Pakistan Gasport seeks spot LNG cargo

Pakistan Gasport is looking to buy a spot liquefied natural gas (LNG) cargo for November delivery, its chairman Iqbal Ahmed told Reuters on Thursday. This would be the country's first spot LNG deal since June 2022.

The south Asian country, facing a severe economic and foreign exchange crisis, has struggled to purchase the super-chilled fueled following a surge in prices after Russia's invasion of Ukraine last year.

LNG is crucial for Pakistan, where natural gas accounts for over a third of power generation and local gas reserves are insufficient to address growing electricity demand in a country of over 230 million, leading to frequent power cuts.

Pakistan Gasport is evaluating interest for a cargo from sellers in Oman, the United States and the United Arab Emirates, Ahmed said.

"We've got different countries which have offered us different options. We are extremely encouraged by what we've heard today," Ahmed told Reuters.

Pakistan Gasport owns the country's largest LNG import and regasification terminal at Port Qasim, but LNG imports have historically been facilitated by Pakistan LNG, a state-run firm that last bought a spot cargo in June 2022 from PetroChina.

A cargo would be the first shipped in by a private sector company in Pakistan, said Ahmed, who expects LNG prices to fall in coming years, making spot purchases more attractive.

Ahmed said 12% to the Brent slope was the "price to beat" for a cargo to Pakistan. That works out to nearly US$11 per mmbtu, a discount of a sixth to current average Asian LNG prices of US$13.

"If the government or anybody else can bring LNG at a price of 12% of Brent or lower, there is a market. The minute you cross that barrier, there is resentment," he said.

Ahmed said he expects Pakistan's LNG demand to grow to 30 million metric tons in 5 years, from about 10-12 million tons now.

Importers of all commodities to Pakistan have faced increased financing costs and higher processing times due to the ongoing economic and foreign exchange crisis. LNG traders have said sellers to Pakistan could demand a premium because of the country's low credit rating.

Pakistan Gasport plans to avert such challenges by not seeking a letter of credit from banks, financing the deal with internal funds, Ahmed said.

"I plan to use a currency other than the dollar to facilitate the payment and also use a semi-barter system to settle," he said.

 

Urea shortage in Pakistan a hoax call

Certain quarters have started saying that Pakistan is likely to face shortage of urea that could affect wheat production and food security in the country. Their voice gets credibility because natural gas supply to fertilizer plants will be suspended from middle of October.

They say the gap between urea production and consumption has widened, raising fears of nitrogenous fertilizer shortage up to 500,000 tons during Rabi season, especially between the critical period of October 2023 and March 2024, when wheat and other crops are sown.

The market has also begun to see price distortions, the industry is providing urea as usual but the middlemen are selling it at higher rate.

Farmers are being fleeced by middlemen, who are charging a premium up to PKR1,000 per bag above the retail price.

According to the National Fertilizer Development Center (NFDC) projections, total urea availability as of October 01, 2023, is expected to be only 69,000 tons, compared to 294,000 tons during the same period last year. During the last Rabi season, around 300,000 tons of urea was imported, but no plan has been set by the government to meet the critical requirement of farm nutrients for this season.

Some groups are asking the government to immediately import at least 500,000 tons urea and ensure its arrival in November 2023 to avoid a shortage and also ensure uninterrupted supply at full capacity keep the plants operating simultaneously.

Every year around this time Pakistan is forced to import urea. However, this year the government should continue gas supply to the fertilizer plants as the gas prices are attractive level in the international market.

For those, who may not be aware, Pakistan has an installed capacity to produce 7 million tons urea, but the manufacturers produce 6 million tons.  

There is also the responsibility of the ruling junta to also take concrete steps to stop the smuggling of fertilizer through the Western borders.

Why Modi is keen in calling India Bharat?

Dinner invites referring Bharat rather than India have fueled a political row and public debate over what the country should be called as the country prepares to welcome world leaders for the G20 summit.

Invites issued by the “President of Bharat,” instead of the customary “President of India,” were sent to delegates from the world’s 20 top economies for a dinner to be hosted by Indian President Droupadi Murmu on Saturday.

Both India and Bharat are used officially in the nation of 1.4 billion people, which has more than 20 official languages.

