Iraq balks at greater Chinese control of its oilfields

Iraqi Oil Minister Ihsan Abdul Jabbar walks during a Lukoil 

energy event, in Baghdad

Mon, May 16, 2022
By Sarah McFarlane and Aref Mohammed

LONDON/BASRA (Reuters) - Iraq's oil ministry thwarted three prospective deals last year that would have handed Chinese firms more control over its oilfields and led to an exodus of international oil majors that Baghdad wants to invest in its creaking economy.

Since the start of 2021, plans by Russia's Lukoil and U.S. oil major Exxon Mobil to sell stakes in major fields to Chinese state-backed firms have hit the buffers after interventions from Iraq's oil ministry, according to Iraqi oil officials and industry executives.

Selling a stake to a state-run Chinese company was also one of several options being considered by Britain's BP, but officials persuaded it to stay in Iraq for now, people familiar with the matter said.

China is Iraq's top investor and Baghdad was the biggest beneficiary last year of Beijing's Belt and Road initiative, receiving $10.5 billion in financing for infrastructure projects including a power plant and an airport.

But when it comes to further Chinese investment in major oilfields, Baghdad has drawn a line in the sand.

Iraq's government and officials at state-run firms are concerned that further consolidation of fields in the hands of Chinese companies could accelerate an exodus of Western oil companies, a total of seven Iraqi oil officials and executives with companies operating in Iraq told Reuters in interviews.

Supported by state-run oil company officials, Iraq's Oil Minister Ihsan Abdul Jabbar dissuaded Lukoil last year from selling a stake in one of the country's largest fields, West Qurna 2, to Chinese state firm Sinopec, three people familiar with the matter said.

Iraqi officials also intervened last year to stop Chinese state-backed firms buying Exxon's stake in West Qurna 1 and to persuade BP to stay in Iraq rather than offloading its interest in the giant Rumaila oilfield to a Chinese company, people familiar with the matter said.

Combined, Rumaila and West Qurna produce about half of the crude coming out of Iraq, which sits on the fifth-largest oil reserves in the world.

Iraq's oil ministry did not respond to requests for comment about the deals or the minister's role in any interventions.

The government worried that China's dominance could make Iraq less attractive for investment from elsewhere, two government officials said.

China's strengthening relationship with Iran has helped its position in Iraq due to Tehran's political and military influence there, but the oil ministry is wary of ceding more control over the country's key resources, some officials said.

"We don't want the Iraqi energy sector to be labelled as a China-led energy sector and this attitude is agreed by government and the oil ministry," another Iraqi official said.

RISKY STRATEGY

The interventions over BP, Exxon and Lukoil's positions in Iraq come after British oil major Shell decided in 2018 to withdraw from Iraq's vast Majnoon oilfield.

The interventions also mark a shift in stance after Chinese companies won most energy deals and contracts awarded over the past four years. Iraqi oil officials said Chinese firms have accepted lower profit margins than most rivals.

"All the rules regarding tenders were formulated jointly by the Chinese and Iraqi sides and were conducted under transparent and fair principles," said state-owned China National Offshore Oil Corporation (CNOOC) in an emailed statement.

Pushing back against further Chinese investment is a risky strategy, though, as there's no guarantee others will step up and the government needs billions of dollars to rebuild the economy after the Islamic State insurgency was defeated in 2017.

Over the past decade, oil revenue accounted for 99% of Iraq's exports, 85% of the country's budget and 42% of its gross domestic product, according to the World Bank.

While oil majors jostled to get access to Iraq's vast oilfields after the U.S.-led invasion in 2003, they are increasingly focused on the energy transition and more profitable plays elsewhere. They also want better terms to develop fields, oil executives said.

China is among the biggest buyers of Iraq's crude and Chinese state firms have built up a dominant position in its oil industry.

But when Lukoil notified the government last summer that it was considering selling some of its stake in West Qurna 2 to Sinopec, the oil minister intervened, people familiar with the matter said.

It has not previously been reported that Sinopec was the potential buyer of Lukoil's stake. The Chinese company did not respond to a request for comment.

To encourage Lukoil to stay, Iraq offered a sweetener, a person with direct knowledge said.

A few months after Lukoil signalled it was considering a sale, Baghdad finally approved its plan to develop a field known as Block 10, where the Russian company had discovered an oil reservoir in 2017. Afterwards, Lukoil dropped the idea of selling its stake in West Qurna 2, the source said.

Lukoil did not respond to a request for comment.

BP AND EXXON

Over the past few years BP has also spoken to the government about its options - including leaving Iraq altogether - before settling on spinning off its stake in Rumaila into a standalone company last year, two people familiar with the matter said.

Oil minister Abdul Jabbar led efforts to convince BP not to leave as the government was concerned its partner in the field, China National Petroleum Corporation (CNPC), would buy BP's stake, the people said. Baghdad was also keen to keep such a high-profile international oil major in the country, they said.

