Italy to play low 2019 deficit card to avoid EU procedure

EU Commission threatened Rome with disciplinary steps; 2019 deficit could be 2% of GDP or lower, officials say; league economics chief says 1.8% is possible; coalition still undecided how to use savings emerging Reuters Rome Italian coalition officials say the country’s public accounts are throwing up positive surprises this year, strengthening Rome’s hand as it tries to ward off a possible Euro-pean Union disciplinary procedure. Recent data suggest the deficit this year will not only be below the European Commission’s forecast of 2.5% of gross domestic product (GDP) but could even be below the 2.04% agreed with Brussels in December, two senior coalition members said. However, it remains to be seen how far the anti-austerity government will actually slash its current 2.4% target, because some in the 5-Star Movement, one of the two ruling coalition parties, want the savings that are emerging to be quickly spent on new expansionary measures.

The other ruling party, the League, is a push- ing for deep tax cuts, but only from 2020. It is also not certain that an unexpectedly low 2019 deficit would be enough to convince Brussels that Italy’s finances are on a sustainable path. But the latest data at least give Rome fresh arguments — something that looked impossible a few months ago. The Commission on Wednesday paved the way to disciplinary steps against Italy, complaining that its debt had risen in 2018 instead of falling and would continue to do so. It said Rome had also not reined in its annual budget deficit as promised in 2018 and would continue to run excessive deficits this year and next. A disciplinary procedure, which could eventually end in fines, had already been averted at the last moment in December when Italy cut its original 2.4% deficit target for this year to 2.04%, with the agreement of the Commission. In April, Italy restored the original 2.4% target because of a slump in growth, while the Commission forecast 2.5%.

Prime Minister Giuseppe Conte surprised observers when he said on Wednesday, in response to the Commission, that a deficit of 2.1% was possible. But now, senior officials in the government of the right-wing League and the anti-establishment 5-Star say it could be even lower. Claudio Borghi, the League’s economics chief, told Reuters 1.8% was possible if current trends continue. The main reason for the surprise trend is that two flagship government measures — an early retirement option and a new means-tested welfare benefit — are proving less popular, and therefore less costly than expected. Taken together, it now looks as if the combined cost of the two policies will be €4bn ($3.4bn) less than was set aside in the 2019 budget, Borghi said.

This estimate was confirmed by a government member closely involved in economic policy, who asked not to be named. Borghi said tax amnesties allowing people to settle disputes with the authorities by paying a limited sum had yielded more than expected, as had measures against tax evasion. Among these, the requirement from January this year that a copy of virtually all transactions must be transmitted electronically to the taxman produced squeals of protest from companies but has bolstered sales tax revenues. State coffers have also been swelled by out-of-court settlements with several large multinationals accused of tax evasion, the largest of them a €1.3bn deal with Kering, the holding company of fashion house Gucci.

A senior Treasury official declined to confirm Borghi’s 1.8% 2019 deficit projection but said it now looked “possible” that the deficit would be 2% or lower. Public finance data so far this year has been encouraging. The central government deficit for the first four months was just €1.5bn above last year’s equivalent figure — below the trend projected in Rome’s 2019 Stability Programme, which forecasts that the full-year deficit would rise by €16bn. Tax revenues through April were up 1.0% year-on-year despite a stagnant economy, compared with an official full-year target of 0.6% growth. In addition, dividend payments by the central bank and state-owned enterprises will also exceed the projections in the Stability Programme by more than 0.1% of GDP, the Treasury said in documents sent to Brussels this month.

