Monday 9 June 2014

China presents documents to UN Secretary-General Ban Ki-moon, showing Vietnam's provocation

 A Chinese envoy on Monday sent a note to UN Secretary-General Ban Ki-moon, presenting documents making clear Vietnam's provocation and China's stance regarding the Xisha Islands in the South China Sea.

In the note, Wang Min, China's deputy permanent representative to the United Nations, also asked Ban to circulate the documents, as UN General Assembly documents, among all UN member states.
The documents included an article, released by the Chinese Foreign Ministry on Sunday and titled "The Operation of the HYSY 981 Drilling Rig: Vietnam's Provocation and China's Position", as well as annexed material that proves the Xisha Islands are part of Chinese territory.
"China sent the note to tell the international community the truth and set straight their understanding on the issue," Wang told reporters here after delivering China's second note to the UN chief on Vietnam's provocative actions on the sea. The first note was sent to Ban on May 22.
He noted that the actions of the Vietnamese side, which illegally and forcefully disrupted the Chinese operation, were serious infringements upon China's sovereignty, sovereign rights and jurisdiction, grave threats to the safety of Chinese personnel and the HYSY 981 drilling rig, and gross violations of the relevant international laws, including the Charter of the United Nations, the 1982 UN Convention on the Law of the Sea (UNCLOS) and 1988 Convention for the Suppression of Unlawful Acts against the Safety of Maritime Navigation and the Protocol for the Suppression of Unlawful Acts against the Safety of Fixed Platforms Located on the Continental Shelf.
"Such actions also undermined the freedom and safety of navigation in these waters, and damaged peace and stability in the region," Wang added.
The Chinese envoy stressed that Xisha Islands are an inherent part of China's territory, over which there is no dispute.
Wang quoted the documents as saying that, prior to 1974, none of the successive Vietnamese governments had ever challenged China 's sovereignty over the Xisha Islands.
"Vietnam had officially recognized the Xisha Islands as part of China's territory since ancient times," he said. "This position was reflected in its government statements and notes as well as its newspapers, maps and textbooks."
But now, Wang noted, the Vietnamese government goes back on its word by making territorial claims over China's Xisha Islands, which is a gross violation of the principles of international law, including the principle of estoppel, and the basic norms governing international relations.
Wang also underlined that China is a staunch force for maintaining peace and stability in the South China Sea and promoting cooperation between and development of countries in the region.
He went on to say that China wants good relations with Vietnam, but there are principles that China cannot abandon.
Wang reiterated that China urges Vietnam to bear in mind the overall interests of the bilateral relations and peace and stability in the South China Sea, respect China's sovereignty, sovereign rights and jurisdiction, immediately stop all forms of disruptions of the Chinese operation and withdraw all vessels and personnel from the site, so as to ease the tension and restore tranquility at sea as early as possible.
"China will continue its effort to communicate with Vietnam with a view to properly addressing the current situation," he added.
Source: ChinadailyUSA

Huawei tries to be a healthy "sapling" in competition with "big trees": interview

Huawei Technologies Co. Ltd, a Shenzhen-based Chinese telecommunication giant, is trying to get more business momentum in the U.S. market by joining hands with local partners.
"By continuously strengthening cooperation with local partners, Huawei is gradually expanding the visibility and credibility in the U.S. market", said Shen Jingyang (Victor Shen), the CEO of Huawei Enterprise USA Inc.
As one of the world's leading manufacturers of telecommunications equipment, Huawei has been successful in Europe, India, Japan, and emerging markets generally. Its commercial LTE solutions have been deployed in more than 100 capital cities and nine financial centers worldwide, according to Shen.
However, Huawei's business in the U.S. has been hampered by " security concerns" by the U.S. government.
But Huawei does not give up the U.S. market. On the contrary, it adopts a series of new strategies to meet the challenges.
"We considered ourselves as a start-up in the U.S.," Shen said in a recent interview with Xinhua.
"We decided to put our advantage and strength on only 10 percent of the U.S. market," said Shen, after doing a subtraction on their business area and put aside those hard, non-realistic and sensitive ones.
Huawei now is trying to cultivate clients in retail, education, media & entertainment industries and Chinese companies.
The "subtraction principle" helped Huawei focus on certain part of the big market and build closer connections and partnerships with over 100 customers by providing personalized solutions, and delivering a superior user experience.
Sears, one of the U.S. leading retail enterprises, decided to use Huawei's technology and equipment when upgrading hundreds of stores' network. Northern Michigan University, Crowley Independent School District in Texas and Digital Domain, a visual effects and digital production company in Hollywood, accepted storage, internet solutions and other services provided by Huawei.
The U.S. has huge ICT demands, said Shen, representing about 40 percent of the world's annual market and 60 billion dollars market is accessible to Huawei.
In such a well-developed market, Huawei faced tough competition. "Our major local competitors have first-class technology, management experience and tens of thousands of partners," Shen told Xinhua, "we compared them to giant and leafy trees which cloud sunshine needed for plant growing underneath."
In order to make a breakthrough, Huawei sought and valued its local partners and employees.
"We now have a lighthouse project, which is to find lighthouse partners in each area," said Shen. "We'd like to share our market advantage with them and provide them our training and technical support, so as to gain brand and market influence while ensuring healthy, sustainable, and effective growth for both sides."
"The success of our partners like bright lighthouses," said Shen, "They could help Huawei develop an ecosystem in targeting market to attract more partners and clients to cooperate with Huawei."
Shen is confident to lead the company through the difficult situation and to be a healthy "sapling" in the competition with " big trees".
Source: Xinhua