BP declined to comment.

When Exxon flagged its intention to leave Iraq in January 2021, meanwhile, U.S. officials told Exxon they were unhappy with the prospect of the biggest U.S. oil major pulling out – for reasons that echoed Iraqi concerns.

State department officials said Exxon's departure could create a vacuum for Chinese companies to fill, a person familiar with the conversations said. U.S. officials then asked Exxon what it would take to stay in Iraq, the person said, declining to give further details.

A State Department spokesperson said: "We regularly engage with our Iraqi counterparts on fostering an environment conducive to private sector investment."

Exxon had signed an agreement for the sale of its interest in West Qurna 1 to CNOOC and PetroChina, the listed arm of CNPC, people familiar with the matter said.

Neither CNOOC nor CNPC responded to requests for comment about the deals.

Exxon's stake was valued at $350 million to $375 million, said people familiar with the matter. Iraq has veto power over oilfield deals, however, and did not approve the transaction.

Exxon filed for arbitration with the International Chamber of Commerce against Basra Oil Co., arguing that it had followed the terms of its contract for West Qurna 1 and had a good deal on the table, people familiar with the matter said.

The oil ministry then took the unusual step of trying to broker a deal on Exxon's behalf. The ministry offered Exxon's stake to other Western companies including Chevron Corp.

No one was interested. Rather than let the stake go to the Chinese companies, Baghdad said the state-run Iraq National Oil Company (INOC) would take it instead, though INOC is still in the process of being revived after being defunct for many years.

"(Exxon) will continue to work closely and constructively to reach an equitable resolution," said a spokeswoman.

SERVICE CONTRACTS

Iraq's oil industry is mostly based on technical service contracts between the state-backed Basra Oil Co. and foreign companies that are repaid costs plus a fee per barrel to develop fields, while Iraq retains ownership of the reserves.

Oil majors typically prefer deals that allow a share in profits rather than a set fee.

The priority for Chinese firms, however, is achieving secure oil supplies to feed China's growing economy, rather than returns for investors, said a Chinese oil executive with direct knowledge of CNPC's global investments.

There are some signs, however, that Iraq is attempting to make its terms more appealing.

France's TotalEnergies signed a $27 billion deal in September that included payment of 40% of revenue from one field. The deal has stalled, however, due to disputes over terms and it still needs approval from some Iraqi government agencies, Reuters reported in February.

TotalEnergies said it was fully committed to the project.

One oil company executive said they were sceptical Iraq would introduce more attractive terms. But unless they improve significantly, analysts say it is hard to imagine Iraq will be able to stem the exodus as the energy transition accelerates.

"Many of the energy majors are looking at the carbon emissions, their ability to generate cash flows if commodity prices are low, and they're looking at improving returns," said Ian Thom, research director at consultancy Wood Mackenzie. "As the priorities of the energy companies are changing, the relative attractiveness of Iraq is changing."

(Reporting by Sarah McFarlane in London, Aref Mohammed in Basra and the Iraq bureau; Additional reporting by Aizhu Chen in Singapore; Editing by Simon Webb and David Clarke)

Sony PlayStation Staff Outraged Over CEO’s Abortion Rights Stance In Email About Cats

Jazmin Tolliver
Mon, May 16, 2022,

Employees at Sony Group Corporation say they are outaged over an email the head of PlayStation sent encouraging staff to “respect differences of opinion” regarding abortion rights before launching into five ill-timed paragraphs about his two cats’ first birthdays.

In the email staff received on Thursday that was shown to Bloomberg, PlayStation CEO Jim Ryan begins his message by acknowledging the recently leaked Supreme Court opinion that was poised to overturn Roe v. Wade, the landmark 1973 decision that guaranteed the right to an abortion.

Ryan remained neutral on his stance over abortion rights in the email to employees, noting that the company’s community are “multi-faceted and diverse, holding many different points of view.”

He went on to say, “we owe it to each other and to PlayStation’s millions of users to respect differences of opinion among everyone in our internal and external communities. Respect does not equal agreement. But it is fundamental to who we are as a company and as a valued global brand.”

The company leader then suddenly switched topics, telling his employees he “would like to share something lighthearted to help inspire everyone to be mindful of having balance that can help ease the stress of uncertain world events.”

Jim Ryan, Sony Interactive Entertainment president and chief executive officer, received backlash after sending employees an email asking them to “respect differences of opinion” around abortion rights before concluding the ill-received message with paragraphs about his cats' birthdays.

 (Photo: PATRICK T. FALLON via Getty Images)

He then dove into a story about the recent first birthdays his two cats celebrated.

Gushing over his furry friends, Ryan boasted about getting birthday cakes for his cats, described the noises they made and even revealed his dreams of owning a dog one day.

