Global finance ministers and central bankers pledged to use all their tools, including fiscal policy, to support demand amid a “highly uncertain” outlook and elevated risks.
“The outlook is highly uncertain and subject to elevated downside risks,” including trade tensions, policy uncertainty and geopolitical risks, according to a communique issued Saturday by the International Monetary and Financial Committee, the steering panel of the IMF’s 189 member countries. “We will employ all appropriate policy tools, individually and collectively, to mitigate risks, enhance resilience and shore up growth to benefit all.”
The statement was released in Washington, where the IMF and World Bank are holding their annual meetings.
An International Monetary Fund Committee (IMFC) plenary session on October 18.
“Available fiscal space should be used to support demand as needed,” and monetary policy should aim to keep inflation approaching or stabilising around targets, the communique said.
The downbeat statement caps a week during which the IMF made a fifth-straight cut to its 2019 global growth forecast, projecting the weakest expansion since 2009. The fund’s chief economist, Gita Gopinath, earlier warned that “there is no room for policy mistakes and an urgent need for policymakers to co-operatively de-escalate trade and geopolitical tensions.”
“All tools can be applied — monetary policy where there is space for it” as well as fiscal measures and structural reforms when appropriate, IMF managing director Kristalina Georgieva said on Saturday at a press conference in Washington. Governments need to take these steps to stop or reverse the slowdown, she said.
Global finance leaders met against a backdrop of slowing growth in the world’s major economies and central banks grappling with limited room to support expansion.
In the US, the Federal Reserve has reversed some of its tightening to insure against downside risks, though consumer spending has largely held up amid weakness in manufacturing and business investment. China said on Friday that economic growth decelerated to the weakest pace since the early 1990s, yet it may be starting to stabilise as fiscal stimulus works its way through the economy.
For the euro area, policymakers don’t expect to go beyond the interest-rate cuts and quantitative easing pushed through by European Central Bank President Mario Draghi in September unless the economy is hit by shocks such as escalating trade tensions or a no-deal Brexit, according to regional officials.
While the US and China have touted progress toward a trade agreement that leaders Donald Trump and Xi Jinping would sign next month, the situation remains uncertain and there’s no indication that the nations are preparing to roll back tariffs implemented over the past two years.
The IMFC statement repeated language from the prior statement in April saying that “we recognise the need to resolve trade tensions.”
But the latest missive added a line saying that a “strong international trading system with well-enforced rules addressing current and future challenges would support global growth.”

È l’opinione di Roudi Baroudi, veterano del business energetico, spesso d’aiuto per delineare la policy energetica per aziende, governi, e organismi sovranazionali come l’Unione Europea. Baroudi, attualmente Ceo della Energy and Environment Holding, con sede a Doha, è intervenuto sul tema: «Perché il Qatar è cresciuto così tanto nel business del gas». «Una volta capita l’estensione delle riserve naturali di gas del paese – spiega Baroudi – il governo ha intrapreso studi organici per comprendere le condizioni di mercato e le possibilità di sviluppo, definire le necessità interne, e identificare i migliori partner commerciali. Come risultato di questa immediata scommessa, il Qatar in poco tempo è diventato l’esportatore numero uno di gas liquido. Posizione che detiene tutt’ora». E non solo da un punto di vista interno. Ad esempio Qatar Petroleum è in trattative con vari partner per la costruzione di un nuovo terminale di gas liquido sulla costa tedesca del mare del Nord. E un nuovo impianto di distribuzione verrà implementato nel porto belga di Zeebrugge entro il 2044. Ulteriori sviluppi dipingono il Qatar in prima posizione per quanto riguarda l’aspetto mercantile e finanziario. Nel luglio scorso Qatar Petroleum ha raggiunto la quota del 49 per cento in una joint venture con la Chevron, per lo sviluppo di un imponente complesso petrolifero sulla costa degli Stati Uniti, in prossimità della zona più interessante per la produzione di «shale gas». E solo qualche settimana fa QatarGas è entrato nella storia, quando una delle sue navi da trasporto per il gas, la Thumama, è riuscita – per prima – a completare il trasferimento di una unità di rigassificazione dal terminal di Moheshkhali, in Bangladesh. «Come si vede, le attività di estrazione, e trasformazione qatariote sono lanciate verso il futuro, e ci si aspettano grandi cose», ha commentato Baroudi.