Airlines scramble to overcome polluter stigma

Reuters Seoul/Stockholm/London

In Lorna Greenwood’s London home, there is a shelf lined with travel guides.
But the 32-year-old mother and former government employment lawyer has given up flying.
Greenwood, who grew up enthralled by the possibilities offered by plane travel, is part of a growing group of environmental activists in Northern Europe who are shunning flights as concerns about global climate change increase.
“It’s a tough pill to swallow, but when you look at the issues around climate change, then the sacrifice all of a sudden becomes small,” Greenwood said.
A Swedish-born anti-flying movement is spreading to other European countries, creating a whole new vocabulary, from “flygskam” which translates as “flight shame” to “tagskryt,” or “train brag.”
A number of famous Swedes have stopped flying, including opera singer Malena Ernman, the mother of teenage activist Greta Thunberg who has thrust climate change into the spotlight.
“Flygskam” was a major topic at a three-day airline summit in Seoul this weekend, with global industry leaders launching a counter-offensive.
“Unchallenged, this sentiment will grow and spread,” Alexandre de Juniac, head of the International Air Transport Association (IATA) told some 150 CEOs.
The industry says it is shrinking its carbon footprint and its sustainability plan is among the most ambitious and globally focused of any industry.
“Come on, stop calling us polluters,” de Juniac said at a news conference after detailing the global initiative.
The IATA said the CO2 emission for each CEO’s flight to Seoul was half the amount of a 1990 flight, largely thanks to more fuel-efficient aircraft.
Commercial flying accounts for about 2.5% of global carbon emissions today but without concrete steps, that number will rise as global air travel increases.
The aviation industry has set out a four-pronged plan to achieve carbon-neutral growth from 2020 and halve net emissions from 2005 levels by 2050.
But airline leaders acknowledge they have struggled to articulate their plans in a way that resonates with the public.
When CNN anchor Richard Quest asked a room full of aviation executives whether they had used an often available booking option to offset emissions from their own flights to the South Korean capital, only a handful raised their hands.
The industry’s plan rests on a mix of alternative fuel, improved operations such as direct flight paths and new planes or other technology.
But a widely publicised March study funded by investors managing $13tn said airlines were doing too little.
“If we as an industry can provide better, more concrete answers…people will start to feel more comfortable that airlines are serious about this commitment,” JetBlue CEO Robin Hayes said in an interview.
Questions remain over how airlines will slow, steady and finally reduce harmful emissions.
Use of sustainable-fuel would have the single largest impact, reducing emissions from each flight by around 80%, according to the IATA.
The problem is that it is in short supply.
“The reality today is there’s just not enough and it’s too expensive,” KLM CEO Pieter Elbers told Reuters.
KLM last week announced a deal to develop and buy biofuels from Europe’s first sustainable aviation fuel plant, due to open in 2022.
Still, the IATA targets 2% of total fuel supply from sustainable sources by 2025 and then expects a steady increase.
In Europe, eliminating dozens of national airspaces borders could reduce fuel consumption by around 6%, but lobbying for a Single European Sky has been bogged down for years.
Airlines say small steps like single-engine taxiing and the use of lighter materials are cutting around 1-2% of emissions each year.
In the absence of a quick and substantial reduction its carbon footprint, the industry has committed to a carbon-offset programme.
The global Carbon Offsetting and Reduction Scheme for International Aviation (CORSIA) allows airlines to purchase pollution credits from environmental projects.
It’s unclear what will count as an “offset” and critics say such schemes hide how much effort is being made by industry and how much is being imported and at what price.
“The risk is that the price airlines are effectively paying for carbon will not be politically acceptable in 5 or 10 years,” a senior aviation executive said, asking not to be named.
European Union Transport Commissioner Violeta Bulc told Reuters she favours reviewing available green technology every five years “and then seeing if we can reach even further.”
For now, trains are benefiting from the anti-flight movement, although airline bosses in Seoul said that option barely exists in their busiest new markets such as Indonesia’s archipelago.
In Stockholm, Susanna Elfors says membership on her Facebook group Tagsemester, or “Train Holiday,” has spiked to some 90,000 members from around 3,000 around the end of 2017.
“Before, it was rather taboo” to discuss train travel due to climate concerns, Elfors said. “Now it’s possible to talk about this on a lunch break…and everybody understands.”

UK oil’s appeal returns for S Korea even as Brexit looms

After staying away for four months, South Korea is back in the market for North Sea crude. Hyundai Oilbank Co bought 2mn barrels of North Sea Forties crude for August de- livery, a rare purchase this year, said trad- ers who asked not to be identifi ed because the information is private. The import was made after refi ners in the Asian nation were given incentives to look beyond the Mid- dle East for oil, and it followed a discharge of UK crude in May, the fi rst such purchase this year. South Korea imported zero oil from the United Kingdom in the fi rst four months of this year as the possibility of Brexit threat- ened to erode the appeal of the crude to one of Asia’s top refi ning hubs. Britain’s exit will mean the return of a 3% import tariff on Forties purchases that was waived by South Korea under a free-trade agreement with the European Union since 2011. While the Asian country is a steady buy- er of UK oil, purchasing an average of over 2.6mn barrels a month in 2018, refi ners were reluctant to bring cargoes earlier this year as the government delayed renewing a freight rebate scheme that encouraged purchases from regions other than the Middle East. The very-large crude carrier Farhah is scheduled to load Forties crude from Hound Point on June 20 for delivery to Daesan in August, according to traders and ship- ping fi xtures compiled by Bloomberg. Last month, supertanker Athenian Freedom also made a similar voyage, discharging a small- er cargo of the grade, ship-tracking data showed. Hyundai Oilbank operates a refi n- ery in Daesan with crude processing capac- ity of 650,000 barrels a day.