Ryan never took a concrete stance on abortion rights in the correspondence. He did go into detail about pets, declaring that “dogs really are man’s best friend, they know their place, and perform useful functions like biting burglars and chasing balls that you throw for them.”

Employees at multiple PlayStation studios expressed being put off by the tone of the email, according to internal company discussions viewed and reported on by Bloomberg.

Some female employees wrote that they felt their rights were disrespected by the message. Another employee shared they’d “never been so mad about a cat birthday before.”

Though PlayStation hasn’t taken public a stance on abortion rights, other companies in the video game industry have.

Notably, Bungie Inc, the developer of the Destiny game and a company that Sony agreed to buy earlier this year for $3.6 billion, blasted the government’s decision as “a direct attack on human rights” in a blog post last week. The post was met with positive reactions on social media.

“Standing up for reproductive choice and liberty is not a difficult decision to make,” Bungie said in the post.

This article originally appeared on HuffPost and has been updated.

5 Other Rights That Could Be Struck Down If Roe V. Wade Is Overturned

Christopher Rhodes
Mon, May 16, 2022,


The United States is still reeling in the aftermath of the leaked draft ruling from Justice Samuel Alito on behalf of the conservative majority of the Supreme Court, indicating that the court will likely strike down Roe v. Wade, the 1973 ruling that guaranteed abortion rights across the country. Such a decision would leave abortion law up to individual states, and several states already have legislation in place that would ban the procedure outright. As Democratic efforts to codify abortion rights at the federal level stall and protests continue against the upcoming decision, the move on abortion has opened up debates about other rights that could be scaled back or eliminated in light of the expected Supreme Court decision. Here are five additional rights that could soon be restricted.

Outlawing in vitro fertilization

In the decades since Roe v. Wade was decided, in vitro fertilization (IVF), has been developed as a common approach to dealing with infertility. The process, which involves the creation of multiple fertilized embryos — many of which are ultimately discarded — may be disrupted or even outlawed in states that pass very strict anti-abortion laws. Several states, including Louisiana, are proposing laws that define embryos as people and equate their destruction with murder. As one Twitter user noted, “the fetal personhood laws like this one, which we are about to see all over the place, will criminalize IVF too.”

Restricting contraception

The Roe v. Wade ruling rested in part on the idea that various parts of the U.S. Constitution imply certain rights that are not spelled out in the document, such as a right to privacy. Most endangered would be emergency contraception, such as the morning after pill, which many conservatives lump together with abortion. However, the denial of a right to privacy could allow other forms of contraception — such as IUDs, birth control pills or condoms — to be restricted or even banned by states. In a recent interview, Mississippi Governor Tate Reeves would not rule out a contraception ban in his state.

Reversing same-sex marriage

The decision to undermine a right to privacy potentially calls into question the 2015 Obergefell v. Hodges decision, in which the Supreme Court decided 5-4 to extend recognition of same-sex marriages to the entire country. Before this ruling, the marriage issue had been fiercely contested across the country, with conservatives and LGBTQ+ advocates clashing politically in many states.


Though the Obergefell case seemed to put the issue to rest, the Supreme Court reversing its view on privacy and overturning settled laws like Roe opens up the possibility that same-sex marriage will be the next target. President Joe Biden recently said “it’s not just the brutality of taking away a woman’s right to her body” at a Democratic fundraiser, adding that the Alito decision “basically says there’s no such thing as the right to privacy.” The president signaled a warning, stating “mark my words: They are going to go after the Supreme Court decision on same-sex marriage.”
Undermining interracial marriage

It’s not just same-sex marriage that could be reconsidered in the wake of the court’s ruling. Some experts have speculated that the Supreme Court might reconsider the case Loving v. Virginia, which struck down the remaining laws that banned interracial marriage. Overturning Loving would be both more difficult legally — since laws that discriminate based on race are much harder to justify — and out of line with the 90 percent of the population that approves of interracial marriage. Nevertheless, one Senator, Mike Braun (R-IN), has already stated that the issue should be left up to states, a view that his office later attempted to walk back as a misunderstanding.

Striking down the Affordable Care Act

In 2012, Chief Justice John Roberts, generally a conservative vote among the justices, sided with the court’s liberals to uphold the constitutionality of the Affordable Care Act. This ruling has long angered conservatives, including those sitting on the court. Since that ruling, three Trump-appointed conservatives have joined the court.

Now that there is a 6-3 conservative supermajority on the Supreme Court, rulings like Alito’s abortion opinion can come down without Roberts’ support. The same five justices preparing to overturn Roe could therefore revisit the health care case. Attorney Amee Vanderpool tweeted this concern, posting that after the Roe ruling, “next comes every other established right that the conservative majority finds abhorrent, including Obamacare.”

If the leaked Supreme Court opinion turns out to be the final decision on Roe v. Wade, the full impact of this change might not be known for years. Nevertheless, this ruling is likely to create a legal atmosphere that is more restrictive of many rights that have been recognized or extended over several decades.