WeChat Opens Contents to Tencent-backed Search Engine Sogou

Shortly after releasing a mobile search app this May, Sogou, the search and Internet service provider of Sohu, unveiled today a new search engine where users can find all the contents generated on WeChat platform.
The users can search WeChat contents either by public service accounts or by keywords of articles. The contents generated by authenticated accounts will be put on higher rank on the search result list.
The search engine will be available both on mobile and PC terminals. The web version will feature QR codes of the searched public service accounts to facilitate the users to subscribe for these accounts.
This is the first time for WeChat to open its contents to a third-party search engine and it is not surprising for us to see WeChat chose Sogou as its partner. Tencent, parent company of WeChat, acquired a 36.5% stake in Sogou last year and merged its own search service Soso into the latter.
Sogou’s newly released mobile search app is also integrated into Tencent’s various services, like QQ IM, social network Q-zone, online news service QQ.com, etc.
Source: TechNode

JD.com to Launch Cloud Services for Smart Gadgets and Home Appliances

JD.com, the Amazon-like Chinese online retailer, has developed a Cloud platform,JCloud, for smart hardware products and smart home appliances in-house that will officially be launched later this month.
The largest online retailer of China by market cap has been building a platform for smart hardware, which even includes an incubation program, called JD+, and has helped smart gadgets made in or outside China such as fitness tracking gadget Shine achieve high-volume sales.
The Cloud platform, like many others, will offer Cloud storage and data analytics services. With the addition of this, JD.com will be providing almost everything smart hardware makers big and small need, from funding, component parts like WiFi chips, to distribution channels.
With Tencent being its second largest shareholder, JD recently had been added into Tencent’s mobile messaging app WeChat as the Shopping channel. The link to the smart gadget site of JD is featured in one of the three sub-channels.
JD is also building experience stores for consumers to try out those smart gadgets on its platform.
Now a couple of other Chinese tech companies who also wanted to build platform for smart hardware have been dwarved by JD. Chinese search giant Baidu built a Cloud platform hoping all the smart gadgets to use its Cloud services. JD and Baidu announced a partnership early this year with the latter offering the Cloud services. But before long JD is taking it all.
One of the few in the smart hardware ecosystem JD hasn’t tapped into is crowdfunding. Right now JD is working with those crowdfunding sites that the latter would introduce products which are ready to ship to JD. It’d be very easy for JD to build a crowdfunding site if the number of project backers or the amount of pledged funding is big enough to be considered by JD as a threat to post-crowdfunding sales.
Source: TechNode

China May CPI rose 2.5 pct y/y, PPI fell 1.4 pct

 China's consumer prices rose 2.5 percent in May from a year earlier while producer prices fell 1.4 percent, official data from the National Bureau of Statistics showed on Tuesday, slightly above market expectations.

Economists polled by Reuters had expected consumer inflation of 2.4 percent and factory-gate prices to fall 1.5 percent.

Source: Reuters

Brasil: Economistas pioram projeção de expansão da economia neste ano a 1,44%

 Economistas de instituições financeiras pioraram o cenário para o crescimento da economia em 2014, ao mesmo tempo em que mantiveram a perspectiva de que o Banco Central não voltará a elevar a Selic este ano.
Na pesquisa Focus do BC divulgada nesta segunda-feira, os agentes econômicos reduziram a projeção para o crescimento do Produto Interno Bruto (PIB) neste ano a 1,44 por cento, 0,06 ponto percentual a menos do que na semana anterior.
Ao mesmo tempo, pioraram bastante a estimativa de expansão da indústria, para 0,96 por cento, ante 1,24 por cento na semana anterior. Esse setor iniciou o segundo trimestre ainda mostrando contração, com recuo de 0,3 por cento em abril, indicando que a atividade econômica do país terá dificuldade para se recuperar.
No primeiro trimestre, o PIB brasileiro cresceu apenas 0,2 por cento na comparação com os últimos três meses do ano passado, quando a expansão foi de 0,4 por cento.
Na semana passada, o BC informou que vê menos crescimento econômico neste ano, e ao mesmo tempo reduziu as expectativas de inflação em 2014 e 2015, através da ata da reunião do Comitê de Política Monetária (COpom) em que manteve a Selic em 11 por cento ao ano.
INFLAÇÃO
No Focus, os economistas mantiveram a projeção para o IPCA este ano em 6,47 por cento e ajustaram a perspectiva para 2015 em 0,02 ponto percentual a mais, para 6,03 por cento. Nos próximos 12 meses, a estimativa permaneceu em 6,01 por cento.
Já o Top 5 de médio prazo, com as instituições que mais acertam as projeções, não vê mais a inflação estourando este ano
o teto da meta do governo, de 4,5 por cento, com margem de 2 pontos percentuais para mais ou menos. A estimativa agora é de que o IPCA encerre 2014 a 6,30 por cento, contra 6,60 por cento na pesquisa anterior.
Em maio, o IPCA desacelerou a 0,46 por cento, dando força às expectativas de que o BC não deve voltar a elevar os juros tão cedo num cenário também de atividade fraca, o que já havia sido apontado na ata.[nL1N0ON115]
Os economistas consultados pelo BC também deixaram inalterada a perspectiva de que a Selic não voltará a ser elevada este ano, encerrando 2014 no atual patamar de 11,00 por cento.
Novo movimento de aperto monetário, para eles, ocorrerá apenas no ano que vem, em janeiro, de 0,50 ponto percentual, inalterado sobre a pesquisa anterior. Para 2015 também foi mantida a perspectiva de que a taxa básica de juros terminará a 12,0 por cento.
Por sua vez, o Top 5 de médio prazo vê a taxa básica de juros a 11,25 por cento neste ano, projeção inalterada. Mas reduziu a perspectiva para 2015 a 11,63 por cento, sobre 12,50 por cento.

Source: Reuters

China Mobile to buy $881mln stake in Thai billionaire's True Corp

- State-owned China Mobile Ltd <0941.HK> has agreed to buy an 18 percent stake in Thai telecoms group True Corp for $881 million, in Thailand's first major corporate deal since the military coup last month.

