China says U.S. Trying to Influence Philippines’ Case

By Reuters 2015-07-24 19:04:41

China’s Foreign Ministry said on Friday the United States was trying to influence a South China Sea arbitration case filed by the Philippines after a senior U.S. official said China would be obligated to abide by the tribunal’s decision.

China has for years insisted that disputes with rival claimants to the South China Sea be handled bilaterally.

But this month, its claims came under international legal scrutiny for the first time when the Permanent Court of Arbitration in The Hague began hearing a suit the Philippines filed in 2013.

China has refused to take part in the case.

U.S. Assistant Secretary of State Daniel Russel told a conference in Washington this week that as both Beijing and Manila are signatories to the U.N. Convention on the Law of the Sea, legally they have to abide by the tribunal’s decision.

China issued a position paper in December arguing the dispute was not covered by the treaty because it was ultimately a matter of sovereignty, not exploitation rights, and the Foreign Ministry said it stood by that.

“Attempting to push forward the arbitration unilaterally initiated by the Philippines, the U.S. side just acts like an ‘arbiter outside the tribunal’, designating the direction for the arbitral tribunal established at the request of the Philippines,” it said.

“This is inconsistent with the position the U.S. side claims to uphold on issues concerning the South China Sea disputes,” the ministry added, calling on Washington to live up to its promises and not take sides.

China claims almost the entire South China Sea, believed to be rich in energy deposits, where about $5 trillion in ship-borne goods pass every year. Brunei, Malaysia, the Philippines, Vietnam and Taiwan also have conflicting claims.

China has become increasingly assertive in the South China Sea with rapid reclamation around reefs in the Spratly archipelago in particular sparking concern, both in the region and in the United States.

Iran Already Making Shipping and Oil Deals

By MarEx 2015-07-24 18:44:46

Iran has outlined plans to rebuild its main industries and trade relationships following its nuclear agreement with world powers.

According to the agreement, all economic and financial sanctions against Iran will be removed and all bans on Iran’s Central Bank, shipping, oil industry and many other companies will be lifted.

Container Shipping

An Iranian official has already indicated that the French shipping company CMA CGM is arranging to start calling at the southern Iranian port Shahid Rajaei, reports Iran Daily.

Ebrahim Idani, director general of Hormozgan Ports and Maritime Department, indicated that CMA CGM’s Andromeda will be the first container ship to berth at the port as a result of the lift in sanctions. It is anticipated to arrive in early August with 11,500 teu of containers.

Idani stated that the Andromeda has already started its journey from the Far East and is bound for the Persian Gulf. He also said that recent developments at Shahid Rajaei port mean it is suitable for large container vessels. The port is equipped with 18 gantry cranes and 41 docks, making it the biggest and most modern container port in Iran.

Oil and Gas

Iran is also targeting oil and gas projects worth $185 billion by 2020.

Iran’s Minister of Industry, Mines and Trade Mohammad Reza Nematzadeh said the Islamic Republic would focus on its oil and gas, metals and car industries with an eye to exporting to Europe after sanctions have been lifted, rather than simply importing Western technology.

“We are looking for a two-way trade as well as cooperation in development, design and engineering,” Nematzadeh told a conference in Vienna.

“We are no longer interested in a unidirectional importation of goods and machinery from Europe,” he said.

Global Interest

Many European companies have already shown interest in reestablishing business in Iran, with Germany sending its economy minister Sigmar Gabriel on the first top level government visit to Tehran in 13 years together with a delegation of leading business figures.

Iran’s deputy oil minister for commerce and international affairs, Hossein Zamaninia, said Tehran had identified nearly 50 oil and gas projects worth $185 billion that it hoped to sign by 2020. OPEC-member Iran has the world’s largest gas reserves and is fourth on the global list of top oil reserves holders.

In preparation for negotiations with possible foreign partners, Zamaninia said Iran had defined a new model contract which it calls its integrated petroleum contract (IPC).

“This model contract addresses some of the deficiencies of the old buyback contract and it further aligns the short- and long-term interests of parties involved,” he said.

He said the deals would last 20-25 years – much longer than the previously less popular buybacks, which effectively were fee paying deals with global oil majors such as France’s Total for services they performed on Iranian oil fields.

He said Iran would introduce the projects it has identified and the new contract model within 2-3 months.

Projects Approved

Deputy Economy Minister Mohammad Khazaei said Iran had already completed negotiations with some European companies wanting to invest in the country.

“We are recently witnessing the return of European investors to the country. Some of these negotiations have concluded, and we have approved and granted them the foreign investment licences and protections,” Khazaei told the conference.

“Even in the past couple of weeks we have approved more than $2 billion of projects in Iran by European companies,” he said, without naming the firms or providing further details.

Most European oil majors and oil service companies have so far expressed caution about the prospects of a windfall of deals in Iran, saying their compliance departments will want to first see sanctions being fully removed before any meaningful work can start on projects.

Looking for Joint Ventures

Beyond oil, Nematzadeh said Iran was looking to move away from state ownership in many sectors, creating joint ventures for auto parts manufacturers with the aim to produce 3 million vehicles by 2025, of which a third would be exported.

Central bank deputy governor Akbar Komijani said Iran’s financial sector was offering opportunities for cooperation between domestic banks and foreign investors.

Nematzadeh said Iran aimed to join the World Trade Organization once political obstacles were removed and would be interested in trade deals with Europe and central Asian countries.

Shell‐BG Merger Gets Brazilian Clearance

By MarEx 2015-07-24 17:50:02

Royal Dutch Shell has announced that its recommended combination with BG Group has received unconditional merger clearance from the Brazilian competition authority (CADE), satisfying the first of the pre‐conditions to the combination. Other pre‐conditions include merger clearances in Australia, China and Europe.