Can euro replace dollar as world’s dominant currency?

Reuters/ London

Should European countries want the euro to replace the dollar as the world’s dominant reserve currency, the Sino-US trade war may offer a window of opportunity.
The souring of ties between the world’s two largest economies will indicate the extent to which China can switch some of its giant reserve holdings to another hard currency and also point to the limitations the eurozone faces in providing a viable alternative.
In the post-World War Two era, no asset has ever fully matched US government bonds for size, liquidity and credit quality.
It is the closest any global security has come to being perceived as a cash-like, risk-free asset with over $16tn worth of paper in circulation.
Yet, a year into a bitter tariff war, there are some signs of Beijing’s discomfort at being both the United States’ biggest trade adversary and one of its biggest creditors.
Recent data showed China sold more US Treasuries in March than it has in any month over the past 2-1/2 years.
If that proves to be more than a one-month quirk, speculation will rise about where it is diverting those reserves, and the eurozone — the world’s biggest trading bloc — tops the list of likely spots.
On size alone, eurozone government bonds appear to provide a credible landing pad: outstanding securities are almost two-thirds of the overall Treasury market.
There are signs already of greater Chinese interest in Europe — bankers attribute record Asian demand for recent Spanish, French and Belgian debt sales to Beijing.
And China has stepped up buying debt from Europe’s quasi-sovereign entities, bankers told Reuters, in particular the European Stability Mechanism (ESM) a eurozone-guaranteed AAA/A1-rated bailout fund.
Asian investors snapped up 33% of the ESM’s recent 2bn-euro 10-year bond, data from International Financing Review shows.
Asian takeup for ESM’s euro issues last year was 4%-5%. But for Chinese reserve managers to shift hundreds of billions of dollars from Treasuries to Europe’s single currency, the euro bloc needs to address key shortcomings.
“I find it hard to square the circle how such a huge Treasury holding can be diversified away, given the landscape we are in,” said Salman Ahmed, chief investment strategist at Lombard Odier Investment Managers.
“In the eurozone there is not a big risk-free market…Twenty years down the line it may be different.”
For Ahmed, the main issue is that credit risk in the bloc is not uniform.
The 19 members each run their own fiscal policies, budget rules are too loosely policed to ensure adherence, and euro exit remains a theoretical possibility.
So wealthier members such as Germany remain net savers that run balanced budgets or even surpluses, while others, mostly in southern Europe, are dogged by high debt.
The resulting mix of credit and political risks make it harder to see the aggregate eurozone bond market as a true mirror of the US Treasury universe.
Ross Hutchison, a fund manager at Aberdeen Standard Investments, says it boils down to the fact the United States “has a federal nature that the euro area hasn’t got yet”. Additionally, distortions stemming from years of bond buying stimulus by the European Central Bank mean available euro government bonds are far fewer than may appear.
While euro government debt outstanding is around $9.5tn, the ECB is estimated to hold roughly a quarter.
And the kind of “safe” securities that reserve managers seek are even scarcer — AAA-rated debt from Germany, the Netherlands and Luxembourg totals around $2.5tn, less if ECB holdings are discounted.
Debt from slightly lower-rated France, Belgium and Austria would add another $3tn.
Italy on the other hand has the bloc’s biggest government bond market, worth $2.3tn.
But its poor debt-to-GDP ratio, sluggish economy and populist policies make its bonds riskier and its credit rating is a notch or two above junk.
So in times of stress, investors clamour for German bonds, while in Italy, yields spike, threatening to undermine local banks that hold these securities.
Italian 10-year yields are at 2.5%, versus Germany’s minus 0.22%. Such risks have chipped away at the euro’s fortunes as a reserve currency — International Monetary Fund data shows it comprises 20% of global central bank holdings, from 26% in 2009.
The decline is linked to the 2011 Greek debt crisis that then ravaged Spain, Italy, Portugal and Ireland, highlighting risks of default by a member state and redenomination of euro debt into a new currency.
European officials are keen to counter the dollar’s hegemony, and at a conference last month they debated ways to win the euro a “stronger international role”. But they made no mention of the one measure that could resolve the issue at a stroke — joint debt issuance via common eurozone bonds.
Such securities would pool the bloc’s risks, and offer safer securities than those from most individual nations.
Olli Rehn, Bank of Finland governor and an ECB governing council member, said last week a safe asset would help enhance the euro’s international role, offering hope the issue will be on the agenda of the new European Commission later this year.
A common bond “would be more significant than the creation of another TLTRO in boosting demand for euros globally and reserve managers would be part of that story,” said David Owen, chief European economist at Jefferies.
He was referring to the ECB’s cheap multi-year loans.
“Maybe there will be more focus on pushing forward this agenda and taking advantage of the US and China having this trade spat,” Owen added.
Others, however, note that wealthier states oppose any common bond programme, fearing they will end up footing the bill.
Also, across Europe populist and anti-establishment movements are on the rise, with the agenda of slowing integration and returning power to national capitals.
Such groups grabbed a greater share of the vote in EU parliamentary elections last month, albeit less than expected.
“If anything, the trend is towards decentralisation of power,” Ahmed said.

