TPT January 2010

G lobal M arketplace

agreement between the US and South Korea, reached in 2007, is yet to be ratified as American politicians contend with the objections of domestic auto makers. Also opposed to the EU-South Korea trade deal is the European Automobile Manufacturers’ Association, which alleges it would lead to unfair competition. But the EC, evidently believing that this is a risk worth taking, stressed the potential benefits of the pact to several European industries, particularly in the removal of the many regulations and standards in the non-tariff barrier category. China’s CNOOC may be about to test the waters of the Gulf of Mexico China, too, is looking toward the Americas to help satisfy its energy needs, second only to those of the United States. On 16 October, Dow Jones Newswires reported that the China National Offshore Oil Corporate (CNOOC) was close to closing a deal to buy stakes in some 20 of the 451 drilling leases in the Gulf of Mexico held by Norwegian national oil company StatoilHydro. Very little oil is involved, even in prospect. But it will be remembered that, four years ago, CNOOC’s $18.5 billion bid for the California-based oil company Unocal first shook the US political establishment, then foundered altogether under congressional opposition. Since then, China has formed oil alliances and joint ventures in Venezuela, Russia, and Brazil, and Chinese companies are actively competing for exploration and development rights in Africa. Now China is making a gingerly approach to oil lying in waters that lap the shores of the US. In addition to StatoilHydro, oil companies like London-based BP, Royal Dutch Shell, and Brazil’s Petrobras are already heavily invested in the Gulf of Mexico, with its highly motivating deepwater potential. And several large American oil companies, including Chevron, ConocoPhillips, and Devon Energy, have wide-ranging investments in China. But there may be, as one energy policy researcher surmised, “still a hangover from Unocal” in the US. Even so, Amy Myers Jaffe, an energy specialist at Rice University (Houston, Texas), foresees little or no opposition in the US to China’s dipping a toe into the Gulf of Mexico. “It’s completely unthreatening,” she told the New York Times (17 October). “There is no reason why any American should be concerned about a Chinese company taking a small stake in the Gulf.” Trade Having angered Beijing with a 35% tariff on Chinese tyre imports, the US moves on – and up – to steel pipe The US International Trade Commission on 30 October voted 6-0 to authorise a Commerce Department investigation into charges that Chinese steel pipe producers sell at unfairly low prices in the United States. In this eighth ITC investigation last year into allegedly unfair Chinese pricing practices, three American companies and the United Steelworkers union were seeking anti-dumping duties of 98.37% on $382mn worth of pipe. In addition, the petitioners sought countervailing duties, to offset subsidies they suspect Chinese steel makers of having received from their government.

Oil and gas Acquisition of a Canadian producer and refiner will help oil-poor South Korea to secure its supply The purchase of Harvest Energy Trust, of Canada, by Korea National Oil Corp (KNOC) in a deal worth C$4.1bn (US$3.9bn) will greatly strengthen South Korea’s ability to satisfy domestic demand. Oil consumption in Asia’s third-largest economy, after Japan and China, exceeded two million barrels per day in 2008. The country produces little oil of its own and is a net importer. Harvest’s reserves in western Canada and its refining operations on the eastern seaboard should go far toward squaring South Korea’s failure, last June, to acquire Geneva-based Addax Petroleum. In a battle of state-run oil companies, KNOC lost out to China’s Sinopec for Addax’s assets in West Africa and Iraq. KNOC is not new to Canada. In 2006 it bought a lease on an oil sands prospect from Newmont Mining for $270mn, and is expected to dovetail the development of that operation with Harvest’s production, as well as to increase Harvest output. In a message to investors in September, Calgary-based Harvest estimated that it was producing between 50,000 and 51,000 barrels of oil per day. At the end of 2008 the Canadian producer and refiner reported reserves of 154mn barrels of oil and oil equivalents. Harvest is the first of two such acquisitions that KNOC had said it was looking to make last year, and Canada appears to be central to Seoul’s quest for a steady supply of oil from overseas. In a statement accompanying the Harvest announcement, Young- won Kang, president of KNOC, said his company “has ambitious plans for future growth and is committed to a long-term investment strategy in Canada”. The deal with Harvest, announced 22 October, was expected to close by the New Year. Of related interest . . . › South Korea has also been cementing ties with Europe. After two years of negotiations, on 15 October the country signed a free trade agreement with the European Union under which the two sides will remove virtually all trade barriers between their economies — tariffs as well as many non-tariff items — over a five-year period. The European Commission (EC), the executive arm of the EU, said the trade in goods between Europe and South Korea totalled about $97bn in 2008, and that the deal was worth $28bn to European exporters alone. The EU runs a trade deficit with South Korea. Analysts believe that the pact, achieved in a climate of deadlocked global trade and fears of rising protectionism, could spur other nations to press ahead with bilateral pacts of their own. A free trade

South Korea has strengthened links with the EU

Attilio Ivan

84

J anuary 2010

www.read-tpt.com

›