THE PENINSULA
DOHA
Wednesday 2 October 2019

It’s because Qatar had made an early bet on liquefied natural gas that helped the country to emerge as the world’s most prolific exporter of LNG, a position it retains to this day. It was good governance that made sure this resource has been very well-managed, a top energy expert said.

Attending a major energy congress in Athens, Roudi Baroudi, a veteran of the energy business who has helped shape policy for companies, governments, and even entities like the European Union, the World Bank and the United Nations, noted the North Field Expansion Project is a massive undertaking that will grow LNG output from the current 77 million tons per annum to 110 MTPA over the next five years. That will not only increase Qatar’s lead over other producers, but also give it the wherewithal to keep diversifying its holdings abroad.

Speaking on the sidelines of the First Annual Eastern Mediterranean Energy Leadership Summit, Baroudi (pictured), currently the CEO of Doha-based Energy and Environment Holding, elaborated on ‘how did a tiny country like Qatar become such a giant in the gas business?”.

“ Once the full extent of the country’s natural gas reserves were understood, the government sought out the best advice, then undertook comprehensive studies to understand market conditions and forecasts, define its own needs and capabilities, and identify the best partners. As a result of these analyses, Qatar made an early bet on liquefied natural gas that soon made it the world’s most prolific exporter of LNG, a position it retains to this day.” He noted that it’s not only this domestic megaproject (North Field Expansion) that matters. Qatar Petroleum, for instance, is in talks to secure partners for the establishment of a new LNG distribution terminal on Germany’s North Sea Coast. Again, this a mutual benefit proposition from start to finish, with the German side increasing its energy security and the Qataris lining up future revenues by securing access to a crucial market. In addition, QP recently entered a new agreement that books LNG offloading facilities at the Belgian Port of Zeebrugge until 2044.

Other developments paint a similar picture of a wide-ranging strategy that keeps Qatar in its leading position by capitalizing on both its market influence and its financial resources. In July, QP took a 49 percent stake in a joint venture with Chevron Philips Chemical Co. (51 percent) that will see the partners develop a huge petrochemical complex – including the world’s largest ethylene cracker – on the US Gulf Coast, taking advantage of the proximity of America’s most productive shale gas regions.

And just a couple of weeks ago, QatarGas made history when one of its massive Q-Flex LNG carriers, the Thumama, became the first vessel of its class to complete an open-water ship-to-ship transfer to a floating storage and regasification unit off Bangladesh’s Moheshkhali Terminal. Qatari investments and expertise are also driving exploration activities in several countries around the world. “Qatar is not sitting on its hands. Day in and day out, in all sorts of ways, the country is constantly taking stupendous strides toward bigger and better things to come”, he said.

Roudi Baroudi

The global transition from carbon-intensive fossil fuels to cleaner, more reliable renewables like wind and solar is already well underway. But the big question – for the 2020s and beyond – is how fast it will happen. A slow transition would mean that energy-sector incumbents continue to flourish, and we would all but certainly miss the emissions-reduction targets enshrined in the 2015 Paris climate agreement. But if the transition is rapid, incumbents will experience varying degrees of disruption – the price of keeping the Paris targets well within reach. As matters stand, both scenarios are possible, representing two paths that lie before us.In a new report for the World Economic Forum’s Global Future Council on Energy, we and our co-authors identify four key areas that will determine which path we take. The Speed of the Energy Transition offers compelling evidence that the transition is coming fast, and that all stakeholders in the global energy system – which is to say, everyone – must start preparing.

