Bloomberg/London BP boss Bob Dudley launched a wide-ranging attack on the divestment movement that’s calling on institutional investors to sell down their oil stocks, rejecting warnings from the likes of the Bank of England that hydrocarbons present a risk to the financial system. There are “people who want to drive a wedge between the energy industry and investors – between oil and money,” Dudley said on Wednesday at the Oil & Money conference in London. “They push for potentially confusing disclosures, raise the spectre of a systemic risk to the financial system from stranded assets, and campaign for divestment.” The criticism puts the British oil major at odds with the country’s central bank. Governor Mark Carney has suggested that the fight against climate change could leave some oil reserves stranded – effectively worthless – and that the exposure of UK investors is “potentially huge.” Now asset managers are increasingly prodding the world’s biggest polluters to come up with stronger green strategies. Proponents of the divestment movement “are driven by good intentions, but my concern is that their suggested recommendations could lead to bad outcomes,” Dudley said. “We could take a different, more innovative and collaborative path. One that recognizes many fuels must play a part in meeting the dual challenge – albeit made much cleaner.” Since activist group 350.org started the climate divestment movement in 2012, multiple institutional investors have signed up to the six Principles for Responsible Investment, a UN-backed framework for incorporating environmental, social and governance issues into investment practices. Carney himself is leading a group called the Task Force on Climate-Related Financial Disclosures, prodding companies to make transparent the risks they face from environmental rules. Dudley cautioned that such disclosures can open companies up to potential litigation. “I know what will happen: we’ll get sued by a certain industry because we’re off the path after a year,” he said. “So we need some sort of safe-harbour statements” from the regulator before that can work.

BP boss Bob Dudley launched a wide-ranging attack on the divestment movement that’s calling on institutional investors to sell down their oil stocks, rejecting warnings from the likes of the Bank of England that hydrocarbons present a risk to the financial system.
There are “people who want to drive a wedge between the energy industry and investors – between oil and money,” Dudley said on Wednesday at the Oil & Money conference in London. “They push for potentially confusing disclosures, raise the spectre of a systemic risk to the financial system from stranded assets, and campaign for divestment.”
The criticism puts the British oil major at odds with the country’s central bank. Governor Mark Carney has suggested that the fight against climate change could leave some oil reserves stranded – effectively worthless – and that the exposure of UK investors is “potentially huge.” Now asset managers are increasingly prodding the world’s biggest polluters to come up with stronger green strategies.
Proponents of the divestment movement “are driven by good intentions, but my concern is that their suggested recommendations could lead to bad outcomes,” Dudley said. “We could take a different, more innovative and collaborative path. One that recognizes many fuels must play a part in meeting the dual challenge – albeit made much cleaner.”
Since activist group 350.org started the climate divestment movement in 2012, multiple institutional investors have signed up to the six Principles for Responsible Investment, a UN-backed framework for incorporating environmental, social and governance issues into investment practices.
Carney himself is leading a group called the Task Force on Climate-Related Financial Disclosures, prodding companies to make transparent the risks they face from environmental rules. Dudley cautioned that such disclosures can open companies up to potential litigation. “I know what will happen: we’ll get sued by a certain industry because we’re off the path after a year,” he said. “So we need some sort of safe-harbour statements” from the regulator before that can work.

