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On March 19th, Shigeto Nagai, Head of Japan Economics at Oxford Economics, stated that given the possibility of stagflation in the Japanese economy, they now expect the Bank of Japan to postpone its next interest rate hike from June to July. Thereafter, they anticipate the central bank will continue to gradually raise rates in the first and third quarters of 2027. In the short term, rising energy costs will re-accelerate supply-side driven inflation. They now believe that core CPI will not return to 2% until the second quarter of 2027, rather than the fourth quarter of 2026. Despite a strong expected outcome from the spring wage negotiations, higher inflation will limit real income growth. Therefore, they have lowered their 2026 real GDP growth forecast by 0.4 percentage points to 0.3%. Despite concerns about inflationary pressures and a weaker yen, they believe the Bank of Japan may become more cautious about raising interest rates, prioritizing the impact on corporate profits and real household income.Market news: On Thursday, the Japanese House of Representatives approved the addition of two dovish monetary policy strategists nominated by Prime Minister Sanae Takaichi to the central banks board of directors: Toichiro Asada and Ayano Sato. This move could influence the central banks decisions on the timing and pace of further interest rate hikes.1. JD Cloud: Offers greater discounts on multiple products, with an average price reduction of over 16%. 2. Alibaba Cloud: AI computing power and storage products see price increases of up to 34%. 3. Baidu AI Cloud releases price adjustment announcements for AI computing power, storage, and other products. 4. Ma Huateng publicly discusses "shrimp farming" for the first time: it can be combined with WeChats decentralized philosophy. 5. MiniMax releases its new generation large-format model M2.7. 6. Xiaomi releases its large-format model MiMo-V2-Pro. 7. Germany plans to significantly increase AI computing power. 8. HSBC reportedly considers large-scale layoffs; AI restructuring may affect approximately 20,000 jobs. 9. Foxconn and SAP sign strategic cooperation agreement to accelerate AI-driven manufacturing and supply chain transformation. 10. AI security startup Xbows valuation surpasses $1 billion. 11. Samsung Electronics and AMD sign memorandum of understanding to explore foundry cooperation.On March 19, Russian Presidential Press Secretary Dmitry Peskov told Russian media on March 18 that the working group on security issues, comprised of representatives from Russia, the United States, and Ukraine, has suspended its work. Peskov said the work of the Russia-US bilateral working group on economic issues continues, while the security and economic working groups operate independently with different schedules. Peskov had previously stated that negotiations on the Ukraine issue had been suspended due to changes in US priorities.The UKs Office of Maritime Trade Operations said it had received a report of an incident that occurred 4 nautical miles east of Ras Lafan, Qatar.

Sources suggest that PetroChina might sell assets in Australia and Canada to stem its losses

Aria Thomas

Jun 29, 2022 10:42


According to two persons with knowledge of the matter, PetroChina may sell natural gas projects in Australia and oil sands in Canada to minimize losses and shift financing to more lucrative regions in the Middle East, Africa, and central Asia.


PetroChina's plan follows a similar strategy shift by a smaller state rival, CNOOC (NYSE:CEO) Ltd, which was prepared to abandon its operations in the United Kingdom, Canada, and the United States because of concern that these assets may become susceptible to Western sanctions.


The transactions are the outcome of an internal examination of PetroChina's global portfolio that began last year, according to two unidentified individuals who refused to be identified due to the sensitivity of the subject.


As it does not own any oil and gas assets in the United States, unlike CNOOC, PetroChina's divestments are driven more by the assets' poor economics than by a fear of U.S. sanctions, but political tensions with Australia and Canada also played a part, they noted.


According to sources, the state-owned oil and gas firm intends to sell some of these assets, which have lost billions of dollars and are situated in uncompetitive locations, over the next two years.


"Australian gas assets Arrow Energy and Browse are among the top "negative assets" in PetroChina's global portfolio. According to one report, CNPC has a small competitive edge in this industry.


In 2010, PetroChina purchased Arrow Energy for $2.5 billion in a joint venture with Shell (LON:RDSa), marking its first investment in Australia's coal seam gas sector. It paid $1.63 billion in 2013 for BHP's investment in Browse, the largest undeveloped gas reservoir in Australia.


According to reports, the company is also contemplating selling its Canadian oil sands assets, MacKay River Oilsands and Dover (NYSE:DOV) Oilsands, owing to losses incurred from producing and processing bitumen. PetroChina declined to comment.


China's state-owned energy companies were among the most acquisitive in the industry during the beginning of the 2010s, as shown by CNOOC's $15 billion purchase of Canadian oil and gas company Nexen in 2013. However, they grew more subdued with the oil price fall in 2014-2015 and the government's financial audit.


In addition, economic worries may have caused PetroChina to reevaluate its acquisitions spree.


Arrow is PetroChina's most unprofitable offshore investment. If Browse receives final approval, it is unlikely to enter production until 2030 because to its technical complexity.


In 2020, Arrow made a final investment decision to construct the 5 trillion-cubic-foot Queensland Surat Gas Project. A dispute between PetroChina and Shell over the pricing of gas to a Shell-operated export facility reportedly caused the delay.


Arrow experienced losses of about A$3.3 billion ($2.29 billion) between 2018 and 2021, including A$2.2 billion in impairments.


When reached by Reuters, a representative for Arrow said, "The investment decisions of our shareholders are their responsibility, and Arrow would neither comment nor speculate on such topics."


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