EU must compromise on Brexit deal: Johnson


Prime Minister Boris Johnson yesterday urged EU leaders to drop their opposition to renegotiating Brexit, as the pound slumped on growing concerns about a no-deal departure.
Johnson, who took office last week, wants to change the exit terms struck by predecessor Theresa May but insists he will leave the European Union without any agreement at all if necessary on October 31.
Brussels has said it will not reopen the text.
“The withdrawal agreement is dead,” Johnson told reporters during his first visit to Scotland. “I am confident we will get a deal but it is also right we prepare for no-deal,” he said.
The government has not yet announced plans for Johnson to visit EU capitals, and a spokeswoman indicated he would not go until Brussels changes its stance.
“He obviously wants to meet EU leaders and negotiate but not to be sat down and told that the EU cannot possibly reopen the withdrawal agreement,” the spokeswoman said.
The Confederation for British Industry (CBI), the country’s top business lobby group, said companies now needed to be on an “emergency footing” because of the growing likelihood of no-deal.
The pound lost more than 1% of its value against the dollar yesterday, hitting a two-year low. In a report, the CBI warned that both Britain and the EU were not prepared for a no-deal Brexit and urged businesses to step up contingency plans.
The group’s head of EU negotiations Nicole Sykes tweeted that it was “like putting sandbags down for a flood”.
“Your kitchen’s still going to be underwater but MAYBE we can save the bedroom upstairs,” she wrote.
The Institute for Government also warned that a no-deal Brexit would “dominate government for years”, allowing little room for other domestic priorities outlined by Johnson such as health, education and transport.
The think-tank said such an outcome would also place the United Kingdom, which includes England, Scotland, Wales and Northern Ireland, “under unprecedented pressure”.
On his first visit to Scotland as prime minister, Johnson visited a military base before meeting Scottish Conservative leader Ruth Davidson, who has been opposed to a no-deal Brexit.
Irish Prime Minister Leo Varadkar has also said that a no-deal Brexit would make more people in Northern Ireland “come to question the union” with Britain.