European Central Bank chiefs were divided at their September meeting over the danger to the eurozone economy from protectionism and other global threats, with some calling for a gloomier assessment.
“It was remarked that a case could also be made for characterising the risks to activity as now being tilted to the downside,” according to a regular account of the private gathering published by the ECB yesterday.
Following the September 13 meeting, ECB president Mario Draghi told journalists that risks to the 19-nation single currency area remained “broadly balanced”. The account reveals colleagues on the institution’s governing council had earlier highlighted “risks relating to rising protectionism, vulnerabilities in emerging markets and financial market volatility having gained more prominence recently”. In the end, policymakers decided to stick to the “broadly balanced” language.
“The underlying strength of the economy was judged to be mitigating downside risks,” they agreed.
At its meeting in Bali this week, the International Monetary Fund (IMF) also expressed caution for the eurozone over growing risks, downgrading its 2018 growth forecast from 2.2 to 2.0%. A slowdown in economic activity could trip up the ECB as it winds down its “quantitative easing” (QE) mass bond-buying scheme, designed to boost economic growth and inflation by pumping cash through the financial system and into the real economy.
It is on the home stretch of its exit, slashing monthly purchases of government and corporate debt by half to €15bn ($17.4bn) in October before a planned stop in December.
But with inflation projected to hover around 1.7% between this year and 2020, the central bank remains short of its target of price growth close to, but below 2.0%. Even after the end of QE, it plans to keep interest rates at historic lows “through the summer of 2019” to help keep credit flowing to firms and households.
The ECB kept policy unchanged as expected last month, staying on track to wrap up a €2.6tn ($3tn) bond purchases scheme this year and raise interest rates next autumn, continuing its slow but steady pace of policy tightening.
Indeed, even as trade tensions weighed on growth and a stock market selloff amplified growth fears, some policymakers argued that was not enough for the bank to backtrack on policy normalisation.
“A gradual pace of monetary policy normalisation is justified,” Finnish central bank chief Olli Rehn said in Indonesia on yesterday. “The current strength of the euro area economy supports our confidence that inflation will converge towards… the ECB’s price stability target.” But some policymakers appear to be increasingly cautions, according to the minutes.
“A remark was made that some of the factors behind the (downward growth) revisions might not be entirely of a transitory nature,” the minutes showed. “It was also argued that there could be larger spillovers from weaker external demand to domestic demand.”
Still, while some policymakers argued that the case could be made for downgrading the risk assessment, there was agreement that the underlying strength of the economy would mitigate the downside risks to activity.
“High-frequency indicators had stabilised and remained at elevated levels, underlining the overall robustness of economic activity,” chief economist Peter Praet told policymakers at the meeting, the minutes showed. With years of unprecedented stimulus finally lifting inflation, the ECB has been dialling back support, but only by the smallest of increments, fearing that bigger moves risked unravelling its work.
While the ECB has not explicitly pledged any rate hikes, policymakers, including Praet, have argued that they were comfortable with market expectation for a small increase in the fourth quarter of 2019, followed by only small and infrequent moves.
“To be any more precise than that, to lock in a date, to tie our hands, would be rather risky,” Ardo Hansson, Estonia’s central bank chief said at the annual meeting of the International Monetary Fund yesterday.
“When we get closer, we can have another discussion if we need to adjust the language again, but this is not a debate we are going to have just yet,” Hansson said.
Policymakers also concluded last month that domestic cost pressures continued to build and broaden, indicating that inflation would rise, moving back towards the bank’s target of almost 2% after undershooting it for over five years.

Opec is under intense pressure right now from consumers to ease prices by pumping more crude, but for 2019 it sees a more doubtful picture.
The group cut its estimate for global demand for its crude next year due to weakening economic growth and higher output from rivals, notably US shale drillers. The world will need almost 900,000 fewer barrels from the group each day in 2019 – equivalent to Libya’s average output this year.
The weaker outlook comes as pressure is increasing on the Organization of Petroleum Exporting Countries and its allies to pump more to offset the impact of looming US sanctions on Iran and Venezuela’s collapsing oil industry. In addition to tweets from President Donald Trump demanding action, Opec secretary-general Mohammad Barkindo said yesterday that India has written to the group expressing its discomfort with the current market. “There is no cause for alarm,” Barkindo said at the Oil and Money conference in London. Opec and its allies “are ready and willing to continue to make sure that the market remains well supplied.”
The group’s daily production rose by 132,000 barrels in September to 32.76mn. While Iran’s output fell by 150,000 bpd and Venezuela lost 42,000 bpd, Saudi Arabia and Libya more than offset the decline.
Still, Opec’s monthly oil market report provided some reasons to question the sustainability of the rally in crude futures to four-year highs last week.
The group reduced its estimates for the expansion in global consumption in 2018 and 2019, citing slowing economic activity in emerging markets. Demand growth of 1.54mn bpd this year will slow to 1.36mn next year. At the same time, it added 200,000 bpd to its estimate for non-Opec supply this year as the US, Canada, Kazakhstan and Brazil grow faster than expected.
Stockpiles of crude and refined products in industrialised countries rose by 14.2mn barrels in August, a second consecutive monthly increase. The outlook for supply and demand in 2019 indicates that inventories could continue to rise, Barkindo said.
Oil prices could fall next year as the “fear factor” that’s currently gripping the market subsides, Ian Taylor, chairman of the world’s largest independent oil trader Vitol Group, said in an interview with Bloomberg television on Wednesday.