One area where the gradual and rapid scenarios diverge is adoption of renewable energy. When will renewables start displacing incumbents? For markets, the key moment will be when renewables make up all of the growth in energy supply, as well as all the growth in electricity supply. That, most likely, will happen in the early 2020s, long before fossil fuels lose their dominant share of total energy supply. As renewables become the leading growth industries in the energy sector, financial markets will increasingly reallocate capital accordingly.

A second area concerns innovation in energy technology, and whether growth in new applications is linear (the gradual scenario) or exponential (the rapid scenario). Solar and wind are already cheaper than fossil fuels when it comes to generating electricity, and electric vehicles are close to challenging internal-combustion-engine cars on price. The evidence suggests that the barriers to growth for EVs in the foreseeable future are soluble. Moreover, new waves of innovation are forthcoming, in the form of nascent but already viable technologies such as green hydrogen energy. Prices for renewables will most likely drop far below those of incumbent energy sources – and fast – leading to exponential growth in green energy.

A third key area is public policy. Will policymaking remain cautious, or will it become more dynamic and ambitious as new technologies create opportunities to improve the design and functioning of markets? Inertia being a powerful force, existing policies have been limited in scope. But history teaches us that there are tipping points: Once genuine change comes, it tends to be adopted rapidly across the board – as in the case of laws prohibiting smoking indoors.

Given that new technologies are already providing better solutions for consumers’ energy needs, policymakers inevitably will respond to their constituents’ demands. Once enough politicians recognize that the energy transition is not expensive, and will actually boost competitiveness (thereby reducing prices), they will update the rules governing energy markets to make way for the change that is already underway.

The last key area is emerging markets, which could either follow the fossil-fueled path of developed countries, or leapfrog to newer energy technologies. Countries like China and India undoubtedly need to generate far more energy for their citizens, and there are almost 1 billion people worldwide who still lack access to electricity. But that doesn’t mean emerging and developing countries have to opt for high-emission fossil fuels.

Just as mobile phones made landline telephony irrelevant in much of the developing world, increasingly affordable renewables can become the obvious first choice for generating energy.

From our perspective, the evidence clearly points to a rapid energy transition in the years ahead. The danger is that key stakeholders – whether policymakers or investors – will mistake which path we are on, and make poor decisions. If so, we will all have to bear the costs of stranded high-carbon assets and bad investments in obsolete technologies. Worse, we will have missed an early opportunity to achieve sustainability and minimize the risk of catastrophic climate.

Everyone – from innovative technology startups to energy incumbents and government policymakers – has a role to play in determining which path we take. If stakeholders recognize the rapid pace of the global energy transition already underway and embrace the change, we can still hit the Paris targets and have a planet that allows everyone to thrive.

Kingsmill Bond is the new energy strategist for Carbon Tracker. Angus McCrone is chief editor of Bloomberg NEF. Jules Kortenhorst is CEO of the Rocky Mountain Institute. THE DAILY STAR publishes this commentary in collaboration with Project Syndicate © (www.project-syndicate.org).

ODESSA, Texas (Reuters) – Oil producers and their suppliers are cutting budgets, staffs and production goals amid a growing consensus of forecasts that oil and gas prices will stay low for several years.

The U.S. has 904 working rigs, down 14% from a year ago, and even that is probably too many, estimated Harold Hamm, chief executive of shale producer Continental Resources (CLR.N), which has reduced the number of rigs at work.

Bankruptcy filings by U.S. energy producers through mid-August this year have nearly matched the total for the whole of 2018. A stock index of oil and gas producers hit an all-time low in August, a sign investors are expecting more trouble ahead.

“You’re going to see activity drop across the industry,” Earl Reynolds, CEO of Chaparral Energy (CHAP.N), told Reuters at the EnerCom oil and gas conference last month.