ALSO

INTERRACIAL MARRIAGE

Interracial marriage is a marriage involving spouses who belong to different races or racialized ethnicities.

In the past, such marriages were outlawed in the United States, Nazi Germany and apartheid-era South Africa as miscegenation. In 1960 interracial marriage was forbidden by law in 31 U.S. states. It became legal throughout the United States in 1967, following the decision of the Supreme Court of the United States under Chief Justice Earl Warren in the case Loving v. Virginia, which ruled that race-based restrictions on marriages, such as the anti-miscegenation law in the state of Virginia, violated the Equal Protection Clause (adopted in 1868) of the United States Constitution.^[1][2]

Interracial marriage - Wikipedia

INTERFAITH MARRIAGE

Interfaith marriage, sometimes called a "mixed marriage", is marriage between spouses professing different religions. Although interfaith marriages are most often established as civil marriages, in some instances they may be established as a religious marriage. This depends on religious doctrine of each of the two parties' religions; some prohibit interfaith marriage, and among others there are varying degrees of permissibility.

Several major religions are mute on the issue, and still others allow it with requirements for ceremony and custom. For ethno-religious groups, resistance to interfaith marriage may be a form of self-segregation.

In an interfaith marriage, each partner typically adheres to their own religion. One issue which can arise in such unions is the choice of faith in which to raise the children.

Interfaith marriage - Wikipedia

SpaceX Employees Offer to Sell Shares at $125 Billion Valuation


Gillian Tan and Katie Roof
Mon, May 16, 2022

(Bloomberg) -- SpaceX employees are offering to sell shares via a private placement that would value Elon Musk’s launch and satellite company at around $125 billion, according to people familiar with the matter.

The shares are being offered in a so-called employee tender at $70 each, the people said, asking not to be identified because the details are private. That compares with a split-adjusted $56-a-share during a sale in October at a valuation of about $100 billion.

It’s unclear whether Musk is selling stock as part of the employee tender, the people said. The size of the offering couldn’t immediately be determined.

Read more: Musk Seeks to Scrap Tesla Margin Loan With New Twitter Funding

SpaceX didn’t respond to a request for comment outside regular business hours. The New York Post reported the share placement plan earlier.

Musk has been seeking a variety of funding sources to complete his agreement to purchase Twitter Inc. On Monday he suggested the deal for the social media platform might be completed at a lower price, days after he questioned Twitter’s ability to estimate how many accounts are spam or fake.

ROARING TWENTIES SPECULATION
Bitcoin’s Plunge Exposes Idea of Uncorrelated Asset as ‘Big Lie’

Vildana Hajric and Sidhartha Shukla
Mon, May 16, 2022

(Bloomberg) -- A selloff in cryptocurrencies resumed Monday, with Bitcoin dropping back below $30,000 with global equity markets remaining under pressure.

The largest cryptocurrency fell as much as 6.2% and was trading at $29,835 as of 4:54 p.m. in New York. Other tokens including Ether and Avalanche were on the back foot too. U.S. equities fell as investors assessed the latest signs of economic malaise from the US and China.

Overall, however, digital-asset markets were still calmer compared with the worst of last week’s turmoil over the collapse of the TerraUSD, UST, stablecoin. Deus Finance’s DEI token lost its peg to the dollar on Monday, though it only had a market value of about $63.5 million, compared with about $18 billion for UST.

“I think it will continue to trade with the equity market and risk assets,” said David Donabedian, chief investment officer of CIBC Private Wealth Management. “That’s the big lie that’s been exposed, the idea that it’s some new asset class that’s going to help diversify your portfolio has been blown to smithereens.”

Bitcoin dipped to a low of $25,425 on Thursday after the TerraUSD algorithmic stablecoin unraveled, throwing the entire ecosystem that supports it into disarray. At its height, the market panic engulfed the $76 billion stablecoin Tether, a key cog in cryptoassets that briefly dipped from its dollar peg.

“We have witnessed the rapid decline of a major project, which sent ripples across the industry, but also a new found resiliency in the market that did not exist during the last market downswing,” Changpeng Zhao, chief executive officer of crypto exchange Binance Holdings Ltd., tweeted on Sunday.

One difference between the current environment and other prolonged downturns such as the “crypto winter” in 2018 is the amount of institutions now involved in the market, which may be a source of support, said Paul Veradittakit, an partner at digital asset manager Pantera Capital.

“Compared to 2018, there are more institutional investors with exposure to crypto and most see this as a buying opportunity,” said Veradittakit.

Ebbing Rally

Monday’s price action saw Bitcoin give back some of a Sunday rally. The total market value of cryptocurrencies has dropped by about $326 billion in the past seven days to roughly $1.33 trillion, according to data from CoinGecko. Bitcoin is some 57% off its November all-time high.

While crypto markets may have digested the worst of the TerraUSD fallout, the asset class faces other challenges -- most notably, rising global interest rates and tighter liquidity conditions.

