Saudi Aramco acquires stake in Pakistani company

Reportedly, Saudi Aramco has acquired a 40% stake in Gas & Oil Pakistan (GO Petroleum). This is the second major development in Pakistan’s oil marketing space this year - both led by Saudi Arabia - with Wafi Energy earlier entering into a share purchase agreement to buy Shell Pakistan (SHEL PA).

Incorporated in 2015, GO Petroleum retails fuels and lubricants, backed by about 1,100 outlets and a storage capacity of 200,000 tons. It is the 2nd largest oil marketing company in Pakistan in terms of retail outlets. However, its market share has fluctuated between 6 to 8 percent in the last three years, making it smaller than SHEL and APL. The industry leader remains PSO (enjoying market share of 50%).  

Although, pricing details have not been divulged as yet, according to Pakistan’s leading brokerage house, Intermarket Securities the assessed intrinsic value of US$200 million for SHEL to tentatively price the GO deal.

Given GO’s smaller market share, including in the lubricants business and the lack of a brand value comparable to SHEL, the brokerage house takes the deal price between US$100 million to US$150 million.

A 40% stake at this valuation range translates to US$40 million to US$60 million.

The brokerage house estimates that Vitol Dubai has a 10% share in GO Petroleum but it is unclear at this point if this is part of the 40% stake being acquired by Aramco.

It is likely but not certain that Aramco will take over management rights.

The GO Petroleum deal will be Aramco’s first investment in Pakistan, and comes on the heels of its earlier moves to acquire Valvoline’s global operations and Chile’s Esmax Distribution SpA.

The GO Petroleum investment will likely be very small in comparison to these other overseas downstream ventures. This leads analysts to think it may well represent a testing of the waters, with Aramco reportedly also interested in setting up a mega refinery project in Pakistan.

If GO Petroleum expands rapidly it could eat into the existing market shares of competitors. At present, given its major presence on motorways and the North region, GO primarily competes with HASCOL and APL, while urban centers are dominated by PSO and SHEL.

A possible expansion into the South region will impact the latter two companies more.

 

Israel uses US-supplied white phosphorus in Lebanon

In an exclusive report on Monday, the Washington Post revealed that the Israeli army used white phosphorus munitions supplied by the United States in Dheira, southern Lebanon, in October.

Following is an excerpt of the report:

Israel used US-supplied white phosphorus munitions in an October attack in southern Lebanon that injured at least nine civilians in what a rights group says should be investigated as a war crime.

A journalist working for The Post found remnants of three 155-millimeter artillery rounds fired into Dheira, near the border of Israel, which incinerated at least four homes, residents said. The rounds, which eject felt wedges saturated with white phosphorous that burns at high temperatures, produce billowing smoke to obscure troop movements as it falls haphazardly over a wide area. Its contents can stick to skin, causing potentially fatal burns and respiratory damage, and its use near civilian areas could be prohibited under international humanitarian law.

Lot production codes found on the shells match the nomenclature used by the US military to categorize domestically produced munitions, which show they were made by ammunition depots in Louisiana and Arkansas in 1989 and 1992. The light green color and other markings — like “WP” printed on one of the remnants — are consistent with white phosphorous rounds, according to arms experts.

The weapons are part of billions of dollars in US military arms that flow to Israel every year, which has fueled Israel’s war on Hamas in the Gaza Strip, launched after the militants attacked on October 07.

At least 17,700 people, many of them civilians, have been killed since the Israeli operation began, according to the Gaza Health Ministry.

Tensions along Lebanon’s southern border between Israeli forces and Hezbollah have boiled over from a simmer to near-daily exchanges of fire in the weeks since October 07.

Dheira, a town of 2,000, has become a focal point for fighting. Just across the border from an Israeli radar tower, it has been used as a staging ground for Hezbollah’s attacks against Israel.

At least 94 people have been killed on the Lebanese side of the border since tensions escalated, according to data released on December 05 by the Health Ministry — 82 have been militants, according to Hezbollah. In addition, at least 11 Israelis have been killed, most of them soldiers.

Photos and videos verified by Amnesty International and reviewed by The Post show the characteristic ribbons of white phosphorus smoke falling over Dheira on October 16.