True Corp, backed by billionaire Dhanin Chearavanont's Charoen Pokphand Group, said it was raising $2 billion through a rights share issue to boost its financial position. As part of the fund raising, True Corp will sell 4.4 billion shares to China Mobile, the world's biggest carrier by subscribers, at 6.45 baht each, a 13.4 percent discount to True's last traded price.

The deal is part of the Thai group's long-term plan to secure a foreign partner and underscores Dhanin's strong political connections in mainland China, sources familiar with the matter said.

In 2013 Dhanin's CP Group emerged as a surprise buyer for global bank HSBC Plc's $9.4 billion stake in Ping An Insurance Group Co of China Ltd <601318.SS>. CP Group was the first multinational to invest in China's agri-business in 1979 and it was tasked with helping to modernise China's farm sector. It also operates Lotus super markets in Shanghai, according to the company's website.

"Through the proposed strategic investment in True Corp, China Mobile is expected to access new customers, international business opportunities and new earnings growth drivers, which is of great significance to the telecom business of the company," China Mobile's chief executive Li Yue said in a statement.

The proposed deal comes less than three weeks since the military seized power in Thailand. The two companies made no mention of the coup or preceding political crisis, which weighed on corporate dealmaking. New mergers and acquisitions in the country have slumped by 72 percent by value from a year ago to $648 million by end May, according to Thomson Reuters data.

"The deal is unusual given the country is having a political situation like this, " said Mintra Ratayapas, an analyst at KK Trade Securities,

"Some foreign investors voice concerns about the situation in Thailand. But for True, it seems like the buyer is confident about the company thanks to strong connections with Dhanin."


STRUGGLING AT HOME

True has been grappling with rising debt as it invests in the expansion of its network to compete with market leader Advanced Info Service and second-ranked Total Access Communication .

True is the only Thai mobile company without a foreign partner and the new investment is expected to help with its planned regional expansion, a source with knowledge of the deal said on Monday.

True shares were suspended earlier on Monday pending an announcement and last traded up 2.8 percent at 7.45 baht.

Like True, China Mobile has been struggling in its home market, reporting in April its lowest quarterly profit in five years as it invests heavily to catch up with rivals in providing 4G mobile broadband services.
China Mobile, which had $69.4 billion in cash and short-term investments at the end of 2013, also faces challengers in the shape of newly-licensed mobile virtual network operators, who lease capacity from the network operators like China Mobile and sell their own packages to subscribers.

If successful, the Thai deal would mark China Mobile's first transaction outside of China, Hong Kong and Taiwan in seven years, according to Thomson Reuters data.

China Mobile is being advised by CICC, while Deutsche Bank is advising True Corp, a source familiar with the matter said. Deutsche Bank declined to comment, while no one at CICC could be reached for immediate comment.


Source: Reuters

Facebook Poaches PayPal President David Marcus To Run Messenger, Maybe Monetize It With Payments

Source: TechCrunch
Facebook doesn’t show ads in Messenger or WhatsApp. Instead, payments could be the key to earning money on chat, especially in the developing world where ad rates are low. If that’s the strategy, Facebook just got the perfect executive to lead the charge. It’s poached PayPal’s president David Marcus to run its Messenger unit.
Facebook hinted that Marcus would be looking outside of ads for how Messenger could bring in revenue, writing in its announcement of the hire that “David is a widely respected leader in the technology industry with a track record of building great products and finding creative ways to turn them into great businesses.” For now, eBay CEO John Donahoe will be the interim PayPal president.
Marcus joined PayPal three years ago when it acquired his mobile payments company Zongfor $240 million in cash. Zong let users buy things online through carrier-billed mobile payments.
In a Facebook post announcing his move, Marcus wrote: “While I was in the middle of my thought process about what was next for me, Mark Zuckerberg and I got together. Mark shared a compelling vision about Mobile Messaging. At first, I didn’t know whether another big company gig was a good thing for me, but Mark’s enthusiasm, and the unparalleled reach and consumer engagement of the Facebook platform ultimately won me over. So… yes. I’m excited to go to Facebook to lead Messaging Products.”
Facebook has previously said that it wants its standalone apps to hit at least 100 million users before it starts monetizing them. Messenger now has 200 million users and recent acquisition WhatsApp has 500 million, so they’re both definitely eligible. Both have been focusing on growth and boxing out the competition in the heated messaging space. But since monetization plans can take a while to get mapped out and then revved up, it’s smart for Facebook to start thinking about this now.
Facebook has already made some forays into the payments space. The Financial Times reported in April that Facebook had applied for an e-money license in Ireland that let it handle peer-to-peer money transfers in Europe.
Using Marcus’ expertise could one day help Facebook earn significant revenue from developing nations and the parts of the world it’s trying to connect to the web through Internet.org. In these markets, buying power is smaller in absolute terms because of lower currency values, cost of living, and more modest incomes of citizens. This makes it tough to earn serious revenue from ads. Facebook makes just 11 percent of its revenue from all countries outside of the U.S., Canada, Europe, and Asia combined.