How Europe’s populists lost the EU Game of Thrones

The conventional wisdom about European Commission President-elect Ursula von der Leyen’s confirmation by the European Parliament this month is that Central and Eastern European populists pushed her over the line. That is wrong. Had such parties actually backed her, Von der Leyen’s margin of victory would have been much larger, considering the support she had from the centre-right European People’s Party (EPP) and the liberals in the EU parliament.
True, populist MEPs from Poland’s Law and Justice (PiS) Party and Hungary’s Fidesz were firmly opposed to Frans Timmermans, a Dutch socialist who has loudly condemned both parties over their violations of EU norms and the rule of law. But nor did they want to strengthen French President Emmanuel Macron, who supported Von der Leyen. The optimal outcome for Poland’s de facto ruler, Jaros?aw Kaczyoski, and Hungarian Prime Minister Viktor Orbán was Von der Leyen’s confirmation by the smallest possible majority. Populist MEPs thus appear to have been instructed to say they were voting for her without actually doing so.
Had Von der Leyen lost, it would have been ample payback to the rejection of the PiS candidate for deputy speaker of the European Parliament and former prime minister Beata Szyd?o’s two failed bids to chair the Parliament’s Employment Committee. Moreover, this was around the same time that Krzysztof Szczerski, also backed by PiS, lost his bid to become deputy secretary-general of Nato.
But, because Von der Leyen made it through, the populists are boasting that she owes her job to them, as though they have some kind of tacit deal with the former German defence minister. That seems highly dubious, given that a deal between Von der Leyen and PiS would have cost her the support of the socialists and liberals. But now that the populists have cast a shadow over her leadership, it is important to understand what they may want from her.
The first thing to recognise is that Central and Eastern Europe’s populists – now including the Czech government – would prefer to pursue intergovernmental negotiations than to work through the European Commission. Though the Commission usually goes out of its way to back the EU’s weaker members, populists, by definition, distrust institutions. They would rather install “the right people in the right positions,” and then strike a deal with them.
In the view of the Visegrád Four (Poland, Hungary, the Czech Republic, and Slovakia), the weaker the Commission, the better. The V4 governments are convinced that they will always reach agreements with Germany – with which their countries have deep economic and historical ties – more easily than with the EU.
The Visegrád countries didn’t even try to get their act together in the new parliament. Their approach to intra-EU relations is based not on building alliances or developing long-term strategies, but on wielding the veto. And yet, while PiS has the largest parliamentary delegation, with 26 seats, it belongs to the marginal European Conservatives and Reformists group. Fidesz has 13 seats, but is part of the EPP; and the Czech populist party ANO has six MEPs, but sits in the Renew Europe group.
Then again, the V4 has always functioned as an ad hoc coalition without a common strategic vision. This time, it didn’t even try to unite to block any of the leadership appointments. But the next test will come with budget negotiations, which is one area where the V4 has traditionally been able to form a plan and cooperate. Prior to an earlier budget negotiation, for example, Poland was able to secure Polish MEP Janusz Lewandowski’s position as EU Budget and Financial Programming Commissioner.
The problem this time is that the Visegrád populists will not have any allies in key positions. That means they could soon face a problem: the disbursement of EU funds will be made conditional on a recipient government’s respect for the rule of law. It isn’t yet clear where Von der Leyen stands on this issue. But it is worth remembering that conditionality is a German idea, and that Germany is the largest source of EU funds.
Moreover, the V4 itself is divided on the question of whether EU funds should come with more strings attached. Hungary and Poland are staunchly opposed to the idea, of course; but the Czechs and the Slovaks have remained quiet, for fear of being thrown out of the Alliance of Liberals and Democrats for Europe or the Progressive Alliance of Socialists and Democrats. So, while the V4 governments might manage to negotiate jointly on local projects, the Czechs and Slovaks will probably stick closer to larger allies.
For Western Europeans, the fact that Eastern Europe got nothing in the leadership reshuffle is somewhat awkward. Most likely, the question of regional inclusion will be settled by making Laura Codruva Kövesi of Romania the head of the new European Public Prosecutor’s Office. But this, too, would represent another blow against populists. Having made a name for herself as an anti-corruption crusader at home, Codruta Kövesi now has Macron’s backing, following the withdrawal of a French candidate for the job.
Yet while Von der Leyen is German, her victory is widely seen as a triumph for Macron. In the leadership negotiations, German Chancellor Angela Merkel couldn’t play the “Eastern European card” and demand that Old Europe offer the newer members some concessions to avoid offending them. The countries to Germany’s east have been offended for quite some time. – Project Syndicate

l S?awomir Sierakowski, founder of the Krytyka Polityczna movement, is Director of the Institute for Advanced Study in Warsaw and Senior Fellow at the German Council on Foreign Relations.

QP signs agreement to enter Guyana exploration blocks


Qatar Petroleum (QP) has entered into an agreement with Total for a share of exploration and production rights in two blocks offshore Guyana in Latin America.
Under the agreement, which is subject to customary regulatory approvals by the Government of Guyana, Qatar Petroleum will hold 40% of Total’s existing 25% participating interest in the Orinduik block.
The other partners in this block are Tullow Oil (Operator) with a 60% participating interest and EcoAtlantic with a 15% interest.

