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Contact: Dwight Ingalsbe email: ingalsbe@epfr.com
By
Scott B. MacDonald
China – Energy
Thirst Leads to Iranian Deal: China last thursday
said it has signed a multibillion dollar deal with Iran
to import liquefied natural gas from Iran. The plan calls
for Beijing-based Zhuhai Zhenrong Corp. to buy 2.5 million
metric tons of LNG a year from Iran starting in 2008.
The volume will then be increased to 5 million tons annually,
with the agreement to last for 25 years, Zhenrong said.
The agreement follows the recent renewal of a term contract,
which allows Tianbao (Hong Kong) Energy Co., a Zhenrong
unit, to buy 80,000 tons/month of straight-run fuel oil
from National Iranian Oil Co. from next month to March
2005. Zhenrong also plans to expand its business into
Iran's upstream sector, and is expected soon to finalize
terms for the development of three oil fields in Iran,
the company said. Zhenrong, a spinoff of China's weapon
manufacturer, China North Industries Corp, or Norinco,
was established in 1994, with the task of importing crude
from Iran. It is now China's sole Iranian crude buyer.
Norinco is among Chinese companies that are actively seeking more opportunities
to buy oil and gas reserves outside China. Chinese state-owned energy companies
are investing abroad heavily, in response to the government's call to build
up overseas assets of hydrocarbons to ensure security of supplies, bridge a
widening energy deficit and fuel the country's runaway economy. Iran is currently
under U.S. trade sanctions and the Washington administration actively discourages
foreign companies from entering Iran's energy business. The fact that Zhenrong
was previously part of Norinco could provoke some speculation about China-Iran
arms sales.
The U.S. State Department announced in May 2003 the imposition of sanctions
against Norinco for supplying specialty steel used in an Iranian missile program.
The sanctions included a ban on exports of defense articles and services to
Norinco, a ban on U.S. government procurement of Norinco products, and a two-year
ban on U.S. imports of Norinco products. Norinco, and the Chinese government,
rejected the allegation, saying that it was completely unjustified and groundless.
China's largest oil refinery, Sinopec Corp. (SNP), is also active in Iran's
oil and gas business, despite U.S. opposition.
Zhenrong imported 12.4 million tons of crude oil from Iran last year, accounting
for 14% of China's total crude imports. Most of Zhenrong's Iranian crude imports
are processed in Sinopec refineries.
Hong
Kong: Hong Kong's unemployment rate fell slightly
to 7.2 percent in the three months ending February on
improved job prospects in the restaurant and finance
sectors, officials said Thursday. Economists had expected
the jobless rate to be 7.1 percent for the period until
Feb. 29, compared to 7.3 percent in the November-January
period. Unemployment declined across a wide variety of
business sectors, including financing, insurance, restaurants,
communications and recreational services, the government
said. It said total employment grew by 9,500, to 3.25
million during the period. Hong Kong is continuing its
recovery from the severe acute respiratory syndrome crisis,
which devastated the economy by keeping tourists away,
pushing joblessness to a record 8.7 percent in May-July
last year.
Indonesia – the
Cost of Illegal Logging: There are always trade offs between
activities in the legal and black market economies. In Indonesia
a heavy price is being paid for illegal logging, as legally established
firms are suffering. Around 70 per cent or 322 of 460 companies
operating in the upstream sector of the timber processing industry
in the country have collapsed over the past few years mainly as
a result of rampant illegal logging. There are many factors but
illegal logging was the main culprit causing the bankruptcy of
the companies said Agung Nugraha, deputy secretary of the Indonesian
association of forestry companies (APKI). Rampant illegal logging
a caused big shortage in the supply of log raw material for the
country's plywood, sawn timber and pulp factories, Nugraha said.
He said the industries need around 20 million cubic meters of logs
a year and supply from natural forests is much less than 10 million
m3. He said illegal logging has caused damage to 43 million hectares
of natural forests in the country reducing the country's tropical
forests from 153 million hectares to 98 million hectares over the
past year.
Malaysia – The
March 29th Elections: On March 29th, Malaysia
voters went to the polls to elect a new government.
As was the case over the last several decades, the
ruling multi-ethnic coalition, the Barison Nasional
or BN, won handily, reasserting the dominant role of
the United Malays National Organization (UMNO) within
the majority Malay community. The BN captured 198 of
the 210 (90%) seats in the federal parliament or 64.4%
of all votes cast (up from 56.6% in 1999 and just below
the 65% it scored in 1995). This was decidedly good
news for the standing Prime Minister Abdullah Badawi,
who had earlier assumed the leadership role from longstanding
Prime Minister Mohammad Mahathir. Despite considerable
speculation as the strength of the Islamic issue in
swaying voters to opt to non-BN parties, Badawi marked
his first outing as national leader with a sweeping
victory, which should provide him the opportunity to
further put his own personal stamp on the direction
of the country.
Pakistan – Foreign
Exchange Down: Pakistan's foreign exchange
reserves slipped slightly to $12.560 billion in the
week to March 13, down $5 million from the previous
week, the State Bank of Pakistan said on Thursday.
The central bank gave no reason for the fall, but
bankers said the slide was mainly due to quarter-end
repayments of foreign debt. The central bank said
its direct holdings were $10.764 billion and those
of commercial banks were $1.796 billion. The central
bank changed the method it uses to calculate foreign
reserves in 2002. It now monitors the total liquid
foreign reserves, including previously undisclosed
foreign exchange deposits by banks.
Philippines – Less
Money in Reserve: The Philippines' gross
international reserves are expected to fall to $15
billion at the end of this year from $16.9 billion
as of end 2003, the central bank said on Thursday.
The central bank uses the reserves to intervene "from
time to time" to support the weak peso, but "we
will not use up our gross international reserves
to defend an unrealistic FX rate", Governor
Rafael Buenaventura told Reuters on Wednesday. The
international reserves comprise the foreign currency
holdings of the central bank, including gold and
International Monetary Fund special drawing rights.
Turkey – A
Little Less Change in the Pocket: Turkey's
central bank foreign currency reserves fell $946
million to $31.853 billion in the week ending on
March 12. Gold reserves were unchanged at 1.558 billion.
Turkey's total gross reserves on February 27, the
latest available data, were $47.126 billion, of which
$12.187 billion was with private institutions, including
commercial banks. The central bank held the rest.
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