Israeli forces continued to shell the town with white phosphorus munitions for hours, residents said, trapping them in their homes until they could escape around 7.00 am the next morning. Residents now refer to the attack as the black night.

Most fled the town when the shelling stopped, returning during a week-long pause in fighting and leaving again when it resumed.

Uday Abu Sari, a 29-year-old farmer, said in an interview that he was trapped in his home for five hours during the shelling and was unable to breathe because of the smoke. He suffered respiratory problems for days after the attack.

“Emergency services told us to put something that was soaked in water on our faces, which helped a bit. I couldn’t see my finger in front of my face,” he said. “The whole village became white.”

White phosphorus ignites when in contact with oxygen and burns at temperatures up to 1,500 degrees, which can cause severe injuries. The chemicals left in the body can damage internal organs, sometimes fatally, according to a Human Rights Watch report.

The US origin of the shells was verified by Human Rights Watch and Amnesty International. The same manufacturing codes also appear on white phosphorus shells lined up next to Israeli artillery by the city of Sderot, near the Gaza Strip.

The United States is under an obligation to track the behavior of its partners and allies who receive its assistance in order to comply with US law, humanitarian law experts said. The use of white phosphorus smoke is permitted if used for legitimate military operations, but like other weapons, its misuse can violate laws of armed conflict. Rights groups have warned its use should be restricted around civilians because fire and smoke can be spread to populated areas.

“The fact that US-produced white phosphorus is being used by Israel in south Lebanon should be of great concern to US officials,” Tirana Hassan, the executive director of Human Rights Watch, wrote in an email. “[Congress] should take reports of Israel’s use of white phosphorus seriously enough to reassess US military aid to Israel.”

 

Israel trying to clear Palestinians from Gaza

Philippe Lazzarini, Commissioner General of the UN agency for Palestinian refugees, said Israel appears to be trying to clear Gaza of its Palestinian population through its military offensive and evacuation orders.

“The developments we are witnessing point to attempts to move Palestinians into Egypt, regardless of whether they stay there or are resettled elsewhere,” he wrote in the Los Angeles Times.

On Sunday, Jordanian Foreign Minister Ayman Safadi also accused Israel of being determined to push Palestinians out of Gaza.

“We are seeing a systematic effort, it seems to empty Gaza from its people,” he said at a conference in Doha, Qatar.

Eylon Levy, an Israeli government spokesperson, called the allegations outrageous and false.

Israel has said it is prepared to fight for months or longer to defeat Gaza's Hamas rulers, as its ground offense intensifies with more airstrikes and artillery fire.

On Monday, the Israeli army announced that 101 soldiers had been killed so far in the military offensive which began on 27 October.

Qatar, which has played a key mediating role between the warring parties, says efforts to stop the war and have all hostages released will continue, but a willingness to discuss a ceasefire is fading.

Israel faces international outrage after its military offensive killed more than 17,700 Palestinians in Gaza, around two-thirds of them women and children, according to the Hamas-controlled Health Ministry.

About 90% of Gaza’s 2.3 million people have been displaced within the besieged territory, where UN agencies say there is no safe place to flee.

With only a trickle of humanitarian aid reaching a small portion of Gaza, residents face severe shortages of food, water and other basic goods.

Panama Canal drought to delay grain ships

According to Reuters, bulk grain shippers hauling crops from the United States Gulf Coast export hub to Asia are sailing longer routes and paying higher freight costs to avoid vessel congestion and record-high transit fees in the drought-hit Panama Canal.

The shipping snarl through one of the world's main maritime trade routes comes at the peak season for US crop exports, and the higher costs are threatening to dent demand for US corn and soy suppliers that have already ceded market share to Brazil in recent years.

Ships moving crops have faced wait times of up to three weeks to pass through the canal as container vessels and others that sail on more regular schedules are scooping up the few transit slots available.

The restrictions could continue to impede grain shipments well into 2024 when the region's wet season may begin to recharge reservoirs and normalize shipping in April or May, analysts said.

"It's causing quite a disruption both in expense and delay," said Jay O'Neil, proprietor of HJ O'Neil Commodity Consulting, adding that the disruption is unlike any he's seen in his 50 years of monitoring global shipping.