Screen Shot 2014-06-09 at 3.05.10 PM

Eventbrite Beefs Up Engineering To Take On Ticketmaster

Eventbrite is setting its sites on a bigger vision that will take on the likes of Ticketmaster and StubHub as the go-to events space. It’s been busy hiring a bunch of new and notable engineering talent of late to create what they hope will become a true platform for event discovery.
Eventbrite just crossed the 200-million-tickets-sold mark and reaped over $1 billion in sales in 2013 alone. The company also rolled out advanced reserved seating charts last March in order to add seated concerts and sporting events.
Overall ticket sales on Eventbrite have grown nearly 300 percent in just the past month, according to the company. The free events are a big driver of Eventbrite’s business. The number one driver of new organizers are previous attendees who got inspired to do their own event, according to the company.
The company most recently brought in April Chang from PayPal as a new VP of Engineering, Consumer & Infrastructure Operations, Danny Greenfield, author of Two Scoops of Django, as well as co-creator of the Django framework, Simon Willison.
Chang’s vision for the revamp is to own the event space and make it more of an event suggestion marketplace.
One possible scenario here is going to the site or on mobile and seeing that a few of your friends are already at an event in real time that you would not have known was happening in your area otherwise, then being able to immediately purchase tickets and attend.
Eventbrite co-founders Kevin and Julia HartZ say the reason for the new focus is a previous indication that a marketplace was already inevitably being created. Over 1 million people come to the site to buy tickets each week, and over half of them end up returning to the site once again to sign up for more events.
The Eventbrite events marketplace will further facilitate people already coming back and looking for more stuff to do. Eventbrite believes positioning themselves as a go-to site for event discovery, in addition to social integration and the wide inventory of events on the company’s platform positions them well as an events platform, beyond mere planning and organizing.
Source: TechCrunch

China's Qingdao Port halts some metal delivery due to probe -sources

 China's Qingdao Port has sealed its Dagang bonded metal storage area and suspended delivery of metals from the section, as authorities investigate an alleged fraud into financing of copper, aluminium and alumina, two sources with direct knowledge of the matter said.

A Reuters reporter at the port on Saturday saw that the main gates into the Dagang bonded storage zone, an area roughly the size of two soccer pitches and which mainly holds aluminium ingots, were closed with a chain and padlock.

"The bonded zone has been sealed off and no metal deliveries are allowed," said a person at the port, speaking on condition of anonymity because the source was not authorized to speak to media.

A second person, whose firm has copper stocks in another bonded zone at the port, said authorities had ordered the sealing of the Dagang metals storage area.

The Qingdao Customs Authority is targeting for the investigation on the metal ownership issues within this month, said a senior executive at a firm which produces and trades aluminium.

The bonded storage area, located at the front of Qingdao Port's administrative building, was watched by two security guards during a visit by a Reuters reporter.

China's Qingdao Port International Co. Ltd. said on Friday that it was assisting in the investigations on fraud related to metal financing but neither the company nor its employees are implicated.

It said its Dagang branch was asked by the Public Security Authority, China's police and security administration, to help with an investigation relating to aluminium and copper products under the name of a third-party cargo shipment agency on behalf of a cargo owner.
Qingdao Port, the world's seventh-busiest port, is not a major copper trading centre like Shanghai. A spokesman for the port said he could not immediately comment on the sealing of the Dagang bonded zone.

The amount of metal involved in the financing probe was about 20,000 tonnes of copper, nearly 100,000 tonnes of aluminium ingots and about 200,000 tonnes of alumina, the raw material for aluminium production, said the second source.

Qingdao Port also has bonded zones for metals storage in other areas and deliveries to those sections had not been affected by the probe, said the source.

News of a investigation into a metal financing fraud at Qingdao Port, where a third-party company is suspected of using single cargoes of metal multiple times to obtain financing, has rattled banks and trading houses and unsettled markets. 
Trading houses and banks have sent executives to the Qingdao port as well as other terminals to physically check on their exposure, while at least one bank has halted new metal financing to some clients in China.

However, trade sources said other ports in China are allowing free access and entry for stakeholders to their goods and audits so far suggest that the financing scam at Qingdao was an isolated case.

"As far as I’m aware, investigations to date have not revealed anything untoward at any other location," said a source at a warehousing company.

The probe has not affected iron ore shipments and deliveries at Qingdao Port, China's largest iron ore terminal.

"It is business as usual; the ships are still coming in and trucks are still sending iron ore out of the ports," said a port official, who declined to be identified.

Source: Reuters

Aluminium hits 9-1/2 month high, zinc touches 15-1/2 month peak

Aluminium prices hit their highest in 9-1/2 months on Monday as inventories continued to decline and speculators piled into the market after key chart-based levels were breached.

Zinc hit its highest in 15-1/2 months on strong demand, but copper slipped to a one-month low on concerns that a probe into metals storage and financing fraud at a Chinese port could cut investor buying interest.

Three-month aluminium on the London Metal Exchange

(LME) hit a session peak of $1,918 a tonne, the strongest since Aug. 22, 2013, before paring gains to close at $1,911, up 1.8 percent.

"The move is quite bullish as it is independent from forex,"

said Gianclaudio Torlizzi, partner at metals consultancy T-Commodity.

Computer-driven speculative funds were behind the latest surge after aluminium broke above a peak touched in April, he said, adding the next target was $1,945 a tonne.

"I am reasonably bullish on aluminium this year due to supply tightness. Aluminium has seen the highest reduction of on-warrant stock year-to-date among the LME complex," he said.

LME on-warrant stock - those inventories not ready to be delivered and therefore available to the market - in aluminium has declined by a quarter to 2.32 million tonnes this year.

Russian producer Rusal <0486.HK> said it expects prices may rise as far as $2,000 a tonne in the coming months on to a combination of bullish physical and technical factors.


LME zinc jumped to a session high of $2,145 a tonne, the loftiest since February 2013, before closing at $2,131, a gain of 1.3 percent.

Analyst Mark Keenan of Societe Generale in Singapore said demand for zinc was improving from a diverse base, including auto and white goods.

Copper rebounded from a one-month low as investors digested the latest news about an investigation at China's Qingdao Port, a huge trading hub in the northeast, into whether single cargoes of metal were used multiple times to obtain financing.

As part of the probe, Qingdao Port has suspended delivery of metals from its Dagang storage zone.
Three-month copper fell to a session low of $6,636 a tonne, its weakest since early May, before recovering to finish at $6,670, a decline of 0.24 percent.