Guyana offshore blocks. The Kanuku block is located 100km offshore Guyana and has a total area of about 5,200 square kilometres

Also under the agreement, Qatar Petroleum will hold 40% of Total’s existing 25% participating interest in the neighbouring Kanuku block. The other partners in this block are Repsol (Operator) with a 37.5% participating interest and Tullow Oil with a 37.5% interest.
On the agreement, HE the Minister of State for Energy Affairs, Saad bin Sherida al-Kaabi, also president & CEO of Qatar Petroleum said, “We are pleased to expand our global exploration footprint into Guyana together with our valuable, long-term partner, Total, in these offshore blocks in this prospective basin.”
Al-Kaabi added: “We hope that the exploration efforts are successful. I would like to take this opportunity to thank our partners and the government of Guyana for their collaboration in this effort, and we look forward to working together in these blocks.”
Three exploration wells are planned in these blocks this year – two on the Orinduik block, including the Jethro well, which is currently being drilled, and one on the Kanuku block.
The Orinduik block is located 120km offshore Guyana and has a total area of about 1,800 square kilometres, with water depths ranging from 70 to 1,400 metres.
The Kanuku block is located 100km offshore Guyana and has a total area of about 5,200 square kilometres, with water depths ranging from 70 to 800 metres.

TAPI gas line: Pakistan not to bear transit risk in Afghanistan

ISLAMABAD: Pakistan has told Turkmenistan in plain words that Islamabad will not bear the gas transit risk in war-ravaged Afghanistan under $8 billion TAPI gas line.

In case of halt of gas provision to Pakistan because of any subversive activity in Afghanistan, Pakistan will never take the risk at any cost, rather Turkmenistan will have to bear the risk.

More importantly, the financial commitment on behalf of Pakistan is to start when Turkmenistan ensures the gas supply on Pakistan border, not at border of Afghanistan shared with Turkmenistan. This has been clearly conveyed to Turkmenistan top authorities, top sources close to Special Assistant to Prime Minister on Petroleum Nadeem Babar told The News. Prior to it, Pakistan has already agitated with authorities of Turkmenistan the issue of reviewing the gas prices arguing that the gas price formula under which the gas prices of every buying countries (Afghanistan, Pakistan and India) has been worked out, is too much complicated and if new gas price is worked out while keeping in view the existing gas price formula, the gas price that we get is costlier even than the existing LNG price. ‘So we want Turkmenistan to review gas price formula prior to much awaited ground breaking of the portion of TAPI pipeline in the territory of Pakistan.

A high-power delegation of Turkmen Gas Company is due in Pakistan to discuss the issues raised by Pakistan. Now Turkmenistan wants, under new scenario, Pakistan experts’ delegation to come to Ashgabat and extends the date of August 11, 2019. Because of Eidul Azha the date may get changed.

“Yes, we wrote a letter to Turkmenistan authorities 7 months back seeking the dialogue for review of the gas pricing formula before embarking upon the construction of the portion of the pipeline in Pakistan’s territory and to this effect Special Assistant to PM on Petroleum Nadeem Babar asked the authorities of Turkmenistan to first review the gas prices downward before initiating the project,” a relevant top official confirmed to The News.

Coming to the new issue of bearing risk of gas provision because of Afghanistan highlighted by Pakistan that it will only honour its financial commitment when it gets the gas delivery on its border. Turkmenistan first asked Pakistan to discuss this issue with Afghanistan, but Islamabad responded saying that it is purchasing the gas from Turkmenistan and Pakistan wants gas delivery on its border. Since Afghanistan has been at war for many decades, so Pakistan cannot bear the risk of gas provision in Afghanistan.

During the recent visit, Afghanistan President Ashraf Ghani acknowledged the issue raised by Pakistan and assured that in this regard the authorities will soon meet counterparts of Afghanistan and Turkmenistan.

To a question, the top man in the Petroleum Division said that Turkmenistan has shown willingness to review gas prices.

The three buyer countries — Afghanistan, Pakistan and India — had inked the gas sales purchase agreement with Turkmenistan on bilateral basis. Now all the buyer countries want to unfold their prices and want the re-negotiations.

