China-Iran cooperation on the reconstruction of international order. It had long been China’s policy to oppose sanctions against Iran and to help improve Iran’s status in the international community as the two shared a long history of peaceful exchange of civilizations and shared the same experience struggling for justice and fairness of international order.

With Iran’s membership in both SCO and BRICS, China and Iran with other countries in the two institutions, can work better together on issues relating to the great changes and reconstruction of international order.

On top of all, it will serve to materialize cooperation projects between the two countries. China and Iran both had been working hard to materialize the Comprehensive Strategic Partnership announced in 2016, the Comprehensive Cooperation Agreement in 2022 and various agreements in 2023 when President Raisi visited China.

Iran’s accession into SCO and BRICS will make these cooperations more feasible. In addition to bilateral mechanisms, leaders of the two sides will predictably meet with each other twice annually respectively within SCO and BRICS frameworks, and they can talk directly about the concrete issues, which will greatly facilitate cooperation between the two.

All in all, the enlargement of BRICS will create new momentums for global governance and the evolution of international order for the benefits of emerging economies and developing countries and the whole world as well.

Iran’s accession into BRICS, in addition to SCO, will greatly enhance Iran’s international status and will benefit Iran economically. The world will see how Iran can translate these new political momentums into economic benefits.

 

Iran demands United States should explain links with Sharmahd

The United States should explain its links with the Iranian-German national Jamshid Sharmahd sentenced to death in Iran, Tehran's foreign ministry spokesperson said on Monday, adding that progress had been made in a prisoner swap deal with Washington, reports Reuters.

Nasser Kanaani's remarks came after a US envoy for Iran, Abram Paley, met on Friday with the family of Sharmahd, who was convicted of heading a pro-monarchist group accused of a deadly bombing in 2008.

Sharmahd, who also has US residency, was sentenced to death by an Iranian Revolutionary court in February on charges of corruption on earth.

His daughter has urged Washington not to exclude Sharmahd from the developing prisoner exchange deal between the United States and Iran, under which US$6 billion in Iranian funds in South Korea would also be unfrozen.

Iran on August 10 released four imprisoned US citizens into house arrest, where they joined a fifth already under home confinement, in the first step of a deal under which the five would eventually be allowed to leave the Islamic Republic.

Kanaani said progress has been made regarding implementation of the deal, thanking the constructive role of neighbouring Gulf Arab states Qatar and Oman in facilitating the agreement.

Bangladesh faces deluge after India opens Gajoldoba barrage gates

According to media reports, the flood situation has now shifted to northern Bangladesh after recent flooding in Chittagong. This shift comes after India opened all gates of the Gajoldoba barrage, causing the waters of the region’s rivers to significantly swell.

Several areas on the bank of Teesta River in Gaibandha and Kurigram have been inundated by floods triggered by water from the upstream and heavy rains. As a result, hundreds of families have become marooned in these two districts.

Around 30 meters of the flood control spur dam in the Teesta River at Burirhat in Rajarhat upazila of Kurigram have been washed away.

Rivers in the district kept swelling due to the onrush of water from the upstream, flooding low-lying areas in Rajarhat upazila.

The Teesta was flowing 30cm above its danger level at Kawniya rail bridge point Sunday morning.

Sardar Uday Raihan, executive engineer of the Flood Forecasting and Warning Centre of the Bangladesh Water Development Board (BWDB), said that heavy rainfall in West Bengal’s Darjeeling, Jalpaiguri, and Sikkim regions has led to the surge in water levels.

However, he said, information about the opening and closing of the Gajoldoba barrage’s gates is not consistently communicated by India, making it challenging for Bangladesh to predict water level changes.

A bulletin of the Flood Forecasting and Warning Center (FFWC) said there is a chance of medium to heavy rainfall in the northwestern Indian states and adjoining Bangladesh in the next 48 hours in the Brahmaputra basin.

“Water levels of the Teesta may fall to improve the flood situation in low-lying areas of Lalmonirhat and Rangpur districts while Jamuna may flow close to its respective danger marks at several points in the next 24 hours,” the bulletin added.

In Nilphamari, at least 50 houses built under the Ashrayan Project of the government in Dimla area have gone underwater. As a result, the affected families are spending days amid great suffering. Local people said they have nowhere to go as the lone school building in the area is also underwater.

In Gaibandha, a number of houses in the low-lying areas have been inundated. Some families are also in fear of losing their homes due to river erosion.

In Kurigram, 50 houses went into the gorge of the river and 500 houses were inundated by floodwater in Bidyanondo and Ghorialdanga unions of Rajarhat upazila.

Many roads went under flood water that snapped road communication in the two unions, said members of the two union parishads.

Two government primary schools and a kitchen market in Bidyanondo union are on the brink of river erosion.

The FFWC said water levels of Jamuna River are rising and may flow close to their respective danger level at Fulchhari, Bahadurabad and Sariakandi points in the next 24 hours, the bulletin continued.

Levels of water of the Brahmaputra are rising and may flow well below the danger level at Noonkhawa, Hatia, and Chilmari points during the next 24 hours as the rate of onrushing water from upstream lessened during the last 24 hours.