“India, that is Bharat, shall be a Union of States,” the country’s constitution states.

Bharat is also the Hindi word for India and is used interchangeably – both feature on Indian passports for example.

But its use on the invites marks a notable change in the naming convention used by the country on the international stage under Prime Minister Narendra Modi and his Hindu-nationalist Bharatiya Janata Party (BJP).

The G20 summit is a first for India as Modi aims to raise New Delhi’s global clout following nearly a decade-long tenure in power in which he has positioned himself as a leader intent on shedding the country’s colonial past – emphasizing the need to liberate ourselves from the slavery mindset.

Britain ruled India for about 200 years until it gained independence in 1947 and those who prefer Bharat say the name the country is best known by globally is a remnant of the colonial era.

The name India has been derived by ancient Western civilizations from the Sanskrit word for the Indus River – Sindhu – and was later adapted by the British Empire.

“The word ‘India’ is an abuse given to us by the British, whereas the word ‘Bharat’ is a symbol of our culture,” Harnath Singh Yadav, a BJP politician, told Indian broadcaster ANI.

Meanwhile, former India cricket star Virender Sehwag urged the sport’s officials to use Bharat on players’ shirts during the Men’s Cricket World Cup, which will be held in India this year.

“We are Bhartiyas, India is a name given by the British and it has been long overdue to get our original name ‘Bharat’ back officially,” he said on social media.

During its time in power, Modi’s government has made steps to steer the country away from what it has called “vestiges of British rule” and to free itself from its “colonial baggage.”

These efforts also include renaming roads and buildings related to both India’s Mughal as well as its colonial past.

For example, in 2022, the government renamed Rajpath, a 3-kilometer (1.8-mile) boulevard formerly known as Kingsway that runs through the heart of New Delhi. The new official name, Kartavya Path, would “remove any trace of colonial mindset,” the government said.

And in 2018, three Indian islands named after British rulers were renamed in the Andaman and Nicobar Islands, to erase “these signs of slavery.”

But the use of “Bharat” on the G20 invites has raised eyebrows among opposition leaders.

“While there is no constitutional objection to calling India ‘Bharat’, which is one of the country’s two official names, I hope the government will not be so foolish as to completely dispense with ‘India’, which has incalculable brand value built up over centuries,” Shashi Tharoor, a former diplomat and prominent lawmaker from the main opposition Congress party, said on social media.

Tharoor is also the author of “Inglorious Empire”, a work of non-fiction that excoriates colonial Britain’s rule of India.

India's opposition is uniting to unseat Modi in next year's election. Should he be worried?

In July, the leaders from 26 Indian opposition parties formed an alliance – known as INDIA (or the Indian National Developmental Inclusive Alliance) – in a bid to unseat Modi in the next general election.

Coined to evoke a sense of nationalism ahead of the 2024 polls, the INDIA alliance said its goal was upholding the country’s democratic institutions.

Modi’s government has come under scrutiny from rights groups and opposition lawmakers for its increasingly strident brand of Hindu nationalist politics, an ongoing crackdown on dissent, and a tightening grip on the country’s democratic institutions.

Modi has denied a crackdown, saying in a rare June press conference at the White House that when “there are no human rights, then it’s not a democracy,” and “there’s absolutely no space for discrimination” in the country.

Some opposition politicians said the government’s use of Bharat was a response to the formation of the INDIA alliance.

“How can the BJP strike down ‘INDIA’? The country doesn’t belong to a political party; it belongs to [all] Indians,” Aam Aadmi Party lawmaker Raghav Chadha, an alliance member, said on social media. “Our national identity is not the BJP’s personal property that it can modify on whims and fancies.”

But in an interview with ANI, India’s Minister of External Affairs S. Jaishankar said India “is Bharat.”

“It is there in the constitution. I would invite everybody to read it,” he said.

“When you say Bharat,” it evokes a “sense, a meaning and a connotation,” he said.

“I think that is reflected in our constitution as well

 

G7 likely to remove cap on Russian oil

According to Reuters, the Group of Seven (G7) and allies have shelved regular reviews of the Russian oil price cap scheme, people familiar with the matter told Reuters, even though most Russian crude is trading above the limit because of a rally in global crude prices.