The head of the corporate set to drill Britain’s first fracing effectively in a decade shrugs off the danger that protesters and authorities’s foremost opposition will shut down his undertaking earlier than it will possibly begin.

Francis Egan, the CEO of Cuadrilla Resources, is poised to start hydraulic fracturing inside days at a effectively in northwest England. No matter what’s determined by courts or politicians weighing the problems, Egan stated the UK’s rising wants for pure fuel will stay a distinguished issue within the debate.

While the ruling Conservative Party has backed fracing, the Labour opposition stated it can ban it if it takes energy. And Labour’s ascent is more and more attainable given the delicate majority the federal government is sustaining forward of knife-edge votes deliberate on Britain’s plan to depart the European Union.

“Brexit or no Brexit, having cheap homegrown manufacturing of your power is an effective factor,” Egan stated. “Governments come, and governments go. But power demand isn’t going anyplace and fuel provide is continuous to lower. Fundamentally will probably be a political selection whether or not you wish to supply your fuel from Lancashire or Russia.”

Earthquakes

The UK shale business was stopped in its tracks in 2011 after fracing by Cuadrilla prompted minor earthquakes at its northwest England web site. The drilling is a magnet for indignant protests amid claims that it’ll irreparably hurt the surroundings and maintain the nation wedded to polluting fossil fuels. Proponents say that Britain’s untapped shale fuel reserves might make the nation’s home power provide safe for years to return.

“What’s typically both forgotten or intentionally sidelined is that we are going to be utilizing fuel,” Egan stated. “There is not any situation that any credible power forecaster that claims we received’t be utilizing fuel for a lot of a long time to return.”

Cuadrilla has permission to drill and frac 4 wells at its Lancashire web site. It will start fracing the primary of two horizontal shale fuel exploration wells by Friday on the earliest. The firm will then take three months to extract the primary move of fuel earlier than testing its viability. It’s unlikely the location can be commercially productive till 2021, Egan stated.

Fracing entails pumping fluid and sand-like particles into wells below excessive stress that breaks aside underground rock formations liberating petroleum deposits trapped in troublesome to succeed in reservoirs. There have been aspirations for the UK to emulate the U.S. shale increase, however the business stays small and unproductive.

It’s one of many few applied sciences that would sluggish and even reverse the sharp declines in oil and fuel manufacturing from the North Sea as typical deposits are pumped dry. Britain prospered within the 1980s and 1990s with wealth tapped by the oil business, however revenue has shrunk since manufacturing peaked.

Natural fuel can also be in demand. Britain has been working to restrict fossil gas emissions to rein in local weather change, re-positioning its power sources away from coal crops and towards cleaner sources akin to fuel, which at the moment makes up about 42% of the nation’s power combine.

“It is a fossil gas, nevertheless it has the bottom emissions of fossil fuels and our view is it might be higher to develop this right here the place you’ll be able to regulate and management it than simply shut your eyes and fake nothing is going on as you ship it throughout Europe from Russia,” Egan stated.

Protesters are nonetheless making themselves heard, completely stationed outdoors the Lancashire web site the place three males have been arrested and later jailed for so long as 16 months for public nuisance offenses.

Lawmakers aren’t backing off both – Labour power spokeswoman Rebecca Long-Bailey has pledged to ban fracing ought to her celebration win an election. There’s disquiet in regards to the follow within the Conservative ranks over plans to streamline the appliance course of.

In a final gasp try to dam Cuadrilla from fracing, a protester filed for an injunction on the UK High Court. Cuadrilla can’t do a factor till a choose decides on Thursday whether or not the authorized problem has any…

President Donald Trump is redirecting global oil flows.