"Until there is more clarity about the amount of metals investigated, traders will dump more futures. At the same time copper is quite oversold now," Torlizzi said.

The uncertainty continued to show up in LME spreads.

Cash copper for nearby delivery traded at just $11 above the benchmark three-month price, down from more than $100 at the end of May , with some copper at Qingdao Port said to be on its way to more regulated LME warehouses.

Meanwhile, China traders continue to dump physical metal on worries that access to financing will be constrained.

Premiums for copper held in Shanghai's bonded zones dropped another $5 to $90-$110, according to China price provider Shmet, down $25 since the middle of last week. (www.shmet.com)

Data earlier showed China's imports of major commodities fell in May from the previous month as robust shipments in April caused a supply overhang, credit tightened and authorities increased scrutiny of commodities financing.

Copper imports from the world's top consumer fell 15.6 percent from a month earlier to 380,000 tonnes in May. China consumes around 40 percent of the world's copper.

Lead ended up 1.5 percent at $2,141 a tonne, tin added 0.52 percent to close at $23,295 while nickel finished up 0.3 percent at $18,905.


Source: Reuters

WSJ: David Einhorn: ‘We Are Witnessing Our Second Tech Bubble in 15 Years’

          The WSJ reports,"hedge-fund manager David Einhorn just joined the growing list of market watchers warning about a market bubble.
“There is a clear consensus that we are witnessing our second tech bubble in 15 years,” said Mr. Einhorn of Greenlight Capital Inc. “What is uncertain is how much further the bubble can expand, and what might pop it.”
He described the current bubble as “an echo of the previous tech bubble, but with fewer large capitalization stocks and much less public enthusiasm.”
There are three reasons he cited in an investor letter that back his thesis: the rejection of “conventional valuation methods,” short sellers being forced to cover positions and big first-day pops for newly minted public companies that “have done little more than use the right buzzwords and attract the right venture capital.”
Pricey stock valuations, record high levels of margin debt and a near record number of money-losing companies going public have made some investors nervous that the market has rallied far beyond what the fundamentals dictate.
Some of the market’s biggest momentum plays, such as biotech, Internet and social-media stocks, have been hit hard since early March amid concerns that they have gotten too pricey. Many of those names have recovered some of those losses over the past week and a half.
Without disclosing specific names, Mr. Einhorn said he has shorted a basket of so-called momentum stocks. He highlighted the risk of such a move: “We have repeatedly noted that it is dangerous to short stocks that have disconnected from traditional valuation methods,” Mr. Einhorn said. “After all, twice a silly price is not twice as silly; it’s still just silly.
But now that there is “a clear consensus” that tech stocks are in a bubble, he said he is more comfortable shorting a basket of these high-flying stocks".

Iraq to stay ahead of Iran for now in rivalry for OPEC No.2 spot

 A full lifting of sanctions on Iran could spark new rivalries within OPEC as Tehran seeks to reclaim its rank as No. 2 producer from former foe Iraq.

The two neighbours both aim to expand supplies in the next few years, which could make life difficult for the Organization of the Petroleum Exporting Countries if surging output from outside the group forces OPEC to consider cutbacks.

Baghdad got off to a galloping start this year, ramping up production to 3.4 million barrels per day (bpd) and lifting exports to a record 2.8 million bpd in February, nailing its position as OPEC's second-biggest producer behind Saudi Arabia.

"It's a race for capacity. They may be neck and neck for the next few years, but my money is on Iraq pulling away from a trailing Iran," said Peter Wells of geological consultancy Neftex, who has worked in Iran.

Deteriorating security has reversed early gains, but Iraqi output of around 3.2 million bpd is still up on 2013 and Baghdad is targeting about 4 million by year-end including the autonomous northern Kurdish region.

Iran, more confident after a partial lifting of Western sanctions, has squeezed out more oil to pump 2.8 million bpd. Oil Minister Bijan Zanganeh has vowed to return Tehran to its No. 2 slot as soon as sanctions are fully lifted.

Oil experts say rates could surge to 3.5 million bpd within six months of Tehran being fully unshackled - although the prospects for a final deal between Iran and Western powers may be some way off. Even so, that may not be enough for Iran to overtake Iraq.

"Iran's infrastructure is old but functional. The biggest issues affecting production growth are likely to be bureaucracy and logistics," said a senior oil company source.

"It will be difficult for Iran to surpass Iraq on a sustainable basis in less than two years and more likely three."


IRAQI EXPANSION

The world's biggest oil companies have been expanding Iraq's southern fields - Rumaila led by BP , West Qurna-1 run by Exxon Mobil and Zubair operated by Eni - since 2010 when they signed a series of service contracts with Baghdad.

That revival has gained momentum with the start-up of Lukoil-operated West Qurna-2, considered the world's second-largest untapped deposit, and additional oil from Majnoon, where Royal Dutch Shell is in charge.

But Big Oil could also be tempted by the riches of neighbouring Iran, once sanctions are lifted. To woo them, Tehran has worked up a vastly improved version of its former buy-back investment contract.

Iranian officials say their terms are far more attractive than Iraq's.

"There will be no shortage of companies wanting to help. And if the new upstream terms become clear in the course of this year it would cut the negotiating time," said a senior oil executive from a Western oil company.

Foreign oil companies at work in Iraq's oilfields have long complained about slim margins, red tape and contract delays. But they are unlikely to give up on Iraq in favour of Iran.

"There are quite a few companies committed to Iraq right now. You don't just drop everything and leave after you've built up a local organisation and made investments," said an executive from a Western oil company involved in Iraq.

"But when Iran does open up, it will put more pressure on Iraq to ensure their terms are competitive."

Both straddle huge reserves of oil - Iran the world's fourth, Iraq the fifth - but Iraq may have the advantage when it comes to extracting them.

"Iraq is building up mostly from new fields with potential to exceed 8-9 million bpd by 2025," said Wells.