Russian producers have found ways to sell oil using fewer Western ships and insurance services, making it difficult for the West to enforce the existing price cap because the companies facilitating the trade are outside of their remit.

The G7 countries along with the European Union and Australia imposed the price cap mechanism on Russian oil last December, followed by a cap on fuel from February this year. Initially, EU countries agreed to review the price cap every two months and to adjust it if necessary while the G7 would review as appropriate including implementation and adherence.

The G7 has not reviewed the cap since March 2023 and people familiar with G7 policies said the group had no immediate plans to look into adjusting the scheme.

There were some talks in June or July to do a review, or at least talk about it, but it never formally happened.

While some EU countries were keen for a review they said that there was little appetite from the United States and G7 members to make changes.

The sidelines of the upcoming UN General Assembly later this month could serve as an informal platform for talks on the cap

The mechanism allows third countries to buy Russian fuel using Western ship insurance if there is proof the purchase does not exceed price limits of US$60 per barrel for crude, US$45 per barrel of heavy fuel and US$100 per barrel of light fuel such as gasoline and diesel.

The idea was spearheaded by Washington to cut Moscow's revenues amid its war on Ukraine while avoiding market disruptions as a result of an EU ban on Russian oil.

Benchmark Brent oil futures are trading at their highest this year at above US$90 a barrel, raising the value of global crude, including Russian Urals.

Russia's finance ministry said the average price on its flagship crude grade Urals has recovered to US$74 a barrel on average in August - well above the US$60 a barrel cap - and up from an average US$56 in the first six months of the year.

Russia was forced to cut exports of oil and products immediately after the price cap imposition as it struggled to find enough ships to transport all of its output.

However, the country has managed to move most of its exports into the hands of domestic or non-Western foreign shippers, which do not require Western insurance coverage.

According to Reuters, at least 40 middlemen, including companies with no prior record of involvement in the business, handled at least half of Russia's overall crude and refined products exports between March and June.

While mostly dark fleet of tankers with murky ownership was being now used to transport Russian crude, Western ships were still involved in moving products since those were harder to police, an industry source said.

According to LSEG data, Russian crude has been trading above the cap since mid-July and is currently being traded at around US$67 a barrel at Russian crude terminals. Russian refined products such as fuel oil and diesel have also surpassed their caps.

A US Treasury official said this week the cap was still effective as it had helped cut Russian revenues. He said the group would stay nimble but added there was no plan for an immediate revision.

 

Pakistan Victim of Geopolitics

I am pleased to share one of my articles published in Eurasia Review on December 27, 2012. Despite lapse of more than a decade, many of the assertions seem most current as Pakistan continue to suffer from unabated interference of the super powers. 

Since independence Pakistan has remained the focus of global and regional powers. The country is termed a natural corridor for trade ‑ including energy products ‑ gateway to Central Asia and landlocked Afghanistan.

There is a perception that often regimes are installed and toppled in Pakistan by the super powers to achieve their vested interest. This is evident from cold war era to occupation of Afghanistan and from love and hate relationship with India to creation of Taliban (phantom now having many offspring).

At present Pakistan is facing extremely volatile situation, which has become a threat for its own existence. Fighting a proxy war for United States in Afghanistan for nearly four decade has completely destroyed the economic and social fabric of the country. Pakistan is suffering from the influx of foreign militant groups getting funds and arms from different global operators.

Analysts say over the years Pakistan has been towing foreign and military policy of the United States, which has often offended USSR, China, India and Iran. Therefore, one needs to analyze Pakistan’s relationship with Afghanistan, India and Iran, enjoying common borders with the country. It may not be wrong to say that at present Pakistan doesn’t enjoy cordial relation with none of these countries.

Pakistan helped Afghans in averting USSR attack. After the pullout of USSR forces Afghanistan plunged into civil war. It was often alleged that Pushtoons were supported by Pakistan and Northern Alliance was highly annoyed. After 9/11 Pakistan was made to fight Taliban under the US dictate. As the time for withdrawal of Nato forces is getting closer Pakistan once again faces a precarious position.