Bitcoin’s current lower support is at $27,000, “which can likely stabilize price action in the coming days,” said Edul Patel, chief executive officer of Mudrex, an algorithm-based crypto investment platform.

©2022 Bloomberg L.P.

Exclusive: U.S. Treasury's Yellen and trade czar Tai at odds over China tariffs

Tue, May 17, 2022
By Trevor Hunnicutt and David Lawder

WASHINGTON(Reuters) - President Joe Biden will have to resolve a heated internal debate among his aides over whether to cut taxes on goods from China as his administration tries to battle inflation, according to two U.S. officials and three other people familiar with the conversations.

Officials within Biden's administration have been debating for months the future of tariffs of up to 25% on hundreds of billions of dollars in imports from China imposed by former President Donald Trump that cost U.S. companies billions.

U.S. Treasury Secretary Janet Yellen is among those who want to slash many of these tariffs, while U.S. Trade Representative Katherine Tai wants to hold off for a broader China trade strategy that addresses protecting U.S. jobs and China's behavior in global markets, sources say. This approach could even include new strategic tariffs.

The clear divide is rare in a White House that has made providing a unified front part of its bedrock approach to governing the world's biggest economy.

Adding fuel to the debate, unions that are crucial to Democrats' November campaigns are opposed to relaxing tariffs at this time, said one adviser. Biden personally told union leaders they would be involved in any final tariff decision.

Inflation spiked 8% over the last year, putting pressure on Biden and the Federal Reserve to push down costs on groceries, gasoline and other consumer goods. Biden's Democrats face tough fights in November's midterm elections to retain control of Congress.

The administration believes there are few short-term fixes for inflation - an issue that it initially hoped would be temporary - amid supply chain kinks, high labor costs, Russia's invasion of Ukraine and China's COVID-19 lockdowns.

Reducing tariffs is one of the last major steps they could take that could meaningfully cut costs, economists inside and outside the administration say.

Yellen has publicly said tariff cuts are "worth considering" for their "desirable effects" on lowering U.S. inflation, echoing comments by Biden's deputy national security adviser Daleep Singh.

Yellen believes some of the tariffs are not in the U.S.'s economic interest and cost consumers irrespective of the inflation argument, according to a person familiar with the discussions.

The Peterson Institute for International Economics concluded that reducing China tariffs could cut inflation by as much as 1.3 percentage points, or $797 per household. Tai has publicly questioned those findings as "something between fiction or an interesting academic exercise" and called for viewing the tariffs through a "strategic lens."

The Biden administration officially launched a review last month of the China tariffs imposed by Trump in 2018 and 2019. The tariffs started on $50 billion worth of strategic industrial goods to punish China for forced technology transfers and theft of intellectual property, but after China retaliated, they ballooned to $370 billion, covering t-shirts, bicycles, toys, flooring and other goods.

That review could take months, with a public comment period between July 5 and Aug. 22 before any final decision is made..

Some trade experts say a faster way to provide inflation relief is to broaden the number of exclusions granted to importers of Chinese goods. Thousands of these expired as Biden took office, but Tai has only revived exclusions on 352, and over 140 U.S. lawmakers have called for the list to be expanded.

Political advisers have been divided, too, with some seeing risks of alienating labor unions or other China hawks in key political battlegrounds, and others arguing that removing tariffs to lower inflation would have broad support in a country where rising costs has become the primary political issue.

Tai believes the disposition of the China tariffs needs to be decided as part of an overall trade strategy with China that takes a more strategic approach, said a person familiar with the conversations. A rapid, unilateral move was unlikely.

The divide between Yellen and Tai is likely to force Biden to make a decision by mid-summer, according to one person in touch with administration officials.

(Additional reporting by Jarrett Renshaw; Editing by Heather Timmons and Richard Pullin)

Couple follows ‘elusive’ animal into cemetery and gets rare sight, Montana video shows

Jessica Jaeger

Maddie Capron
Mon, May 16, 2022

An animal dashed down a busy road in Montana and into a cemetery.

Jessica Jaeger and her husband, Dylan Heiner, spotted the critter in Butte and knew this wasn’t an animal they had typically seen.

“We were driving down a fairly busy road in Butte when he ran out of a neighborhood and into the cemetery,” Jaeger told McClatchy News. “We had no idea what he was because of how he was running, so we followed him.”

The couple was experiencing a rare sight.

The animal was an elusive and rarely seen wolverine, wildlife officials told McClatchy News. The Montana Standard first reported the May 2 sighting.

Wolverine sightings are rare, especially in populated areas, Molly Parks, carnivore coordinator for Montana Fish, Wildlife and Parks told McClatchy News.

“They are typically found in remote, high elevation areas and are solitary and quite elusive,” Parks said in an email.

The couple didn’t know it initially, but they did their own research to determine they saw a wolverine. They were blown away.