The Oklahoma energy firm has slashed its workforce by nearly a quarter, trimmed its spending plan by 5%, and agreed to sell its headquarters and use some of the proceeds to reduce debt.

Investment bank Cowen & Co estimated last month that oil-and-gas producers spent 56% of their 2019 budgets through June, based on its review of 48 U.S. companies. It expects total spending this year to fall 11% over last year, based on proposed budgets.

The slowdown in drilling is spurring cost-cutting in oilfield services, including staff cuts and restructurings at top firms Schlumberger and Halliburton Co. Schlumberger plans a writedown yet to be determined this quarter, noting its results in North America have been “under significant pressure,” CEO Olivier Le Peuch said on Wednesday.

Halliburton is paring its North American workforce by 8% because of customer spending cuts, and National Oilwell Varco recently offered buyouts to its U.S. workers.

“The service sector I think is going to be flat,” said Superior Drilling Services CEO Troy Meier, whose firm canceled plans to add new machinery.

Such signs of a downturn come as the shale sector had just started generating the cash flow long demanded by investors, who have grown weary of drilling expansions without returns. Last quarter, a group of 29 top publicly-traded producers generated more in cash – $26 million – than it spent on drilling and dividends, according to Morningstar (MORN.O) data provided by the Sightline Institute and the Institute for Energy Economics and Financial Analysis. A year earlier, the same group had spent $2.4 billion more than it generated.

Despite that progress, many small to mid-sized shale firms are now pulling back on production targets amid the gloomy price projections.

A slowing oil industry could weigh on the United States economy. The boom in shale oil output added about 1 percent to U.S. gross domestic product, or 10% of growth, between 2010 to 2015, according to the Federal Reserve Bank of Dallas. In Texas, the center of shale oil production, energy employment dipped 1.8 percent in the first six months of 2019, according to the Dallas Fed. New drilling permits in the state fell 21% in July compared with the same month last year, according to state data.

MAJORS STAY THE COURSE

Any broader economic impact, however, could be limited by the massive investments in shale drilling by some of the world’s biggest oil firms – Exxon Mobil (XOM.N), Chevron (CVX.N), Royal Dutch Shell (RDSa.L) and BP PLC (BP.L). Even as small and mid-sized firms dial back, the majors continue to pour billions of dollars into years-long shale drilling plans. They have argued their integrated well-to-refinery networks allow them to control costs enough to withstand a sustained period of low prices.

Spokespeople for Exxon, Chevron and BP declined to comment on the industry downturn but referred to previous statements of their longterm commitment to shale. Shell did not respond to requests for comment.

Chevron has focused much of its production growth plans on shale, and CEO Michael Wirth has called its Permian Basin holdings in West Texas and eastern New Mexico the “highest return use of our dollars.”

Exxon CEO Darren Woods told a Barclays energy conference on Sept. 4 that the company continues to take the long view.

“The way we look at the business is tied to some very basic fundamentals that haven’t changed for decades, if not hundreds of years,” he said, noting it took oil a century to replace coal as the world’s dominant energy source.

Exxon has estimated it can earn a double-digit return in the Permian Basin even if oil falls to $35 a barrel.

BRACING FOR LOW PRICES

U.S. oil prices largely have traded just above $50 a barrel since last November, requiring higher output to generate the same profit as when prices were higher. Prices this quarter are about 18% lower than this time last year, according to U.S. government data.

U.S. oil prices are likely to remain below $55 a barrel for the next three years, said Scott Sheffield, CEO of Pioneer Natural Resources (PXD.N), one of the largest oil producers in the Permian Basin. Lackluster prices will result in a “significant fallback in Permian growth” and probably “no growth for most,” he said on a recent earnings call.

Part of the slowdown comes as the best drilling spots in some areas of the field are being “exhausted at a very quick rate,” Sheffield said.

The severity of the looming downturn is a matter of debate.