When British Raj left the subcontinent in 1947 it left a thorn, Kashmir. Since independence India and Pakistan have been living in constant state of war, spending billions of dollars annually on the purchase of conventional as well as non-conventional arms and have also attained the status of atomic powers. However, both the countries suffer from extreme poverty. There seems no probability of reconciliation between the two countries because of presence of hawks on both the sides. Even the trade relations could not be normalized due to Kashmir dispute as Hindus are not ready for another division of Hindustan on the basis of religion.

Pakistan and Iran have enjoyed the best time till toppling of Shah’s rule as both the countries were under the US influence. Iran has been persistently enduring economic sanctions for more than three decades after the Islamic revolution. Pakistan is suffering from severe energy crisis but not allowed to construct Iran-Pakistan gas pipeline or even buy Iranian crude oil under food for oil program. Iran has often complaint that certain outfits, most notorious being Jundullah, having its base in Balochistan province of Pakistan, are involved in cross border terrorism.

Pakistan also faces a difficult situation when Saudi Arabia, under the US pressure asks it to do or not to do certain things. One such example is Saudi Arabia promising to meet Pakistan’s oil requirement if it opts not to buy Iranian oil. There are also allegations and counter allegations that Saudi Arabia and Iran are supporting Sunni and Shia factions in Pakistan. This point is being highlighted by referring to sectarian killings. However, Pakistanis have no doubt that killing is being done by those who are neither Sunni nor Shia. This point got credence when it was discovered that Taliban involved in attack on Peshawar airbase had tattoos on their bodies.

Till today, Pakistan offers the shortest and cost effective route to landlocked Afghanistan, leading to Central Asian countries. Gwadar deep seaport has been constructed in Balochistan province with the financial and technical assistance of China. India often raises its concerns on Chinese presence along Pakistan’s coastal belt. However, India is not only constructing Chabahar port in Iran but also road and rail links up to Central Asia via Afghanistan.

Pakistanis completely fail to understand the duality of US policy. India was asked to withdraw itself from Iran-Pakistan-India gas pipeline project and also rewarded nuclear technology in return. On top of that it has not been stopped from building port and supporting infrastructure in Iran. Some experts say all this is being done to construct an alternate route once the objective of creation of greater Balochistan is achieved. This new country will be created taking one slice each from Iran, Afghanistan and Pakistan.

The level of US pressure on Pakistan can also be gauged from the fact that President, Asif Ali Zardari, on the eleventh hour, cancelled his visit to Tehran and went straight to UK. The new date of his visit to Iran has not been announced as yet. This reminds Pakistani’s of a similar cancelled visit of Prime Minister Liaquat Ali Khan to USSR and he instead went to United States.

It is also on record that Chinese experts working in Pakistan have often come under attack to make them leave Pakistan. Chinese experts working on Gwadar and Thar coal projects have been repeatedly attacked. At one stage it was feared that Chinese will completely withdraw their support for Thar coal mining and power plant.

China has also complaints that some extremist Muslim groups are trying to create disturbance in one of its province bordering with Pakistan. It seems these attempts are made to disrupt trade being done through this land route.

 

 

Bank of China opens branch in Saudi Arabia

China’s most internationalized state bank on Tuesday opened its first branch in Saudi Arabia in a move to expand the use of yuan amid a growing number of economic deals between the two countries.

Bank of China (BOC), one of China’s four biggest state-owned banks, opened its branch in Riyadh, the capital city of the oil-rich Middle Eastern country, more than two years after being given approval by the Saudi Arabian government.

The branch has more than 20 staff, with a majority hired locally – a condition requested by local authorities.

It is the second Chinese bank to open a branch in Saudi Arabia after the Industrial and Commercial Bank of China (ICBC) opened its first branch in Riyadh in 2015. ICBC also opened a branch in Jeddah in May.

China’s ambassador to Saudi Arabia, Chen Weiqing, said the opening of the branch was a result of positive developments in the bilateral relations between the two countries, and new stage of financial cooperation.

“It also shows that China highly recognizes the financial regulations, investment environment, and geographical advantages of Saudi Arabia,” Chen said, as he attended the opening ceremony with Bank of China president Liu Jin.