“It felt pretty special since it’s very rare for them to be in town like that,” Jaeger said.

Wolverines can be between 38 and 47 inches long, and weigh between 13 and 31 pounds, according to the National Park Service.

They’re “active year-round” and breed from April to October, according to the National Park Service. During the winter months, they “den in deep snow.”

Wolverines were nearly extinct in Montana in the 1900s but its population has since grown, according to Fish, Wildlife and Parks.

Now they can be found in remote locations such as Glacier National Park, the Bob Marshall Wilderness Complex and near Yellowstone National Park, according to Lee Enterprises.

In March, a tour group at Yellowstone National Park spotted an elusive wolverine walking on the road in front of them, McClatchy News reported. No other vehicles were around, and the tour group spent 3 minutes watching the wolverine.

“We turned around to make our way back, when I saw what I thought was a black bear running down the road,” Carl Kemp, a person on the tour, said on YouTube. “As soon as it turned, we realized we were in the middle of a once in a lifetime experience.”

Wheat importers in Asia scramble for supplies after Indian export ban


Workers fill sacks with wheat at a market yard on the outskirts of Ahmedabad

Mon, May 16, 2022
By Michael Hogan and Maytaal Angel

HAMBURG/LONDON (Reuters) - Wheat importers in Asia were scrambling to find new sources of supply on Monday after India banned exports of the grain at the weekend in a bid to keep a lid on soaring domestic prices, trade sources told Reuters.

Importers, especially those in Asia, were banking on wheat from India, the world's second-biggest producer, after exports from the Black Sea region plunged following Russia's Feb. 24 invasion of Ukraine.

Russia and Ukraine jointly account for about 30% of global wheat exports. Ukraine's exports are severely hampered because the war has forced it to close its ports, while Russia's exports have been hit by Western sanctions.

"Asian importers are likely to be in deep trouble. India was the Ukraine/Russia alternative especially for feed wheat. (They are) already today casting around for alternatives," said a Europe-based wheat trader at a global trade house.

He said importers in Asia were even looking to buy more Russian wheat despite payment problems linked to sanctions on Russian banks and elevated shipping insurance premiums.

Benchmark wheat futures in Chicago jumped by their 6% limit on Monday as markets reacted to the surprise ban, which came just days after New Delhi said it was targeting record wheat shipments of 10 million tonnes this year.

Its policy reversal now means only exports backed by letters of credit (LCs), or payment guarantees, issued before May 13 can proceed.

That equates to only about 400,000 tonnes, industry sources told Reuters, adding that 1.8 million tonnes is now trapped at the country's ports.

Traders holding that wheat face heavy losses because they will have to cancel their export deals and resell onto a weakening domestic market.

"It started already this morning. Traders (who don't have LCs) had to announce cancellation of contracts. I'd assume from mid-June there will be no more (India) shipments," said a second Europe-based wheat trader.

India's export ban, prompted by a heatwave that has cut harvest prospects and pushed domestic prices to a record high,

also comes amid output issues in traditional export powerhouses Canada, Europe and Australia.

Traders say the ban could drive global prices to new record peaks, hitting poor consumers in Asia and Africa particularly hard.

Top destinations for Indian exports include Bangladesh, Indonesia, Nepal and Turkey, and top global wheat buyer Egypt recently agreed to make a first ever purchase of Indian wheat.

That deal is officially still on the cards as India has said it will still allow exports to countries that request supplies "to meet their food security needs", but market experts are sceptical.

"There's uncertainty over how much will be exported to countries India considers having food security needs. They might just export to friendly neighbouring countries," said Carlos Mera, agri commodities analyst at Rabobank.

(Reporting by Maytaal Angel in London and Michael Hogan in Hamburg; Additional reporting by Gus Trompiz in Paris; editing by David Evans)

India’s wheat export ban is another reality check for its lofty soft power goals

By Manavi Kapur
Reporter

QUARTZ
Published May 16, 2022

In 2020, India wanted to vaccinate the world. Shortly after, it was forced to do a volte-face following an acute shortage at home.

A few weeks ago, it claimed it could feed the world should the World Trade Organization allow it. Later, on May 4, prime minister Narendra Modi reiterated his desire to “save the world from hunger.” After all, in the wake of the Russia-Ukraine war, India had got the perfect window to become a major wheat exporter.

On May 14, however, India banned the export of wheat, largely owing to a record high domestic food inflation. Lower yield due to intense heat waves piled on the country’s agony.

The G-7 has criticised India’s backtracking. Hardeep S Puri, the country’s agriculture minister, responded saying India will meet its immediate commitments.

The unofficial ban on vaccine exports during the deadly delta variant wave in April 2021 had hampered Serum Institute of India’s commitments to the World Health Organization’s vaccine-sharing initiative. The ban on wheat exports puts immense pressure on the global supply.