The Panama Canal Authority restricted vessel transits this autumn as a severe drought limited supplies of water needed to operate its lock system. The Authority did not respond to request for comment on grain shipment delays.

Only 22 daily transits are currently allowed, down from around 35 in normal conditions. By February, transits will shrink further to 18 a day.

Grain ships are often at the back of the line as they usually seek transit slots only a few days before arriving, while others like cruise and container ships book months in advance.

The Authority also offers the rare available slots to its top customers first, none of which are bulk grain haulers, O'Neil said.

Any scheduled slots that come available are auctioned off, but demand is exceptionally high. Some slots have gone for US$ one million or more, untenable costs for the traditionally thin-margin grain trading business.

"The grain trades and the bulk carrier segment are going to be the last customers to go through the Panama Canal. I would not rely on the Panama Canal any time soon," said Mark Thompson, senior trader at Olam Agri.

Wait times for bulk grain vessels ballooned from around five to seven days in October to around 20 days by late November, O'Neil said, prompting more grain carriers to reroute.

Options include sailing south around South America or Africa, or transiting the Suez Canal. But those longer routes can add up to two weeks to shipping times, elevating costs for fuel, crews and freight leases.

While grain prices have fallen from 2020 peaks, higher freight costs will be passed on to grain and oilseed importers who buy for human food and livestock feed.

"Commercial companies have been finding ways to navigate around the problem. But undoubtedly it costs the end-user more money," said Dan Basse, president of Chicago-based consultancy AgResource Co.

In the second half of October, only five US Gulf grain vessels bound for East Asia transited the Panama Canal, while 33 sailed east to use the Suez Canal instead, according to a US Department of Agriculture (USDA) report. In the same period last year, 34 vessels used the Panama Canal while only seven used the Suez.

Some US exporters have also been rerouting crop shipments to Asia to load from Pacific Northwest ports instead. But that, too, comes at a higher cost as those facilities source grain mostly via rail as opposed to the cheaper barge-delivered loads supplying Gulf Coast exporters.

Only 56.8% of all US corn exports in October were shipped from Gulf Coast ports this year, down from 64.9% in October 2022 and 72.1% in October 2021, according to USDA weekly export inspections data.

 

 

 

Bangladesh starts using Chinese crude oil handling facility

Bangladesh has started using a large crude oil receiving and offloading facility built by China. This allows the south Asian oil importer to significantly reduce the cost of crude oil handling, reports Reuters.

The single-point mooring facility at Chattogram port recently offloaded 82,000 tons (about 600,000 barrels) crude oil from a 100,000-ton tanker, said an official with state-run Bangladesh Petroleum Corp (BPC).

The project is majority-funded by the Chinese government and build by a unit of Chinese state oil major CNPC.

Bangladesh, which imports most of its oil needs, does not have a deepwater port and has relied on small vessels to ship crude oil from large tankers parked outside ports.

That typically takes 11 days to offload a 100,000 ton oil cargo and the new facility cuts the offloading time to 48 hours, the official said.

An engineering unit of state major CNPC began in 2019 building the offloading facility financed by Export-Import Bank of China which offers preferential loans.

The new facility is expected to facilitate the planned expansion of Bangladesh's only refinery to 3 million tons per year (60,000 barrels per day) from 1.5 million tons per year currently.

 

 

 

Bangladesh: Opposition Fears Sanctions

Politicians, economists and analysts on Saturday said that the ruling Awami League (AL) will be responsible mainly if any Western sanctions or restrictions are imposed on Bangladesh as the government remains largely indifferent to their repeated calls for upholding democracy and human rights.

On Friday, making an oblique reference to the main opposition Bangladesh Nationalist Party (BNP), Prime Minister Sheikh Hasina said that the party is plotting to create a famine situation in February–March with the support of some foreign countries.

Earlier, in a recent statement AL General Secretary, Obaidul Qauder said that the BNP is relentlessly conspiring to have sanctions imposed against the people of the country with false and fabricated information.

Former President of Communist Party of Bangladesh Mujahiul Islam Selim told New Age that the AL government has no wish for holding inclusive and credible elections and it will be responsible if any sanctions are imposed for undermining the democratic electoral process and violating human rights as well.