Saudi Central Bank governor Ayman al-Sayari and Saudi Arabia’s deputy investment minister, Saleh Ali Khabti, also attended the opening ceremony along with 250 guests.

The Saudi-listed ACWA Power, Saudi Arabia’s Ministry of Investment, Ajlan & Bros Holding Group and Zhejiang Rongsheng Holding Group signed memorandums of understanding involving internationalizing the yuan and green financing with BOC during the opening ceremony, the statement added.

The move came as part of a growing series of economic activities between China and Saudi Arabia, with their bilateral relations described as being at the best stage ever following President Xi Jinping’s state visit in December 2022, with both countries facing souring relations with the West.

During the trip at the end of last year, Xi pledged to work towards widening the use of yuan in oil and gas trade in the region, amid a push to establish the currency internationally and weaken the US dollar’s grip on world trade.

Saudi Arabia is China’s largest source of crude oil imports, with 87.5 million metric tons (641 million barrels) shipped in 2022.

Amid efforts by state banks to tap potential in the Middle East, BOC’s new branch has been licensed to provide basic commercial banking services to individual consumers and small- to medium-sized businesses, ranging from deposit accounts and loans to mortgages and yuan transactions.

At the weekend, BOC president Liu also met Khaled Mohamed Salem Balama Al Tameemi, the governor of the central bank of the United Arab Emirates, to court more support for its yuan clearing in the region and potential cooperation with the nation’s sovereign wealth funds.

In an interview with local media in June, BOC said the new branch aimed to offer the yuan to the wider Middle East region to assist commercial and financial trade between China, Saudi Arabia and beyond.

As there are many Chinese companies entering the market in the region, being able to trade and make financial transactions using the yuan would encourage Chinese companies to invest in the area.

The Saudi Arabian government first agreed to allow BOC to open its branch in January 2020. At the time, Saudi Arabia had only 14 foreign banks, including ICBC.

BOC also has existing branches in Abu Dhabi and Dubai in the UAE, as well as Bahrain, Turkey and Qatar.

Li Tong, president of the bank’s investment banking unit, Bank of China International, said in June during the Arab-China Business Conference in Riyadh that the new branch in Riyadh would push for financial cooperation, and further boost economic cooperation between the two countries.

The bank has also been in discussion with local counterparts to offer panda bonds – yuan-denominated bonds sold by overseas entities in China’s onshore bond market to raise investments in China.

A number of other banking sector collaborations have also been announced this year.

In March, the Export-Import Bank of China announced a first loan cooperation with Saudi National Bank, Saudi Arabia’s largest bank, in yuan.

Hong Kong has also been named as a major hub for financial cooperation between China and Saudi Arabia.

In July, the Hong Kong Monetary Authority, the city’s de facto central bank, signed a memorandum of understanding with the Saudi Central Bank, pledging initiatives in financial infrastructure development, open market operations, market connectivity and sustainable development.

 

 

Crude oil prices take a dip despite supply cut by Saudi Arabia and Russia

Oil prices reversed course on Wednesday after rising over 1one percent in the previous session, on a firmer dollar and as investors shrugged off jitters arising from supply cuts from Saudi Arabia and Russia.

"The reason the market gave back half of the gains and is listless this morning, is because within the language of the joint announcement there is a caveat that these cuts will be reviewed on a monthly basis," said John Evans of oil broker PVM.

"This flexibility add-in allows for wiggle room, but the market smells a taper," he said, citing conditions like anti-inflation battles in the United States and other countries, whether crude prices near US$100 a barrel, or the effect on Saudi oil revenues.

Saudi Arabia and Russia on Tuesday extended their voluntary oil cuts to the end of the year 2023. While Saudi Arabia relinquished one million barrels per day (bpd), Russia agreed to cut 300,000 bpd. These are on top of the April cut agreed by several OPEC Plus members till end 2024.

Both countries will review their decisions monthly to consider deepening cuts or raising output depending on market conditions.

The rising oil prices could be restrained when crude demand dips as US refineries enter their September-October maintenance period, said Sugandha Sachdeva of Acme Investment Advisors.

Iranian crude supply rises could also hobble price gains. "Iran is producing close to 3.1 million bpd and plans to pump around 3.4 million bpd," ING Economics analysts noted.