All posts by Turflinger

Norway Requests WTO Dispute Settlement Consultations with US

Government, Trade

‘In Norway’s view, the additional tariffs imposed by the US on steel and aluminium imports are a violation of the WTO rules. Today we have therefore requested dispute settlement consultations with the US in the WTO. The WTO and its dispute settlement system is the established forum for handling disagreements about trade policy,’ said Minister of Foreign Affairs Ine Eriksen Søreide.

On 23 March, the US imposed additional tariffs on steel and aluminium imports of 25 percent and 10 percent respectively, alleging that imports to the United States pose a threat to US national security. Its justification for doing so was that the nature and scale of imports of these products pose a threat to US national security.

‘For a small and open economy as Norway’s it is crucial that the common rules for international trade are respected. When somebody acts contrary to these rules, both individual countries and the international economy are affected’, Ms Eriksen Søreide said.

Consultations between the parties are the first stage of the WTO dispute settlement process. If the consultations are not successful, Norway will consider requesting the establishment of a panel to address the matter, which is the next stage in the WTO dispute settlement mechanism. The panel’s ruling may then be appealed to the WTO Appellate Body. Norway has previously been a party to three dispute settlement cases that led to the establishment of a panel: the steel dispute with the US in 2002, the salmon dispute with the EU in 2006, and the seals dispute with the EU in 2011. So far, the EU, Canada, Mexico, China and India have also requested dispute settlement consultations with the US in response to the additional tariffs introduced in March.

It is important for Norway and the Norwegian business sector that there are favourable conditions for international trade in steel and aluminium. In 2017, Norwegian exports of steel and aluminium were valued at NOK 16 billion and NOK 33 billion respectively. Approximately 0.2 percent of Norwegian exports of steel and aluminium are exported to the US, and affected by the additional tariffs. The majority of Norwegian steel and aluminium are exported to the EU.

‘In the long run, we all benefit from a situation where right trumps might in international trade. Such a disregard for WTO rules weakens the credibility of the United States in international trade, and risks undermining the rules based multilateral trading system’, Ms Eriksen Søreide said.

European Leaders Indignant and Defiant Over Trump G-7 Statement

Government

It was an image that, in its Rockwellian presentation and characters, seemed to capture an emerging era.

European leaders stood arrayed on one side of a narrow conference room table, leaning in. On the other side: President Trump, seated alone, his arms folded.

The photo, released Saturday on German Chancellor Angela Merkel’s Instagram account and later tweeted by Trump national security adviser John Bolton, fast became a Rorschach test for an increasingly troubled relationship.

Trump was clearly isolated. But was he making an overdue stand against an expiring global order? Or was he just the odd man out in the world’s most powerful club?

The enchantingly unreadable facial expressions make it impossible to know.

On the day after the Group of Seven summit blew up in spectacular fashion, with Trump using idle time on an airport runway to insult his host and repudiate an agreement he had made with allied leaders only hours earlier, emotions were far easier to divine.

Biggest Sovereign Wealth Fund Proposes to Curb CEO Bonus Plans

Financial / Investment

Norway’s $915 billion wealth fund proposed reining in long-term incentive packages for chief executive officers, saying a “substantial proportion” of pay should be provided in shares that are locked in for as long as 10 years.

Pay practices should also be simple and avoid putting undue strain on corporate governance and allotted shares shouldn’t have performance conditions and “complex criteria,” the world’s largest sovereign wealth fund said in a report released on Friday in Oslo.

Yngve Slyngstad, the fund’s chief executive officer, said the investor for now prefers a general discussion and that setting specific targets will still be up to company boards.

“The most important thing for us is that these structures are long term,” he said at a press conference in Oslo.

The state-controlled fund has become increasingly activist in its approach to corporate governance and also on Friday called for more transparency by companies on taxes and said that these should be paid where the economic value is generated.

North Sea Expected to See 30 Crude, Natural Gas Projects Start by 2020

Energy

Despite the low cycle that the market is facing, 30 crude and natural gas projects are expected to start operations in the North Sea by 2020. The UK will lead with a total of 19 projects, followed by Norway with 10 and Denmark with a single project, according to research and consulting firm GlobalData.

The company’s latest report states that the North Sea has seen improvements during the downturn cycle witnessed over the last three to four years. Projects being sanctioned now have costs around half of those sanctioned in 2013, showing the companies have made clear improvements in cost efficiency. Operating costs have also halved from nearly $30/bbl to just over $15/bbl, while the production forecast has seen an increase from 2016–a trend that is set to continue as new fields are brought on stream.

The total recoverable reserves for the 30 projects expected to start in the North Sea stand at 5.2 Bboe. Statoil ASA holds the most reserves (1.6 Bboe), followed by Lundin Petroleum AB (635.9 MMboe), Petoro AS (610 MMboe), A.P. Moller Maersk A/S (414 MMboe) and Aker BP ASA (381.2 MMboe).