"Iran's capacity - built mainly from old fields plus Azadegan/Yadavaran - is likely to be restricted to around 4.5 million bpd. This could be achieved by 2019 if sanctions are removed this year and projects are awarded quickly."

There are major risks for both OPEC members when it comes to tapping their reserves.

For Iraq, internal conflicts, torturous bureaucracy and spiraling unrest pose major challenges. Exports and production since March have been cut by at least 200,000 bpd by attacks on Iraq's northern pipeline to Turkey.

For Tehran, the danger is that sanctions continue to be applied or that internal politics will stymie the process once the measures are removed.

OPEC, meeting in Vienna on Wednesday, expects its market share to come under pressure in the next few years as the U.S. oil boom and other competing sources boost rival supply, making it harder to accommodate rising Iraqi or Iranian output without a hefty cutback by Saudi Arabia and Gulf allies Kuwait and the United Arab Emirates.

"Iran should be able to get well above 3.5 million barrels per day in a relatively short time from sanctions being lifted," said Samuel Ciszuk, analyst at the Swedish energy agency.

"And with Iraq's recent and continued growth that could be an interesting challenge for OPEC to handle."


Source:  Reuters

Oil Development: Kashagan appoints Exxon executive to run US$50 billion offshore Kazakhstan's troubled oil venture

 The troubled Kashagan oil development has named an executive from U.S. firm Exxon Mobil to run the venture while also streamlining its complicated structure in an attempt to fix the beleaguered $50 billion project offshore Kazakhstan.

The group said on Friday Stephane de Mahieu, an Exxon secondee, had become managing director as of May 1, 2014.

However, it denied a report in industry publication Nefte Compass that Exxon would take over as operator of Kashagan saying that instead all seven oil firms involved will be effectively operators through a rejigged venture.

"The appointment of an ExxonMobil secondee to managing director does not mean that Exxon is taking over the operatorship of North Caspian Sea Production Sharing Agreement," a spokesman for the venture Hans Wenck said.

After delays and cost overruns, production at Kashagan - one of the world's biggest finds of the past decades - finally started last September but was halted in early October after the discovery of gas leaks in the pipeline network.

Oil output may not restart until early 2016, Kazakh officials said in May, urging foreign partners to start replacing leaky pipelines at the deposit.

Italy's Eni was given the job of operating the project in 2001. It later lost its role as the sole lead operator following major delays and cost overruns.

The Kashagan shareholders are Eni, Exxon Mobil, Royal Dutch Shell , France's Total and Kazakh state oil company Kazmunaigas, each with 16.8 percent, and Japan's Inpex and China National Petroleum Corp. (CNPC)  as junior partners.

The seven firms will continue to oversee the managing director.

But under the new scheme, the reformed joint venture, run by the managing director, will be responsible for drilling, development and production at the same time, whilst in the past those responsibilities were split in a complicated way between Eni, Kazmunaigas, Shell and Exxon.

No changes to the production sharing agreement or the project's ownership structure are envisioned as a result of the planned transition, the venture said in a statement.

Working "under one umbrella" means that workflows will be more efficient, Wenck said.

The field was meant to be producing 370,000 barrels per day at the peak of the first phase which is likely to be achieved only a few years after the field restart.


Source: Reuters

Struggling Gas Projects around the World



In the east Mediterranean, where Israel and Cyprus have discovered large offshore gas fields, Australia's Woodside Petroleum last month pulled out of an agreement to take a stake worth up to $2.7 billion in Israel's flagship Leviathan gas project.

Woodside is a specialist LNG developer and was targeting sales in Asia with its involvement in Israel.

"After many months of negotiations it is time to acknowledge we will not get there under the current proposal," Woodside CEO Peter Coleman said at the time.

In Central Asia, France's Total pulled out of Azerbaijan's huge Shah Deniz II gas project, which is expected to produce 16 billion cubic metres (bcm) of gas for export to Turkey and Europe towards the end of this decade.

Norway's Statoil had reduced its stake in the project in May.
In North America, several LNG export terminals are also beginning to have trouble attracting buyers.

In East Africa, where impoverished Mozambique and Tanzania hope recent offshore gas discoveries can bring future wealth, analysts have said developers will struggle to find necessary financing and that costly production delays are likely.
"I believe the speed with which the East African projects have been promised is somewhat ambitious since all infrastructure there has to be built from scratch," Shell's 
Matthias Bichsel said.

Mozambique and Tanzania hope to export their first cargoes around the turn of the decade.

In Asia, uncertainty over future pricing of LNG has led consumers to hold off signing 20-year deals amid expectations that prices will soon enter a period of decline.

As a result, final investment decisions on new projects have come to a virtual standstill, while cost blowouts in Australia are further deterring investors from signing up.


LONG-TERM GROWTH

Despite the troubled perspective for many gas projects, Bichsel said the outlook for the sector was positive.

"We're quite excited about gas, there is a lot it can be used for, for instance gas to liquids, gas for transport or gas to chemicals, and there's also a lot of work being done to bring down the production costs of LNG," he said.

"In oil, it's more maintaining production but in the long term, we're talking decades ahead, we see a decrease in oil demand and gas will take a more prominent role, including from shale gas. But it'll take time."

Source: Reuters

Only a fraction of big gas export projects will be built - Shell

Only a fraction of the natural gas export projects being developed around the globe will become reality as high costs and weakening gas prices torpedo those that until recently promised huge returns on investment.

Large natural gas field discoveries on and offshore have prompted several countries to plan liquefied natural gas (LNG) export projects, including in North America, Australia, East Africa and the east Mediterranean.

But high development costs and low profit margins in the gas sector mean most of these will fail, Royal Dutch Shell's director of projects and technology told Reuters in an interview.

"There is always so much talk about these big LNG projects around the world, but only a small fraction of them will get built," said Matthias Bichsel, who is also a member of Shell's Executive Committee.