 

 

Saudi Arabia launches plan to become global logistics hub

Saudi Crown Prince and Prime Minister Mohammed bin Salman, who is also chairman of the Supreme Committee for Transport and Logistics, has launched the master plan for logistics centers to make Saudi Arabia a global logistics hub.

The master plan aims to develop the infrastructure of the Kingdom’s logistic sector, as well as to diversify the local economy, and enhance the status of the Kingdom as a leading investment destination and a global logistics hub, the Saudi Press Agency reported.

The Crown Prince stressed that the plan is part of a package of ongoing initiatives set as targets by the National Transport and Logistics Strategy (NTLS) with the aim of developing the logistical sector to support the economy, as well as to increase the local, regional and international connections of the international trade networks and global supply chains. It also aims to boost the partnership with the private sector, and thus increase the opportunity to generate jobs, and make Saudi Arabia a global logistics hub, given its geographical location among three important continents: Asia, Europe and Africa.

The master plan for logistics centers stipulates 59 centers with a total area of more than 100 million square meters, including 12 in Riyadh region; 12 in Makkah region; 17 in the Eastern Province, and 18 distributed in the rest of the Kingdom. There are currently 21 centers under various phases of implementation and all centers will be completed by 2030.

The centers will also enable local industries to export Saudi products with high efficiency, support e-commerce by facilitating a rapid link between logistics centers and distribution centers in the Kingdom’s various regions, cities and governorates, as well as to provide high traceability and facilitate the issuance of licenses to practice logistic activity. This is especially after the launch of the unified logistics license and the licensing of more than 1,500 local, regional and international logistics companies, and the launch of the Fasah initiative, which is an e-system integrated in Saudi customs, in cooperation with the concerned government agencies.

The logistics services sector represents one of the promising pillars of economic diversification and development in the Kingdom. It is currently witnessing many important initiatives and major developments aimed at developing the sector and expanding its economic and developmental contributions. The Ministry of Transport and Logistics seeks to develop the logistics industry, enhance the export strategy, expand investment opportunities, and seal partnerships with the private sector.

 

US growth a puzzle for policymakers

US economic growth, still racing at a potentially inflationary pace as other key parts of the world slow, could pose global risks if it forces Federal Reserve officials to raise interest rates higher than currently expected. The longer the US economy outperforms, the more Fed officials wonder if they understand what's happening.

The Fed's aggressive rate increases last year had the potential to stress the global financial system as the US dollar soared, but the impact was muted by largely synchronized central bank rate hikes and other actions taken by monetary authorities to prevent widespread dollar funding problems for companies and offset the impact of weakening currencies.

Now Brazil, Chile and China have begun cutting interest rates, with others expected to follow, actions that international officials and central bankers at last week's Jackson Hole conference said are largely tuned to an expectation the Fed won't raise its rate more than an additional quarter percentage point.

While US inflation has fallen and policymakers largely agree they are nearing the end of rate hikes, economic growth has remained unexpectedly strong, something Fed Chair Jerome Powell noted in remarks on Friday could potentially lead progress on inflation to stall and trigger a central bank response.

That sort of policy shock, at a moment of US economic divergence with the rest of the world, could have significant ripple effects.

"If we get to a point where there is a need for ... doing more than what's already priced in, at some point markets might start getting nervous ... Then you see a big increase in the risk premia in different asset classes including emerging markets, including the rest of the world," said International Monetary Fund chief economist Pierre-Olivier Gourinchas. "The risk of a financial tightening, a very sharp financial tightening, I think we cannot rule that out."

After the pandemic shock and the inflationary rebound that had most countries raising rates together, it's normal now for policies to diverge, Cleveland Fed President Loretta Mester told Reuters on the sidelines of the Jackson Hole conference on Saturday.

"The economy is a global economy, right? It's an interconnected economy," Mester said. "What we do with our policy - if we can get back to 2% in a timely way, in a sustainable way, if we have a strong labor market - that's good for the global economy."

Fed policymakers will deliver a crucial update to their economic outlook at the 19-20 September meeting, when they are expected to leave their policy rate unchanged at 5.25% to 5.5%.

Yet Fed officials remain puzzled, and somewhat concerned, over conflicting signals in the incoming data.

US gross domestic product is still expanding at a pace well above what Fed officials regard as the non-inflationary growth rate of around 1.8%. US GDP expanded at a 2.4% annualized rate in the second quarter, and some estimates put the current quarter's pace at more than twice that.

The contrast with other key global economies is sharp. The euro area grew at an annualized 0.3% in the second quarter, essentially stall speed. Difficulties in China, meanwhile, may drag down global growth the longer they fester.

European Central Bank President Christine Lagarde noted after the Russian invasion of Ukraine last year, the outlook was for a euro-area recession, and a potentially deep one in parts of it.

"We expected all that to be a lot worse. It has turned out to be much more robust, much more resilient," Lagarde said.

U.S. fiscal policy is driving some of the difference with $6 trillion in pandemic-era aid still bolstering consumer spending. A recent investment push from the Biden administration is supporting manufacturing and construction.

China may also play a role, economists say. Its slowdown after a short-lived growth burst earlier this year could pinch Germany's exports and slow Europe's growth, for instance.

But, Citigroup Chief Economist Nathan Sheets said, "When you hear economists give you three or four reasons for something, that's usually because we really don't know."