Flotek Industries Inc (FTK.N), a supplier of oilfield chemicals, has cut staff twice this year. CEO John Chisholm told Reuters that the industry is just “pumping the brakes” as it grapples with well-design issues.

Matt Sallee, a portfolio manager at energy investors Tortoise Capital, expects a longer industry decline.

“It’s hard to see how this gets any better for several quarters,” he said.

Qatar has urged energy consumers across the globe to increasingly switch towards liquefied natural gas (LNG), which alone has four key characteristics to tackle environmental challenges.

Drawing attention to unprecedented recurrent climatic conditions, including mean temperatures, turbulent seasonal cycles and extreme events, HE the Minister of State for Energy Affairs, Saad biSherida al-Kaabi said it is time to take another look at natural gas and the number of advantages it has to make it a pivotal element in any strategy to tackle environmental challenges.

“It is versatile, flexible, economic, and clean. No other energy source can boast the combination of all these four qualities,” he told the 8th LNG Producer-Consumer Conference in Tokyo.

Al-Kaabi, who is also the president and chief executive of Qatar Petroleum, highlighted the country’s efforts to reinforce its position as the world’s leading LNG producer, which include the North Field expansion to increase the LNG production capacity to 110mn tonnes per year by 2024, and a major ship-building campaign to build up to 100 LNG carriers over the next decade.

The LNG industry is very dynamic and invigorated, and it connects all corners of the world through hundreds of trade routes, and LNG receiving and regasification terminals, he said, adding, “we, in Qatar, are doing our part to keep this momentum moving forward for the benefit of our partner countries and their peoples.”

Stressing that Qatar was collaborating with many countries around the world to ensure the security of their energy supplies and the sustainability of their economic growth, he said Doha is also working with customers, industry players, and stakeholders for a sustainable, affordable and secure energy supply for all.

“Most importantly, we are providing a sustainable energy solution to environmental and climate change concerns, and responding to widespread global moves towards cleaner and more cost effective fuels,” he said.

Al-Kaabi pointed out that while Japan was celebrating 50 years since the arrival of its first ever LNG cargo, Qatargas has successfully delivered the 3,000th LNG cargo to JERA’s Kawagoe Terminal.

The LNG Producer-Consumer Conference is a global annual dialogue, launched in 2012, and organised by Japan’s Ministry of Economy, Trade and Industry, and the Asia Pacific Energy Research Centre.

It provides ministers, heads of international organisations, corporate executives, and other stakeholders with a venue to share the latest trends in the global LNG market and discussing opportunities and challenges with a view to its development.