This may be deemed a failure for India from a soft-power, geopolitical standpoint.
Can India become a major wheat exporter?

Modi’s goal of India becoming a major wheat exporter hinged on the opportunity presented by the war. While India has been the world’s second-largest producer of the commodity, most of it was used domestically. Its share in the global wheat exports has been only around 1%.

It hoped to considerably plug the deficit created by Russia, which accounts for 30% of the global wheat exports. To some extent, Indian wheat exports did rise. Countries like Egypt and Turkey, besides others in Asia, tapped India following the onset of the war.

This, however, pushed prices to record highs at home. In the past few weeks, wheat prices have soared by 15%-20% in India, forcing the government’s hand. Now, with the ban, prices are rising globally, too.

This, combined with a lack of long-term policies on taxes and supply chain, is unlikely to make India a major wheat exporter anytime soon.

In US, states struggle to replace fossil fuel tax revenue

Oil rigs stand in the Loco Hills field along U.S. Highway 82 in Eddy County, near Artesia, N.M., one of the most active regions of the Permian Basin. Government budgets are booming in New Mexico. The reason behind the spending spree — oil. New Mexico is the No. 2 crude oil producer among U.S. states and the top recipient of U.S. disbursements for fossil fuel production on federal land. But a budget flush with petroleum cash has a side effect: It also puts the spotlight on how difficult it is for New Mexico and other states to turn their rhetoric on tackling climate change into reality. (AP Photo/Jeri Clausing, File)More

MORGAN LEE and MEAD GRUVER
Mon, May 16, 2022

SANTA FE, N.M. (AP) — Government budgets are booming in New Mexico: Teacher salaries are up, residents can go to an in-state college tuition-free, moms will get medical care for a year after childbirth, and criminal justice initiatives are being funded to reduce urban violence.

The reason behind the spending spree — oil. New Mexico is the No. 2 crude oil producer among U.S. states and the top recipient of U.S. disbursements for fossil fuel production on federal land. But a budget flush with petroleum cash has a side effect: It also puts the spotlight on how difficult it is to turn state rhetoric on tackling climate change into reality.

State governments in the nation’s top regions for producing oil, natural gas and coal have by far the highest per-capita reliance on fossil fuels — led by Wyoming, North Dakota, Alaska and New Mexico. The revenue bankrolls essential public services, from highway maintenance to prisons. In Carlsbad, New Mexico, oil infrastructure property taxes are underwriting a high school performing arts center, expanded sports facilities and elementary school renovations.

None of that would be possible without oil revenue, said schools superintendent Gerry Washburn.

“We can’t slow down in that area and what we do to fund schools until we have a legitimate replacement” for oil and natural gas income, he said. “Whether you’re in the middle of the oil patch or in an area with no oil and gas drilling going on, those policies are going to impact revenue in every school district in the state.”

Federal, state and local governments receive an estimated $138 billion a year from the fossil fuel industry, according to a study from the Washington-based nonpartisan economics group Resources for the Future, which does not advocate on energy policies. That's equivalent to the annual state spending of New York and Texas combined.

The cashflow is dominated by gasoline and diesel retail taxes in every state, but energy-producing states have the deepest dependence on fossil fuel income through a gamut of taxes, royalties, lease sales and fees. Because that revenue helps pay for government services, they tend to tax residents less, said Daniel Raimi, a fellow at Resources for the Future, and co-author of the study.

“That’s a really challenging dynamic if you think about a shift away from fossil fuels," he said. "They’re going to be faced with the question: Do we raise our taxes on our residents or do we reduce the level of services we provide?”

In New Mexico, oil and gas account for 42% of state government income, a share that is rising amid the war in Ukraine and record-setting oil production in the Permian Basin that stretches across southeastern New Mexico and western Texas. Additional oil income flows to a new interest-bearing trust for early childhood education.

Soaring fossil fuel industry profits also allowed the Democratic-controlled New Mexico Legislature to try to tackle the highest-in-the-nation unemployment rate and persistently high poverty. Lawmakers provided $1.1 billion in tax relief and direct payments of up to $1,500 per household to offset inflation.

At the same time, legislators balked this year at climate initiatives that might restrain petroleum production. They rejected a bill to limit climate-warming pollution in the production and distribution of transportation fuels, a step taken by West Coast states. New Mexico also shunned a state constitutional amendment for the right to clean air.

Democratic Gov. Michelle Lujan Grisham, up for reelection in November, said her administration is working to contain oilfield methane pollution and diversify the economy. New mandates call for electricity production from solar, wind and other renewable sources. But she has cautioned the federal government against significant restrictions on oil exploration and production, still the lifeblood of the state budget.

“We can work very effectively with oil and gas producers to both meet clean energy standards ... while still managing pretty incredible exploration of fossil fuels to meet the current energy demands of the world," the governor said in April.

Preserving income from oil, natural gas or coal production while acting on climate change can be especially tricky in blue states where Democrats often campaign on tackling global warming.