West African and Latin American producers are sending ever-growing volumes of crude to China. America’s exports to the Asian country have slumped in favor of its neighbors. There’s an urgent global need to find replacement barrels for Iran’s, whose exports might just collapse next month.

The thing that connects the shifting flows is Trump’s foreign policy. China’s slumping purchases of American crude — and its extra buying from elsewhere — have coincided with a trade war between the U.S. and the Asian country. Likewise, reimposed sanctions on Iran, which start Nov. 4, have increased the need for the type of heavy, sour crude that the Persian Gulf state sells.

“If you combine the impact of U.S. sanctions on Iran and the U.S. trade war with China, it is Trump’s foreign policy which is reshaping oil flows,” said Olivier Jakob, managing director of consultancy Petromatrix. “The U.S. is becoming a great energy power and they will use that, we are starting to see the implementation of that in different parts of the energy scene, part of that is being seen today in the oil flows.”

Oil markets are also grappling with record U.S. output, fueled by shale production, and America’s removal in late 2015 of longstanding crude-export limits. Those shipments — just a few hundred thousand barrels a day a few years ago — now consistently top an average of 2 million barrels a day each month. American crude increasingly flows to markets in Asia, Europe and Latin America, data from the U.S. Energy Information Administration show.

But there have been recent changes in precisely where those barrels are going. China, the world’s largest energy consumer, in August didn’t import any U.S. crude for the first time since September 2016, according to the most recent data from the U.S. Census Bureau. That compares with almost 12 million barrels in July, when China was the second-largest recipient.

Shipments to South Korea soared to a record 267,000 barrels a day in August — a 313 percent year-on-year increase, according to Bloomberg calculations from Census data. Volumes to Japan and India rose by 198 percent and 165 percent, respectively. Exports to the U.K., Italy and the Netherlands have also surged this year.

“The pattern of trade does look as though it’s going to ebb away from a focus on China to other Asian countries, and Europe,” said Caroline Bain, chief commodities economist at Capital Economics.

China is also increasingly turning to other regions. Colombian exports to the Asian nation rose fivefold in September, while Brazilian shipments hit their highest level this year. Chinese refiners bought 1.71 million barrels of crude a day from West Africa for October loading, the most since at least August 2011.

It’s not yet clear to what extent, if any, China will curb shipments of Iranian crude due to U.S. sanctions. However, buyers in India, Japan and South Korea are reducing purchases from the Persian Gulf state. Saudi Crown Prince Mohammed Bin Salman said that the kingdom and other OPEC producers are making up for lost supply from Iran.

The demand for replacement crudes is apparent. Exports from Oman last month rose to their highest levels this year on healthy demand from China, Bloomberg tanker-tracking showed. Kuwait is directing more flows to Asia, while its shipments to the U.S. by late September all but dried up — the first time that’s happened since the Gulf War of 1990-91.

The curbs on Iran are having an effect on oil prices, with global benchmark Brent trading now trading near its highest level in four years. Oman was the talk of one of the oil market’s biggest gatherings last month, as its crude surged past $90 a barrel. Supertankers, which often benefit when trade flows are dislocated, are earning the most since early 2017.

Flows from Iran could drop by 2 million barrels a day, to below 1 million barrels day in November and possibly December, Energy Aspects Ltd. said in a report dated Oct. 1.

Whether it’s the need he’s created for replacement supplies from Iran, or other actions by the U.S. president, Trump’s policies are now having a direct impact on where oil is flowing, said Eugene Lindell, an analyst at JBC Energy in Vienna.

“What you can say beyond doubt is that it’s creating lots of exotic trade flows that hadn’t been in the market before,” he said. “It’s been a major influence that has forced a change in trade flows.”

— Bloomberg contributors: Sheela Tobben, Lucia Kassai, Debjit Chakraborty, Dhwani Pandya, Julian Lee, Sherry Su, Christopher Sell and Helen Robertson.

Qatar Petroleum has announced the signing of a sale and purchase agreement to directly supply China with 600,000 metric tons of Liquefied Petroleum Gas (LPG) per year for a period of five years.

