Wednesday, May 6, 2015

Nuclear deal can make Iran region's 'No.1' energy power

Nuclear deal can make Iran region's 'No.1' energy power

[TEHRAN] A nuclear agreement will allow Iran to become the number one energy player in the Middle East and herald major opportunities for foreign companies, top government officials in Tehran said Wednesday.
The remarks, at an industry event, underlined the broader political and economic implications should sanctions on Iran be lifted under a deal, following long-running diplomatic efforts with six world powers.
Iran has the world's fourth largest proven oil reserves and the second biggest gas deposits. Both are seen as long under-tapped and ripe for exploration.
But exports have halved since US and EU sanctions were imposed on Iran's energy industry in 2012 as punishment for the country's disputed nuclear programme.
Oil Minister Bijan Zanganeh, who as nuclear talks have progressed in recent months has signalled willingness to see global oil giants return, said cooperation was essential.
But such a prospect is inextricably linked to the nuclear deal and its June 30 deadline.
"We have to use the foreign companies that will come to us after the removal of sanctions... to increase exports and access regional markets," Mr Zanganeh said in a speech at Iran's 20th Oil, Gas, Refining and Petrochemical Fair.
"It is understandable that they left us during hard times. But we hope to prepare ourselves to work with them for a future in which we become the industry's number one in the region." His comments also seemed aimed at Saudi Arabia, the world's largest oil exporter, with which Iran is locked in a fierce dispute over the conflict in Yemen, and with whom relations have been worsening.
Iran, the region's dominant Shiite state, and Riyadh, its Sunni rival and a fellow member of the OPEC cartel, earlier accused the kingdom of dirty tricks after it refused to cut production when crude prices plummeted last year.
During the nuclear crisis Iran has relied on domestic oil firms and though this will continue, Vice President Eshaq Jahangiri, at the same event as Zanganeh, said: "We don't have any option but to join the international production and distribution chain." New contracts prepared by the oil ministry would lure energy majors back, he said.
"We expect that after presenting the models of the new agreements, which are based on the realities of the global energy market, they will be so attractive that it will bring the foreign investment.
"Iran is very determined that after a very short period of time after signing the nuclear agreement we can take back our position in the global oil industry," Jahangiri added.
According to the oil ministry, 1,200 Iranian companies and 600 international businesses from 29 countries including Britain, China, France, Germany, Russia, Singapore and the United Arab Emirates registered for the four-day Tehran exhibition.
"Iran has a lot of resources and they can become an even bigger power if the sanctions go," said Gerhard Klaumunzer, a sales executive for Deep Blue Pump FZC, a Dutch-Chinese equipment firm still operating in Iran.
But with crude prices hovering around a lowly US$60 a barrel as the market experiences a supply glut, the chances of a quick upturn are difficult to gauge.
While oil has long been the cornerstone of Iran's finances, President Hassan Rouhani's government has been seeking a more varied economy and the global fall in crude saw Tehran halve its reliance on oil income to 25 per cent in this year's budget.
Foreign energy companies, which under Iranian law must partner with local firms, are also weighing the cost of doing business against the potential returns.
Having agreed an outline framework for a nuclear deal on April 2, Iran and the P5+1 powers (Britain, China, France, Russia and the United States plus Germany) are now hammering out the details and drafting the final accord.
Under an interim deal that came into effect in January 2014, Iran has been allowed to maintain its crude oil exports at around 1.2 million barrels per day - less than half of what it was shipping in late 2011.
Production capacity is now around 2.7 million bpd but the ministry has said it could reach 4.0 million bpd within a few years.
AFP