Colorado's Democratic Gov. Jared Polis is pursuing an ambitious clean-energy plan while trying to preserve $1 billion in annual oil and gas production tax revenue. To justify air pollution restrictions, Polis has cited real-time evidence of climate change, drought and fire.

But Polis, a wealthy tech entrepreneur, last year threatened to veto a proposal that might impose per-ton emission fees on polluters. William Toor, executive director of the governor's Colorado Energy Office, said the state's not targeting fossil fuel production — only the industry's emissions.

On Colorado's northeastern plains, Weld County Commission Chairman Scott James said state regulations stifle new drilling needed to support production and government revenue, especially for schools. The county is centered on a vast oil field stretching from the Denver area into Wyoming and Nebraska.

“I agree with the overall mission of reducing greenhouse gas, but there’s an environment that exists at the state Legislature that we must electrify everything, we must mandate it, we must do it now,” James said. "And these technologies are not yet ready for prime time. We simply don’t have the capacity to do it.”

Rural and economically isolated communities could find it hardest to adapt to a low-carbon economy, said Montana-based Headwaters Economics researcher and economist Kristin Smith, who studies public finances in North Dakota’s Bakken oil region. She anticipates “very hard decisions” about cutting areas like public health care and policing.

Some major petroleum producing states are forging ahead with their climate agendas.

Pennsylvania in April became the first major fossil-fuel state to adopt a carbon-pricing policy, joining an 11-state regional consortium that sets a price and declining limits on carbon dioxide emissions from power plants.

Democratic Gov. Tom Wolf's initiative comes without approval from the Republican-controlled Legislature in the nation’s No. 2 state for natural gas production — and a major exporter of gas-generated electricity. A per-well drilling fee on the state’s booming Marcellus Shale gas industry has rained cash on rural counties and municipalities for nearly a decade.

South of Pittsburgh, Washington County reaped over $100 million in the past decade. That’s equivalent to $500 per resident — a “game changer,” said county board chairwoman Diana Irey Vaughan. The windfall paid for park and bridge improvements, among others.

Democratic state Rep. Greg Vitali, an advocate for stronger climate change action, said local governments relying on gas drilling money will simply have to use traditional tools such as property taxes to get by.

Republican-dominated Wyoming, the top coal production state, has bold goals to reduce greenhouse emissions to less than zero even while fossil fuels account for over half its revenue.

That vision relies on eventually capturing carbon dioxide from coal- and gas-fired power plants and pumping it underground, possibly to increase oil production in aging fields in the middle of the state. Wyoming leaders are also looking to alternative fuels like hydrogen and nuclear power, using reactors that produce less waste.

Meanwhile, a decade of declining coal demand has sapped government income. Republican Gov. Mark Gordon in March signed a coal tax reduction, forgoing about $9 million annually to help the coal industry stay economically viable.

The state — one of only two with no taxes on individual income, corporate income or gross receipts — must confront its dependence on fossil fuel money eventually, said Jennifer Lowe, executive director of the Equality State Policy Center, a government watchdog group.

“At some point, there’s going to have to be a come-to-Jesus moment,” Lowe said.

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Gruver reported from Cheyenne, Wyoming. Associated Press writers Jim Anderson in Denver and Marc Levy in Harrisburg, Pennsylvania, contributed to this report.

WAR WINFALL
Soaring oil and gas prices help Russia more than triple its current account surplus to $96 billion, its largest in 28 years


Phil Rosen
Mon, May 16, 2022, 

Russian President Vladimir Putin visits Kaliningrad in 2018.Alexei Nikolsky/Reuters

Russia has a current account surplus of $95.8 billion in the first four months of 2022, central bank data shows.

That's more than triple the $27.5 billion from the same span last year.

Russian oil export revenue is up 50% since the start of 2022, the International Energy Agency said last week.

Russia has a current account surplus of $95.8 billion so far in 2022, the central bank said, helped by surging prices for oil and gas exports paired with cratering imports amid Western sanctions.

This year's surplus is more than triple the $27.5 billion in the same span last year and is the highest since 1994.

Western sanctions have yet to fully deter global customers from buying Russian oil. While the European Union has publicly condemned the Kremlin for its war in Ukraine, it has yet to impose an oil embargo and remains Russia's top export market. Meanwhile, China and India have stepped up purchases of Russian oil.

Last week, the International Energy Agency said Russian oil export revenue is up 50% since the start of 2022 with the Kremlin generating close to $20 billion per month in sales.

Export volume has rebounded to levels seen before Russia invaded Ukraine. In April, Russian oil exports climbed by 620,000 barrels per day from the prior month to 8.1 million, back to their January and February average, the IEA said.

Revenue from oil and gas sales — as well as Moscow's strict capital controls — have helped prop up Russia's ruble, which has become the world's top-performing currency against the dollar.