"Costs in the oil and gas sector are still on the rise and outpacing inflation, and gas projects are extremely price-sensitive because the margins are so thin," he added.

Bichsel, without commenting on specific projects, said that in Australia, high labour costs had caused problems for developers. The country hopes to overtake Qatar as the world's biggest LNG exporter.

Shell is building the world's first floating liquefied natural gas (FLNG) project in Australia, named Prelude, which will be the biggest maritime vessel ever constructed.

It also has a 25 percent stake in the massive Gorgon LNG project on Australia's western coast, led by Chevron .

The development's costs have soared from initial estimates of $37 billion in 2009 to almost $55 billion on the back of high labour expenditures and complex technology.
Also in Australia, Shell exited the Wheatstone LNG project after selling its stake to Kuwait Foreign Exploration Petroleum Co in January, and cut hundreds of jobs at its Arrow LNG project, where it has yet to take a final investment decision.

Late last year, Shell abandoned a proposed gas-to-liquids

(GTL) project that would have made diesel from natural gas in the U.S. state of Louisiana.

While costs are soaring, gas prices have been dropping for most of this year, reducing the outlook for developers' return on investment and prompting analysts to say many new gas projects will struggle to receive the required financing.

European forward gas prices, which are used to make investment decisions for big pipeline and gas field projects, have dropped more than 15 percent since the beginning of 2014.

They are close to five-year lows, and most analysts expect further declines as new producers flood markets with gas.

In Asia, where 70 percent of global LNG trading takes place, spot LNG prices have fallen more than 35 percent this year to their lowest since late 2012.


Source: Reuters

Huge Russia-China gas deal still leaves door open to Japan

 For once, China looks to have done Japan a favour.

In clinching a $400 billion deal last month to buy Russian gas, China may end up helping out its old political and economic rival in a way that matters hugely for Japan - energy security.

The China-Russia agreement, the biggest gas deal ever, unlocks new gas supplies and could bring down gas prices across Asia, a development that would pay the biggest dividends for Japan, the world's top buyer of liquefied natural gas.

Other big Asian gas buyers such as South Korea and Taiwan could also benefit.

The deal, signed on May 21, cemented a dramatic shift in energy flows from the West to the East. Gas will be transported to China via a new pipeline linking Siberian gas fields from 2018, building up gradually to 38 billion cubic metres a year.

China has massive gas needs, but access to more of the fuel is also vital for Japan since its utilities pay the world's highest prices. Japan buys about a third of global LNG shipments and spent a record 7.06 trillion yen ($70 billion) last year, mostly for electricity generation to replace idled nuclear reactors following the Fukushima disaster in 2011.

There are hopes that piping Russian gas to China will create a new price benchmark that could cut prices for Asian LNG buyers as well as providing new gas sources. 

"This will surely put downward pressure on gas prices and some say it is the beginning of the end of the Asia premium," Masumi Kimura, a researcher at Japan Oil, Gas and Metals National Corp (JOGMEC), said in a note, referring to the higher price paid for gas in Asia compared to other parts of the world.

Russia's Gazprom declined to confirm what price the deal with China was struck, but industry sources say it translates to about $10-$10.50 per million British thermal units, an international pricing standard, well below the current level of around $13 for spot Asian cargoes .

A source at one of the biggest Japanese buyers of gas shipped in liquid form said that the new Russian gas should absorb some Chinese pressure on LNG demand in Asia.

Others were cautious, however, over the potential impact.

"The Russian gas will be coming into the northeast of China, into a market that was never going to be served by LNG in the first place," said Gavin Thompson, head of Asia-Pacific gas and power at consultancy Wood Mackenzie.


RUSSIAN ENERGY

Takashi Hayasaki, general manager of the Japan Petroleum Development Association, said the China-Russia pipeline would

"also spur further development of gas fields in Siberia that could be a source of LNG for Japan.".

Japan's Russian purchases have grown with oil and gas flowing from Sakhalin island to the north of Japan since 2009 and oil via the East Siberian Pacific Ocean extension from 2012.

Imports of Russian LNG rose 3.1 percent last year to 8.57 million tonnes, or 9.8 percent of total imports. The ratio is up from 4.3 percent in 2009 when Japan started Russian gas imports.

Prime Minister Shinzo Abe met Russian President Vladimir Putin five times in the last 18 months, more than any other leader. Amid a flurry of agreements there was talk that closer energy ties could come with the resolution of an island dispute dating from the end of World War II. [ID:nL3N0D21P7]

But the diplomatic efforts to take a bigger role in gas projects appear to have fizzled out since the Ukraine crisis, which has led to sanctions on Moscow that Tokyo has supported.

Gazprom and Royal Dutch Shell operate Russia's only LNG plant on Sakhalin, with Japan's Mitsuibishi Corp <8058.T> and Mitsui & Co <8031.T> as junior partners.


HOLDING OFF LONG-TERM CONTRACTS

The Chinese deal has also revived talk of a pipeline from Russia to Japan. A group of 33 ruling party lawmakers plans to lobby Abe to sign a deal on a gas link with Putin at an estimated cost to build of about $6 billion compared with more than $40 billion for the Chinese pipeline.

But Daiske Harada, an economist with JOGMEC focusing on Russia, said Rosneft and Gazprom were more interested in pushing

exports by LNG to the Pacific market, not by pipeline.

Gazpom plans to build a second plant in Vladivostok by 2018, with a capacity of 10 and 15 million tonnes of LNG per year, and also a spur to the Chinese pipeline to bring gas to Vladivostok.

Rosneft and ExxonMobil also plan an LNG plant on Sakhalin to produce 5 million tonnes a year from 2018.

Along with Russian supplies, Japan could also benefit with the United States due to start shipping shale gas from as early as 2015. Other potential sources include West Africa and Canada.