Millions of people in 170 countries took to the streets to protest. World leaders lined up at the UN to pledge action. A 16-year-old girl, close to tears, shamed them for robbing her of a future.
The pressure to act on climate change is mounting. Titans of global business and politics gathered in New York this week for a series of events, including an unprecedented UN summit and the Bloomberg Global Business Forum, to acknowledge that more must be done – but fell short of saying exactly what will be done.
“Time is running out in the court of public opinion, because time is running out to address climate change,” New Zealand Prime Minister Jacinda Ardern told heads of state and business chiefs at the Global Business Forum on Wednesday. “It’s right for them to hold our feet to the fire.”
The stakes have indeed never been higher. Temperatures have already risen 1 degree Celsius (2 degrees Fahrenheit) since the 1880s. The world must limit that warming to no more than 2 degrees above Industrial Revolution levels, the UN has warned, to avoid the most catastrophic of droughts, floods, mass migrations and conflicts. “You can just feel the groundswell of popular sentiment, that the urgency of this is elevated,” Goldman Sachs Group Inc chief executive David Solomon said during the forum.
When asked whether there’s enough information out there to determine his own bank’s exposure to climate change, Solomon said, “We’re working on it. The answer is we’re working on it.” It was a response that underscored both the heightened awareness among leaders that they will be held responsible for global warming and the work that still lays ahead of them.
The meetings were still “far too much a chance for people to beat their chests and say they’re making change,” said Brad Cornell, a business professor at the University of California at Los Angeles. “But who is making real change?”
The UN pointed to some change that came from its Monday summit: 77 countries committed to cutting greenhouse-gas emissions to net zero by 2050; 70 countries pledged to bolster climate action plans by 2020; more than 100 business leaders aligned themselves with the goals of the international Paris climate agreement; and 12 countries vowed to contribute to a fund to help developing countries adapt to climate change.
Nobody says that’s enough. UN Secretary-General Antonio Guterres, who organised the summit and called on world leaders to announce real plans at it, said as presentations concluded, “We need more concrete plans.”
The UN-backed Intergovernmental Panel on Climate Change released a report Wednesday with alarming findings on fast-accelerating and potentially irreversible deterioration of oceans and glaciers.
While some of the world’s most powerful leaders sounded off on climate in New York, a UN panel convened almost 400 miles (600 kilometres) away in Montreal to continue a years-long debate over curbing emissions from airplanes. The group may decide on what kind of system to use to regulate them – a laborious and highly political process that went largely unmentioned in Manhattan. And yet there were signs in New York that the tide is turning in favor of real action.
At the conclusion of Monday’s annual meeting of the Oil and Gas Climate Initiative, an industry-supported group that also met in New York, the majority of the member CEOs stuck around for a discussion on climate change. In all, nine were present at the talk, including the bosses of Exxon Mobil Corp and Chevron Corp who faced questions from students and activists as well as reporters.
“And they were listening,” according to Felipe Bayon, CEO of Colombia’s state-run oil giant Ecopetrol. “I’m very encouraged. As a citizen of the world, I think that a lot of things are possible.”
Credited for inspiring the millions of young people who’ve rallied around climate change in recent days is Greta Thunberg. The teenage activist sailed to New York on a zero-emissions boat, climbed the stage at the UN summit and told the crowd of more than 300 presidents, prime ministers, CEOs, bankers and delegates that they’ve let down her entire generation by not acting on climate change. “You have stolen my dreams and my childhood with your empty words,” she said on Monday. “How dare you!”
Anand Mahindra, chairman of India’s Mahindra & Mahindra Ltd, said Thunberg gives him hope, as do all of the young people calling for change. It took the youth of the 1960s protesting the Vietnam War to wake everyone up to the fact that the war needed to end, Mahindra said. He’s hopeful, he said, that they can do it again to win the fight against climate change.
The movement grew so big that even US President Donald Trump, who has called climate change a myth and vowed to pull America out of the Paris pact, made an unexpected appearance at the UN summit. He stayed for 15 minutes and didn’t speak. China President Xi Jinping didn’t attend the summit at all – leaving the leaders of the world’s two largest polluters visibly absent from the presenters’ list.
During the Global Business Forum on Wednesday, business leaders repeatedly pointed the finger at government to step up and dictate what should be done. “The more there’s a clear policy framework,” Solomon said, “the more you’ll get a reaction and response.”
Samir Assaf, CEO of global banking and markets at HSBC Holdings Plc, had one idea: “The private sector can provide debt, and national development banks can provide guarantees.” To which moderator Christine Lagarde, the incoming president of the European Central Bank, responded: “So, the public takes the risk and the private takes the profits.”
Green investments are proving to be less of a risk and more of a moneymaker. Solar and wind power costs have plunged so deeply that they’re now the cheapest and most profitable form of new electricity in two-thirds of the world. CEOs of corporations worldwide are saving billions by cutting their plastic waste, using less, cleaner and cheaper energy and recycling.
The world will face a serious test next year. Under the Paris agreement, countries are expected to submit new, and ideally more ambitious, climate action plans every five years. The next presentations are due in 2020.
“There’s an enormous gulf right now,’’ said Kelly Levin, a senior associate at the World Resources Institute in Washington, “between current momentum and where we need to be.”