To a question, he said that the financial colure of the project is to be completed by September this year and ground breaking would be held in October 2019 for laying down the 800 kilometre portion of TAPI line in Pakistan territory. The project will be operational by 2020. The pipeline from Afghanistan that will enter from Chaman and pass through Zhob, DI Khan, Quetta, Multan and touch upon Fazilka — a city at Indian border which is 150 kilometer away from Multan. From Fazilka, the pipeline will enter India.

TAPI gas pipeline project aims to bring natural gas from the Gylkynish and adjacent gas fields in Turkmenistan to Afghanistan, Pakistan and India. The ADB is acting as the facilitator and coordinator for the project. It is proposed to lay a 56-inch diameter 1,680KM pipeline with design capacity of 3.2 billion cubic feet of natural gas per annum (Bcfd) from Turkmenistan through Afghanistan and Pakistan up to Pak-India border. There are two phases of this project, the first phase is free flow phase with estimated cost of $5 to $6 billion while second phase is installation of compressor stations with the cost of $1.9 to $2 billion. Civil works of the project have already commenced in Afghanistan after the project’s ground breaking (Afghan section) was held last year.

Afghanistan will be having the gas under TAPI 500 mmcfd, Pakistan 1.325 bcfd and India 1.325bcfd too. Turkmen gas company being the consortium leader for the TAPI project is to contribute up to 85 percent of equity, and the rest of TAPI members namely Afghanistan, Pakistan and India would take 5 percent each equity share in the project company.

Japanese LNG buyer seeking price arbitration in possible ‘bellwether’

An effort by a Japanese company to get lower prices on a liquefi ed natural gas contract signed a decade ago could be the first in a fl ood as buyers seek relief from legacy contracts amid cheaper spot supplies, according to an analyst at Credit Suisse Group AG. “This will prove the bellwether for more arbitrations and tougher LNG buyer negotiating stances across the market,” analyst Saul Kavonic said in an e-mail. “We expect other traditional LNG buyers to quickly follow suit.” The market will be awaiting what concessions Osaka Gas Co will be able to wrest from the marketing unit of the Exxon Mobil Corp’s PNG LNG project. They entered into arbitration after a dispute during a price review, a spokesman for the Japanese fi rm said Friday, adding that the company is seeking to lower LNG costs. Exxon declined to comment. The dispute underscores the frustrations of buyers locked in contracts linked to oil benchmarks while spot prices drop to the lowest seasonal level in a decade. Most of Japan’s LNG imports are indexed to oil, which has remained a widespread practice since its inception in the 1960s. Sinking prices have put LNG producers under intense pressure to off er better terms. Even Qatar, one of the world’s largest suppliers, made a “dramatic” break from tradition by offering mid-term LNG contracts at about an 11% oil slope, compared to more than 16% on some contracts signed in 2008, Fereidun Fesharaki, chairman of energy consultant FGE, said in May. The Osaka Gas contract with the PNG LNG project was agreed at a 15% slope to the Japan Crude Cocktail and runs through 2035, according to data compiled by Bloomberg NEF. Prices in the utility’s current PNG LNG contract are more than double those on the spot market and about 30% more than recently signed contracts, Kavonic said. A shift to a buyers’ market has emboldened consumers that historically have been concerned about security of supply to seek greater contract fl exibility and lower prices. “It’s unprecedented for a traditional LNG buyer to initiate arbitration in this way, presenting a new paradigm for LNG contract negotiations,” said Kavonic.

Turkey May Rethink Boeing Plane Orders, Erdogan Says

Turkey’s president said his government may have to “rethink” existing orders for Boeing Co. airplanes worth about $10 billion, in comments that reflect the country’s strained ties with the U.S.

Turkey’s hesitation on the Boeing order adds to tension created when the country ordered a missile defense system from Russia, spurning an offer for Ankara to buy U.S. air-defense missiles.

“I’ve told Mr. Trump in Osaka that even if Turkey’s not buying Patriots, it’s buying Boeings. We’re good customers,” President Recep Tayyip Erdogan said Friday in Ankara, referring to Raytheon’s Patriot systems. “But if it goes on like this, we’ll have to rethink about this issue.”

Erdogan spoke with U.S. President Donald Trump at the G-20 summit, during which he reminded him of existing orders for 100 Boeing jets by Turkish Airlines, the nation’s flagship carrier where the government holds a 49% stake. Turkey has since begun receiving the S-400 missile defense systems from Russia, which the U.S. has long said is incompatible with the its role as a NATO member and purchases of U.S. F-35 fighter jets.