And faced with potential new supplies, Japanese buyers are holding off from signing long-term LNG contracts starting from around 2017 until there is more clarity on nuclear power, said a source in the natural gas division of a Japanese trading firm.


Source:  Reuters

Geopolitics: "Russophobes" and "Russky"

 Oleg Makarenko wants to set the story straight and answer the "Russophobes" who he says are trying to split and humiliate Russia.

His website Ruxpert (www.ruxpert.ru) may not command the viewer numbers of Wikipedia which inspired it, but inside Russia it holds a prominent position in what Makarenko calls an information war with the West.

As Vladimir Putin has embraced an increasingly nationalist ideology in his third term as president, evidenced by his seizing of Crimea from Ukraine, Makarenko's anti-Western ideas have become mainstream. His website, designed to be a "Patriot's handbook", has mirrored and presaged Putin's thinking.

Makarenko denies receiving money or support from political groups. But his website fits in to a seemingly well-organised Russian media campaign that has blamed the West for the protests that drove Viktor Yanukovich from power in neighbouring Ukraine.

Offering notes on subjects ranging from Crimea and New Russia to liberal myths and sexuality, Ruxpert says it provides

"the truth about Russia - without dirty, enemy propaganda and without embellishments". All good background information to equip "Russian patriots" with reliable arguments.

Makarenko, a prominent blogger in Russia under the name Fritz Morgen, said his website and others like it were needed after the collapse of the Soviet Union enabled America "to swallow countries up like they were nuts, one after the other".

"If we fail to win the information war then it will be easy for the Americans to get people on to the streets," he said, reflecting mistrust, fanned by Putin, of the West. The danger of instability is a continual refrain.

Makarenko started his blog in 2007 and set up Ruxpert last year. He says the site runs on contributions from readers and articles are written for free.

"Russia has an ideology of traditional conservatism. People have a choice - on the one hand they see the West, where there is individualism taken to the extreme, tolerance to the extreme, gay parades, the lack of a traditional family," Makarenko said.

"Russia has more traditional values. I cannot say that this is a route of development that offers a brighter future, but it is not the dead-end that Western liberalism faces."


BEFORE, AFTER CRIMEA

A review of Putin's public comments since he came to power in 2000 shows a consistent emphasis on restoring Russia's pride and its place as a geopolitical power. This has become an even greater priority in his third term as president.

Living through the chaos of the 1990s after returning home from his KGB post in eastern Germany, Putin blamed the West for all but destroying post-Soviet society.

In 2005, he lamented the collapse of the Soviet Union and urged Russia to take its own path.

Last year, he went further, calling for a new and fierce patriotism to save Russia from Western ideology which, he said, was "denying moral principles and all traditional identities: national, cultural, religious and even sexual".

Drawing on at least three schools of thought and contemporary Orthodox beliefs, the former KGB spy has buttressed his ideas with the work of Russian thinkers from the 19th and 20th centuries - a period characterised by debate about Russia's identity.

He has peppered his speeches with references to political philosophers such as Ivan Ilyin who, in the early 20th century, blamed a lack of national pride for allowing the tragedy of the Bolshevik revolution.

Konstantin Leontyev, who was critical of Western consumer society in the late 19th century, also figures, dovetailing with the thinking of a new generation of leaders in the Russian Orthodox Church.

For an answer, Putin has turned to Soviet-era historian Lev Gumilev who contended that Russia was not a European state but a Eurasian one, uniting two continents.

Putin's vision of a Eurasian Union stretching from the Polish frontier to Pacific shores would group together former Soviet states and cement an alternative economic system.

"The Eurasian Union is a project for maintaining the identity of nations in the historical Eurasian space in a new century and in a new world," Putin told visiting journalists last year.

Also among Gumilev's teachings is the theory that nations can become great in the hands of passionate leaders, such as Alexander the Great or Napoleon.


"RUSSIAN WORLD"

Today, two academics, Igor Panarin and Alexander Dugin, have played an important role in establishing the idea of a clash of cultures in the popular consciousness. In their lectures they speak of a geopolitical battle between the West and Russia.

Dugin, who supports the unification of Russian-speaking territories, teaches at Moscow State University. Panarin teaches at the Russian Foreign Ministry's school for future diplomats.

A third academic, Olga Vasilyeva, professor of religious thought at the Russian Presidential Academy of National Economy and Public Administration, has delivered lectures to the presidential administration, her institute told Reuters.

Vasilyeva did not respond to a request for comment. Kommersant newspaper said she had taken part in a three-day seminar on spiritual ties and conservatism for the Kremlin.

In a speech on March 18 shortly after annexing Crimea, Putin set out his vision of a Greater Russia.

Historian Valery Solovei noted Putin's use of the word

"Russky" for Russian instead of the more usual "Rossissky" - a possibly significant linguistic shift suggesting Putin sees himself as leader of all Russians, not just those living within Russia's borders.

"He used the word Russky 27 times. This has never happened before," Solovei said of a word that is used to describe someone by their ethnicity rather than their citizenship. "So the Eurasian Union has been taken over by some kind of vague notion of 'a Russian World'. It's an ideological innovation."

One source close to the political elite said Putin had gone so far off script that even his closest aides were struggling to define his "post-Crimea" ideology. Inadvertently or not, he may have handed conservative forces in the FSB security service a more powerful hand in policy making – something that may prompt rifts with Putin's more liberal aides.

By laying claim to lands outside Russia, Putin may be breaking with a role he has played since he came to power after the chaos of the 1990s - the guarantor of stability.

"We are not talking about the former Soviet Union, but the unification of Russians, like a kind of community. The question is how do you interpret this? Is it cultural, ethnic or biological even?" Solovei said.

"The other thing is, is the move ideologically entrenched or not? It's a very risky move for Putin."

Source: Reuters

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