Wednesday, August 20, 2014

Investment News and Commentary from Emerging Markets in Asia - China, India and ASEAN




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2point6billion.com discusses business and investment news rising from the geopolitical relations of China and India, and the interactions these two countries have with the rest of emerging Asia.



Energy

Declining Coal Prices Herald in New Chinese Reforms

Sept. 25 – Last year, China overtook Japan to become the largest importer of thermal coal, effectively granting China great influence over global coal prices. A recent reform proposal regarding China’s coal pricing system suggests that policy makers are anticipating a continual decline in global coal prices, currently at a three-year low of US$90 a ton.

As thermal coal supplies over two-thirds of China’s energy requirements, it has taken slow and careful steps in reforming its coal prices. China is also the world’s largest coal producer, yet in recent years domestic mines have been unable to keep up with the pace of China’s burgeoning power demand. China instead has had to rely on overseas coal suppliers more heavily, already importing approximately 150 million tons since the beginning of this year. Continue reading

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Implications of India’s Power Outage

By Ian Bhullar

Aug. 3 – India’s recent power outage, which affected 20 of India’s 24 states this week, has raised questions both within and beyond India’s borders about capacity to deal with growing energy demands.

As power returns to the 700 million affected, India’s population asks how such a huge blackout could happen. In other parts of the world, including China, commentators ask what lessons can be learned from a blackout affecting one tenth of humanity.

Reports of the blackout, which ran from Tuesday into Wednesday morning, have stressed just how dramatic its costs were. Alongside miners trapped underground, surgery procedures cancelled, and hundreds of trains stuck on the tracks, the economic costs are likely to be very large. Continue reading

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CNOOC to Buy Canadian Oil Company in US$15 Billion Deal

Jul. 26 – China’s third-largest oil company, the China National Offshore Oil Corporation (CNOOC), has agreed to pay US$15.1 billion in cash to acquire the Canadian oil company Nexen Inc. If this deal is successful, it will be the largest overseas takeover by a Chinese company. CNOOC is offering US$27.50 a share, which is a 61 percent premium on Nexen’s Friday stock price.

“For Canada, this agreement provides a stable source of investment for the many projects that Nexen operates,” said CNOOC Chief Executive Li Fanrong. Continue reading

Posted in Business, Energy, Foreign Trade, Politics | 2 Comments

U.S. Exempts China from Iran Sanctions

Jun. 29 – The United States exempted both China from its sanctions targeting Iran’s oil exports on Thursday, just hours before the deadline. While explaining its decision, the U.S. State Department stated that China had significantly reduced its imports of Iranian crude, and thus like 19 other countries, deserved to be exempted from the rigors of the sanctions.

The Obama administration has now spared 20 of Iran’s major oil buyers from its sanctions. Without exemption from these sanctions, any nation that makes energy purchases through Iran’s central bank would be denied access to the U.S. financial system. The goal of the sanctions is to choke off Iran’s oil revenues, which is the life-blood of its economy and the main source of income that funds its nuclear development program. Continue reading

Posted in Business, Energy, Featured, Foreign Trade, Politics | Tagged , , , , | 4 Comments

China Model Perceived as Barrier to India’s Acquisition of Mineral Assets

By Ian Bhullar

Jun. 25 – Indian policymakers see China’s state-supported model of acquiring commodities abroad as a barrier to India’s own pursuit, according to an article published in the Business Standard last week.

China’s acquisition of mineral resources is supported with extensive financial and diplomatic infrastructure, including favorable loans from state-owned banks, direct government underwriting, foreign aid and multilateral initiatives like the Forum on China-Africa Cooperation. Amongst many deals of this kind, the state-owned China National Petroleum Corporation in 2005 bought the former Soviet Union’s largest oil company, Petrokazakhstan; in the same year the Chinese government awarded US$2 billion of loans to Angola in exchange for oil deals. Continue reading

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China and India to Jointly Explore Overseas Energy Assets

Jun. 20 – China’s largest energy firm, China National Petroleum Corp. (CNPC), and India’s flagship oil and gas explorer, Oil and Natural Gas Corp. (ONGC), have signed an agreement to jointly explore potential energy assets overseas. China and India hope to combine their financial resources and expertise to better secure energy supplies for their rapidly-expanding economies.

This is not the first time there has been cooperation between China and India’s chief oil producers. In 2006, CNPC and ONGC agreed to a series of pacts covering all segments of the oil industry. These pacts, however, never manifested into an efficient working relationship. India’s Junior Oil Minister R.P.N. Singh conceded that cooperation has been slow as “there has been no sharing of information on crude purchases by the oil companies of the two sides.” Continue reading

Posted in Energy, Politics | Tagged , , , , , , | 2 Comments

U.S. Exempts India from Iran Sanctions, but not China

Jun. 12 – The United States has exempted India and six other countries from sanctions after they significantly reduced their imports of Iranian oil. China, however, has been excluded from this exemption as the U.S. Obama Administration believes that the country has not taken substantial action to reduce its imports of Iranian oil. The U.S. is continuing its negotiations with China – Iran’s primary importer of oil.

Under the U.S. sanctions, foreign financial institutions that are doing business with Iran’s central bank to purchase energy resources will be barred from U.S. financial markets. Exemptions on this sanction were given to India, South Korea, Turkey, Taiwan, South Africa, Sri Lanka and Malaysia on Monday, joining 11 other countries that have been previously exempt. Continue reading

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