Britain in final hours of tight election campaign

Britain in final hours of tight election campaign

[LONDON] Britain's political leaders ended their campaigns ahead of Thursday's general election, the most unpredictable in living memory, which could yield no clear winner and weeks of haggling over the next government.
A win for Prime Minister David Cameron's Conservatives would raise the risk of Britain exiting the European Union because he has promised a referendum on leaving the bloc by 2017.
But some business leaders and investors have warned that the main opposition Labour party, led by Ed Miliband, could be bad for the economy, which is weighed down by a budget deficit of nearly £90 billion (S$181 billion).
Final polling data released on the eve of the vote showed a rush of last-minute campaigning had failed to sway voters one way or another.
Three polls showed Labour and the Conservatives in a dead heat, while another three showed the Conservatives just one point ahead.
With neither expected to win outright and smaller parties on the rise, the election is also likely to underline the decline of traditional two-party politics in Britain and the rise of a more multi-lateral European style.
"This has been a remarkable election," Professor Tony Travers of the London School of Economics said, predicting that it would lead to some form of multi-party government "probably less stable than the one that formed in 2010." The Conservatives have been in power in a coalition government with the centrist Liberal Democrats since the 2010 election.
But it is thought that a minority government supported on an informal basis by a smaller party or parties is more likely than a formal coalition, under which the Liberal Democrats have seen their support plummet in the last five years.
MESSY NEGOTIATIONS
Mr Cameron concluded a tour of the country with a rally at a livestock market in Carlisle in northwest England, where he told voters "this is the election that will define this generation." "It comes down to a choice of leadership," Mr Cameron told the crowd in the crucial marginal seat. "Do you want the people who are fixing the economy, or the people who wrecked our economy?"
In a visit to Colne in northwest England, Mr Miliband urged voters not to listen to "siren voices" as they entered the ballot box and insisted the Conservatives would only "protect the privileged few" if re-elected.
"There are some people who tell you Britain can't be better than this. I say they are wrong," Mr Miliband said.
Both leaders insist they are still fighting for a clear majority in the 650-seat House of Commons which would let them govern alone but attention is increasingly turning to the alliances they could make with smaller parties.
But Mr Cameron seemed to acknowledge the possibility of a fresh coalition or minority government in an interview with BBC radio in which he vowed to "put the country first and do what I can do to provide a strong and stable government." His Conservatives look well placed to team up again with Clegg's Liberal Democrats, assuming the Liberal Democrat leader can hold on to his own seat in Sheffield, northern England.
While Mr Miliband has ruled out a formal deal with the pro-independence Scottish National Party (SNP), it is thought they could still prop up a minority Labour government vote-by-vote.
The Liberal Democrats have left open the possibility of backing either the Conservatives or Labour while the SNP will block the Conservatives, and the anti-EU UK Independence Party is unlikely to win more than a handful of seats.
Only one thing is certain - the SNP is likely to make major gains in Scotland at Labour's expense, transforming Britain's political scene and potentially bringing the prospect of Scottish independence closer.
Negotiations to form a government are likely to be complicated. The first big test for the new government will come when parliament votes on its legislative programme following the Queen's Speech on May 27 in a de facto confidence motion.
RESULTS DUE FRIDAY
Polls open at 0600 GMT and close at 2100 GMT on Thursday. Exit polls are published immediately after that followed by the first results shortly afterwards and final results Friday afternoon.
The BBC poll of polls average puts the Conservatives at 34 per cent, followed by Labour at 33 per cent, UKIP at 13 per cent and the Liberal Democrats at just eight percent.
But the percentage breakdown is a poor indicator of the final election outcome in Britain because of the first-past-the-post system, which counts the results only in individual constituencies, not the overall vote share.
AFP

China looks to fiscal stimulus to fight slowdown

China looks to fiscal stimulus to fight slowdown

[BEIJING] China's leaders, caught off guard by a sharp economic slowdown and worried about the risk of job losses, are likely to resort to fiscal stimulus to revive growth after a run of monetary policy easings proved less effective, policy insiders said.
The world's second-largest economy grew at an annual 7 per cent in the first quarter, the weakest rate since the global financial crisis, and data since then suggests it has lost further momentum. "They are very worried. If they don't take bolder measures, it will be very hard to achieve the full-year growth target, and there is risk the slowdown may get out of control," an economist at a well-connected think-tank said of top policymakers.
"Fiscal policy will become more forceful, and infrastructure investment will accelerate, while monetary policy will be more flexible," said the economist.
The Politburo, the ruling Communist Party's top decision-making body, said last week it would "pay high attention to the downward pressure on the economy" and pledged to step up policy "adjustments" by boosting fiscal spending.
The government forecast a budget deficit for 2015 equal to 2.3 per cent of GDP, but Finance Minister Lou Jiwei said in March the real fiscal deficit would be 2.7 per cent of GDP, the widest since 2009, after taking into account unspent amounts from previously allocated funds.
Last year, government spending rose 8.2 per cent, slower than the 9.5 per cent goal.
The emerging view is that the direct impact of government spending would work where monetary policy, including two cuts in interest rates and two cuts in bank reserve requirements since November, has not.
The government is eyeing "a package of measures to stabilise growth and control risks", said a senior economist at the cabinet's Development Research Centre think-tank. "There is no big problem in employment. They (top leaders) are more worried about financial risks and debt risks."
INVESTMENT PUSH
The National Development and Reform Commission (NDRC), the country's top planning agency, is already speeding up investment projects in several key sectors, including water conservation, environmental protection, power grids and health care.
And President Xi Jinping is spearheading the integration of Beijing with Tianjin and Hebei province, aiming to create a growth driver similar to the Yangtze River Delta around Shanghai and Pearl River Delta in Guangdong, the sources said.
The government has said the new metropolis would require investment of 42 trillion yuan (S$9 trillion). "It's hard to boost consumption while external demand is weak, so the only thing they can do is boost investment," said Lu Zhengwei, chief economist at Industrial Bank.
The NDRC has been struggling to lure private investment into such projects, adding more pressure on the government to spend.
Stimulus plans will, nevertheless, be restrained by the fact that China is still struggling with a mountain of local government debt from the 4 trillion yuan stimulus rolled out in 2008/09 to cushion the impact of the global crisis.
The Finance Ministry and the NDRC did not immediately return requests for comment.
Most analysts expect the central bank to ease policy further to keep liquidity conditions favourable for an increase in spending, as well as to keep markets fluid amid concerns about the risk of corporate defaults and a restructuring of local government debt.
"Monetary policy will still be loosened, and we cannot rule out another interest rate cut, depending on economic data," said Lian Ping, chief economist at Bank of Communications.
REUTERS

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