Commenting on CADE clearance Shell CEO, Ben van Beurden, said: “The addition of BG’s competitive deep water Brazil position to Shell’s global portfolio is one of the main strategic drivers for the combination. Securing CADE approval at this early stage is a significant deal milestone and reflects not only Shell’s thorough preparation but also the professionalism and efficiency of the Brazilian authorities.”

Following comments made in June, when the recommended combination cleared its first anti-trust hurdle in the United States, van Beurden also re‐confirmed the filing process is well underway in the remaining pre‐conditional and other jurisdictions, and the recommended combination remains on track to complete in early 2016. The pre‐conditions and conditions to the combination are set out in the April 8 deal announcement.

Shell’s deal with BG Group to buy the UK-based company is worth £47 billion ($69.6 billion) in cash and shares.

Since taking over Shell in 2014, van Beurden had been trying to cut costs, and the deal is expected to enable the two oil and gas companies to reduce costs at a time when the industry is suffering from prolonged low oil prices.

Shell is one of the world’s largest energy producers, with a market value of about $192 billion.

Buying BG will add to Shell’s proven oil and gas reserves by 25 percent and to production by 20 percent, including BG’s offshore oil fields in Brazil’s Santos Basin, natural gas reserves in East Africa and the Queensland Curtis LNG project in Australia.

By applying its capabilities to BG’s assets, Shell believes that, by around 2020, the combined group will have two strategic growth businesses – deep water and integrated gas – that could potentially each generate $15-$20 billion in cash flow per annum. It will also have upstream and downstream capacity to generate a further combined $15-$20 billion in cash flow per annum.

With BG, Shell would be the leading foreign oil company in Brazil.

Shell is also expected to surpass Exxon as the world’s largest publicly traded oil and gas producer by 2018, with output of 4.2 million barrels of oil equivalent per day.

Global LNG production was 246 million tons last year. The new Shell-BG group would have 18 percent of world output.

Shell BG Merger Gets Brazilian Clearance

By MarEx 2015-07-24 17:50:02

Royal Dutch Shell has announced that its recommended combination with BG Group has received unconditional merger clearance from the Brazilian competition authority (CADE), satisfying the first of the pre‐conditions to the combination. Other pre‐conditions include merger clearances in Australia, China and Europe.

Commenting on CADE clearance Shell CEO, Ben van Beurden, said: “The addition of BG’s competitive deep water Brazil position to Shell’s global portfolio is one of the main strategic drivers for the combination. Securing CADE approval at this early stage is a significant deal milestone and reflects not only Shell’s thorough preparation but also the professionalism and efficiency of the Brazilian authorities.”

Following comments made in June, when the recommended combination cleared its first anti-trust hurdle in the United States, van Beurden also re‐confirmed the filing process is well underway in the remaining pre‐conditional and other jurisdictions, and the recommended combination remains on track to complete in early 2016. The pre‐conditions and conditions to the combination are set out in the April 8 deal announcement.

Shell’s deal with BG Group to buy the UK-based company is worth £47 billion ($69.6 billion) in cash and shares.

Since taking over Shell in 2014, van Beurden had been trying to cut costs, and the deal is expected to enable the two oil and gas companies to reduce costs at a time when the industry is suffering from prolonged low oil prices.

Shell is one of the world’s largest energy producers, with a market value of about $192 billion.

Buying BG will add to Shell’s proven oil and gas reserves by 25 percent and to production by 20 percent, including BG’s offshore oil fields in Brazil’s Santos Basin, natural gas reserves in East Africa and the Queensland Curtis LNG project in Australia.

By applying its capabilities to BG’s assets, Shell believes that, by around 2020, the combined group will have two strategic growth businesses – deep water and integrated gas – that could potentially each generate $15-$20 billion in cash flow per annum. It will also have upstream and downstream capacity to generate a further combined $15-$20 billion in cash flow per annum.

With BG, Shell would be the leading foreign oil company in Brazil.

Shell is also expected to surpass Exxon as the world’s largest publicly traded oil and gas producer by 2018, with output of 4.2 million barrels of oil equivalent per day.

Global LNG production was 246 million tons last year. The new Shell-BG group would have 18 percent of world output.

U.S. Representative Seeks To Honor Merchant Marines

By MarEx 2015-07-24 15:55:41

U.S. Representative Susan W. Brooks (R- Ind.) wants to grant World War II Merchant Mariners with the highest civilian honor. Brooks has introduced the Merchant Marine of World War II Congressional Gold Medal Act (HR 2992) to Congress. If passed, the bill would collectively award a Congressional Gold Medal to merchant mariners who served during World War II.

About 215,000 merchant mariners served during the war, entering deadly environments as they delivered supplies to U.S. armed forces in Europe and the Pacific. Merchant Marines suffered higher casualty rates than any other branch of the military, losing between 6,500 to 9,000 seamen.

“The brave actions of the Merchant Marine during World War II proved instrumental in securing victory for the Allied Powers,” Brooks said. “These loyal and courageous men put their lives on the line for the cause of freedom and selflessly answered their nation’s call to duty.”

Brooks is also a co-sponsor of Representative Janice Hahn’s (D- Calif.) “Honoring Our WWII Merchant Mariners Act of 2015 (HR 563). The bill would grant a one-time $25,000 benefit to the roughly 5,000 living WWII mariners.

Merchant Mariners have never received full veteran benefits and were excluded from Veterans and Memorial Day celebrations until 1970.