The ruling AL and all other political parties and the people as well know that no free, fair and credible general elections can be held under a partisan government, said Selim.

Moreover, the AL also knows that they will invariably lose if a free, fair and credible general election is held, said the senior politician.

For this they became eager to hold a false and farcical general election, Selim added.

The government could still hold an inclusive general election by following the special constitutional clause and convening parliamentary sessions to pass the bill of caretaker government, he said.

Referring to the Prime Minister’s complaint that Bangladesh may face a famine after the general election, Selim said that such a comment can be a foreboding sign for the country and the wrong policies of the government would be responsible for that.

BNP standing committee member Abdul Moyeen Khan said, “If this were to be true that the BNP is responsible for the Western sanctions imposed on certain Bangladeshis who are undermining a free and fair election process then this would pre-suppose that BNP is running the decision making process of the Western Governments ! The absurdity of such Awami allegations is obvious to everyone and doesn’t deserve any consideration whatsoever.”

“The fact of the matter is, the forthcoming elections have already been rendered into a sham election by way of publicly horse trading the parliament seats not only between their partners but also with their domesticated opposition aspirants well before the actual election has even taken place. Such an election caricature cannot be acceptable to any democracy loving people whether inside or outside the country,” he observed.

Former cabinet secretary Ali Imam Majumder told New Age that if any sanctions are imposed on Bangladesh from the Western countries, alongside economic impact it would be shameful for the nation.

Former diplomat Humayun Kabir said that accusing the opposition for possible sanctions is nothing but a political rhetoric.

 The European Union and United States are major markets for Bangladesh’s garment sector. If any sanctions are to be imposed on this sector, it will be dangerous for Bangladesh.

Economists said that the country’s foreign exchange reserve and import payments would be badly affected, if any kinds of economic sanctions are imposed on the country in such a struggling economic situation.

Former World Bank Dhaka office chief economist Zahid Hussain said that any kinds of sanctions or trade penalties would create impact on the country as the economy has already been struggling due to shortage of dollars.

‘If any sanctions affect the country’s export-oriented industries, mainly the readymade garment industry, it would create an adverse impact on the country’s foreign exchange reserve and employment as well,’ he added.

Asked about the risk of famine by March 3 and whether the government has taken adequate measures to tackle such a crisis, he said that the government has to disseminate what kind of measures it has taken to overcome the situation.

Dhaka University economics professor MM Akash said that any kind of economic sanctions or penalties would create dollar shortages to lead to a crisis in the imported goods.

The chance of famine is little if the government takes adequate early measures as the country’s agricultural sector is quite strong. The poor people will not be affected much. But, the middle and higher income groups will suffer the brunt of crisis as they would not be able to use imported goods due to dollar shortages.

On September 22, the US Department of State said that they had started imposing visa restrictions on individuals involved in undermining the democratic election process in Bangladesh.

Under this policy, the US said that it would be able to restrict the issuance of visas for any Bangladeshi individuals believed to be responsible for, or complicit in, undermining the democratic election process in Bangladesh.

 

Dismay over US veto on Gaza ceasefire

Arab and Muslim ministers, led by Saudi Foreign Minister Prince Faisal Bin Farhan, expressed their resentment over the United States' use of the veto, preventing a UNSC resolution for an immediate ceasefire in Gaza during an official meeting with US Secretary of State Antony Blinken.

The ministerial committee, assigned by the Joint Arab-Islamic Extraordinary Summit, emphasized their demand for the United States to take responsibility and necessary actions to compel the Israel to immediate cease fire.

They reiterated their united stance against the continued Israeli aggression on the Palestinian people in Gaza, renewing the call for an immediate and comprehensive cessation of hostilities, ensuring the protection of civilians in accordance with international humanitarian law.

The committee members expressed their rejection of any forced displacement operations carried out by the occupation. They underlined the importance of adherence to international law and humanitarian law, committing to confronting such actions on all levels.

Renewing their commitment to a genuine political climate leading to a two-state solution, the committee members emphasized the establishment of a Palestinian State along the June 4, 1967 borders in line with relevant international resolutions.

They rejected any attempts to fragment the Palestinian cause and discussed the future of Gaza separately from the broader Palestinian issue.