The long-term agreement was signed by Qatar Petroleum for Sale of Petroleum Products Company Ltd. (“QPSPP”) and Oriental Energy (Singapore), with the contract starting in January 2019.

Mr. Saad Sherida Al-Kaabi, President & CEO of Qatar Petroleum, welcomed the signing, and said “This agreement reflects our marketing strategy for promoting direct engagement with end-users, especially in China. I would like to thank Oriental Energy for concluding this importantagreement. We hope this deal will further enhance our energy relationship with China, as we place greater importance to meeting the needs of the world’s largest growing LPG market.”
Mr. Yan Jia Sheng, Vice-President of Oriental Energy Group and Managing Director of Oriental Energy (Singapore) International Trading Pte Ltd, signaled similar sentiments stating, “Through this first step, we hope to build a strong and sustainable relationship with Qatar Petroleum and to continue exploring other areas in which Qatar Petroleum and Oriental Energy can further collaborate on.”

Oriental Energy (Singapore) is a subsidiary of Oriental Energy, responsible for the procurement, trading and logistics of Oriental Energy.

Oriental Energy, China’s largest LPG player, has the largest LPG distribution network and LPG storage facilities in China. In addition, it has five major LPG importing terminals along with several petrochemical facilities.

The LPG industry continues to enjoy sustainable growth in China where LPG is used for domestic use and the growing petrochemical sector.

Major changes on the supply and demand sides of the global liquefied natural gas (LNG) market require Qatar to adjust its strategy to maintain its position as the world’s leading LNG supplier, according to HE Dr Ibrahim B Ibrahim, Economic Adviser at the Amiri Diwan.
Dr Ibrahim was speaking at Carnegie Mellon University in Qatar (CMU-Q) as a part of the ‘Dean’s Lecture Series’, a forum for leaders in business and government to discuss issues that affect the future of Qatar and the wider world.
“As we develop Qatar’s long-term policies for LNG, it is crucial that young people understand the issues that we face. LNG policy has an enormous impact on Qatar and I am delighted to share the challenges and opportunities with young professionals who will one day make these policies themselves,” said Dr Ibrahim.
“The Dean’s Lecture Series is an opportunity to speak directly to the students about issues that are crucial to Qatar,” he said yesterday.
Dr Ibrahim noted that the LNG sector faced challenges on the supply side, including the development of the shale gas industry sector in the US, the expansion of LNG supply from Australia, and the expected ascendance of the LNG positions of Russia and African countries.
On the demand side, there is expected expansion of gas consumption in large economies such as China, India and Brazil.
Dr Ibrahim suggested that Qatar should adhere to the pillars of its LNG strategy to weather these challenges. These encompass a fully integrated production and delivery model, cost optimisation in the LNG delivery model, and the leveraging of the Qatargas brand, which is associated with “reliability, flexibility, loyalty, and a strict compliance” to contractual obligations.
While the development of shale gas would have a negative impact on LNG prices in the short-term, Dr Ibrahim argued that the impact could be positive in the long-term, particularly for large gas suppliers such as Qatar.
In other words, the development of shale gas would contribute to lengthening the duration of gas as a viable source of energy.
Qatar should also intensify the development of its gas resources, Dr Ibrahim said, noting that the country has recently lifted the moratorium on expanding production from the North Field, and announced its intention to increase its LNG production capacity by 32mn tonnes. This announcement is expected to affect future projects from marginal suppliers, and the resulting capacity would allow Qatar to maintain its position as a leading world LNG exporter for years to come.
Michael Trick, dean, CMU-Q, noted the educational value of Dr Ibrahim’s remarks: “Our students study science, business and technology, fields that all intersect with the oil and gas sector. His Excellency’s perspective will illustrate to them how the concepts they are studying are managed from a policy standpoint. We very much appreciate HE Dr Ibrahim’s dedication to education and cultivating human capital.”
Carnegie Mellon Qatar offers undergraduate programs in biological sciences, business administration, computational biology, computer science, and information systems.
Graduates from CMU-Q are making a deep impact in Qatar and around the world, including within Qatar’s LNG sector.

US President Donald Trump is using economic warfare to pursue his foreign-policy objectives. In August, his administration announced that it would double tariffs on steel and aluminium imports from Turkey, in order to pressure the Turkish authorities to release an American pastor detained for two years on espionage charges. At the beginning of next month, the United States will also ratchet up unilateral sanctions against Iran.
The Trump administration knows that a key source of US economic leverage is the dollar’s role as the world’s dominant reserve currency. Countering America’s disproportionate power to destabilise the global economy thus requires reducing the share of international trade conducted in dollars. Can the euro serve as a credible alternative?
The euro is the world’s second-leading currency, but it still lags far behind the US dollar. Two-thirds of all loans issued by local banks in foreign currencies are denominated in dollars, compared to just 20% in euros. Similar proportions apply to global foreign-exchange reserves.
European Commission President Jean-Claude Juncker is eager to change this. Last month, he declared it “absurd” that “Europe pays for 80% of its energy import bill – worth €300bn a year – in US dollars,” even though only about 2% of the EU’s energy imports come from the US. He then called for the euro to become “the instrument of a new, more sovereign Europe,” and promised to “present initiatives to strengthen the international role of the euro.”
Juncker is not alone among European leaders in recognising how powerful a tool the single currency can be when it comes to projecting power. German Foreign Minister Heiko Maas has proposed that the European Union establish its own international payments system.
But these proposals, while ambitious, may overlook what is really needed to elevate the euro’s status. If the euro’s role in international trade increased, so would foreign companies’ holdings of euro-denominated assets and the total volume of euro-denominated loans. More global trade in euros could lead foreign banking systems to become heavily exposed to the currency.
That means that, in the event of a crisis, the European Central Bank would have to take action, much as the US Federal Reserve has done in the past. During the 2008 global financial crisis, the Fed served as de facto global lender of last resort, agreeing to unsecured swap lines not only with reserve-currency central banks like the ECB and the Swiss National Bank, but also with emerging economies like Mexico and Brazil. The goal was to stabilise the global economy, but the liquidity also helped to prevent domestic disturbances from foreign sales of dollar assets and to stop foreign banks from scrambling to buy dollars.
The ECB adopted a much more restrictive approach. In late 2008, it began to provide euros to the central banks of Hungary, Latvia, and Poland, but required them to put up euro-denominated securities as collateral. The ECB wanted to guard its balance sheet against unsecured exposure to Hungarian forint or Polish z?oty. But these countries held too few eligible securities to obtain enough euros under the ECB’s initial terms. It took another year for the ECB, under pressure from Austria and other countries, to establish proper swap lines against foreign-currency collateral with the Hungarian and Polish central banks.
Even now, the ECB will provide euro liquidity only to countries considered systemically relevant for the eurozone. This risk-averse approach contrasts with that of the Fed and, more tellingly, with that of the People’s Bank of China, which in recent years has established an extensive network of swap lines to promote the renminbi’s use in trade – and thus its standing as an international currency.
If Juncker’s vision is to be realised, the ECB will have to abandon this parochial mindset and adopt a Fed-style role as international lender of last resort. Yet it remains unclear whether the ECB actually would be willing to leave part of its balance sheet exposed to the fate of non-eurozone countries.
The ECB has good reason to be cautious: it lacks a political counterpart akin to the Fed’s US Treasury Secretary. With no eurozone finance minister with whom to coordinate in times of crisis, a decision by the ECB to help third countries – even EU countries – could be met with strong resistance. The ECB’s reluctance to establish a swap line with Hungary may be a case in point: Hungary was already distancing itself from the EU.
Eventually, the ECB did resolve to do “whatever it takes” to save the euro. But if European leaders want to advance Juncker’s vision of strengthening EU sovereignty by boosting the euro’s international role, they cannot rely on the ECB to repeat that approach, without proper institutional support.
Instead, eurozone leaders should complete the reforms of the currency union’s architecture and provide a political counterpart to the ECB that would support centralised monetary policy. This is the best initial response to Trump’s economic attacks. Anything else would be putting the cart before the horse – yet again. – Project Syndicate

l Jochen Andritzky, a former secretary-general of the German Council of Economic Experts, is a visiting fellow at Bruegel, a Brussels-based think tank.