Luis Pereira, Upstream Analyst for GlobalData, explains: “Of the 30 upcoming North Sea projects, 22 are crude oil projects and eight are gas projects. Norway will dominate oil production, while the UK will dominate gas production. The key planned projects in the North Sea are expected to contribute around 690,000 bopd to global crude production and about 1,255 MMcfgd to global gas production in 2020.”

The planned projects in the North Sea are expected to require a total capital expenditure (capex) of $56.7 billion, of which over half (54%) is expected to be spent between 2017 and 2020.

Norway will lead in terms of capex, spending about $19.3 billion during the forecast period, of which nearly $12.9 billion will be spent on Johan Sverdrup. At the company level Statoil will have the highest capex spending, and is expected to spend a total of $19.1 billion on key planned projects through 2020.

According to Pereira, ten more fields are lined up to start production in the North Sea between 2021 and 2023. This will represent a further capex investment of $7.5 billion in the region, and will add 1 Bboe to the recoverable reserves.

ExxonMobil to Sell its Norway-Operated Oilfields

Energy

Exxon Mobil has agreed to sell its operated upstream business in Norway to private equity firm HitecVision and oil company Point Resources for an undisclosed sum, it said on Wednesday.

The deal means that the world’s largest listed oil firm will no longer operate producing fields on the Norwegian continental shelf, making it the second oil major to scale back its presence in less than a year after BP in 2016.

Exxon Mobil retains stakes in more than 20 producing fields operated by Statoil and Shell however, including the Snorre oilfield and the major Ormen Lange gas field.

The sale of stakes in the Jotun, Balder and Ringhorne fields, along with some related production assets and properties, had long been rumored in local media.

“It’s a natural part of business to assess whether such assets could be worth more to others than they are to us. We’ll remain a significant investor in Norway however,” Exxon spokesman Tore Revaa said.

The fields sold had daily output of 54,000 barrels of oil equivalents in 2016, while Exxon’s remaining Norwegian stakes yielded about 170,000 barrels per day.

Norwegian financial daily Dagens Naeringsliv, citing unnamed sources, said the deal was valued at close to 8 billion Norwegian crowns ($935 million). The companies declined to comment when contacted by Reuters.

Point Resources, which is majority owned by HitecVision, will have output of about 60,000 barrels of oil equivalent following the deal, which could grow to about 80,000 barrels in 2022, it said in a separate statement.

“Given the number of development plans and other opportunities, no redundancies are expected within the combined company as a result of the transaction,” it added.

Following the deal, Point’s reserves and contingent resources will amount to about 350 million barrels of oil equivalent.

The switch of ownership, which the companies hope to complete in the fourth quarter of 2017, must be approved by the Norwegian government.

Energy Minister Terje Soeviknes said in a statement the deal could bring more diversity and competition to the oil industry.

“The transaction … is exciting because it makes Point a significant player while Exxon Mobil remains a large producer,” he added.

BP last year sold all its Norwegian assets to oil firm Det Norske in exchange for cash and a 30 percent stake in the new company, named Aker BP.

Statoil CEO Warns of Globalization ‘In Reverse’ After D.C. Visit

Energy

After the surprise election of Donald Trump, the head of Norway’s biggest oil company headed to Washington D.C. this month looking for reassurance. He came away as worried as ever.

“I was looking for clarity, also some guidance, good advice, and also some people to talk to — new relationships within the administration,” Statoil ASA Chief Executive Officer Eldar Saetre told a conference in Oslo on Thursday. “I have to be honest with you — I didn’t get much of any of it.”

View Saetre’s full speech HERE.

Saetre, whose company has stakes in three U.S. onshore areas and in the Gulf of Mexico, was concerned about the protectionist bent of the new president’s rhetoric. Combined with last year’s Brexit vote and looming elections in Europe where nationalists are gaining influence, he sees Trump’s victory as a threat to global free trade.

“From Brexit to Trump, we see warning signs that globalization could be going in reverse,” Saetre said at the annual Swedbank Energy Summit. “For our industry, I believe that would be very negative.”

Trump’s energy policies could benefit oil producers in the U.S. by loosening regulations and freeing up more areas for drilling. However, his protectionist agenda could affect economic growth and trading relations with countries from neighboring Mexico to Asia.

Global Collaboration

“Global collaboration and integrated markets have been and will remain key to make our industry prosper,” Saetre said. “Fair, open access to markets are keys to enable investments, value creation and jobs in our industry.”

Cross-border cooperation is also essential to solve climate change, making it “more important than ever,” Saetre said. Trump signaled during his campaign he could pull the U.S. out of the Paris agreement to limit global warming, which he has called a hoax perpetrated by the Chinese.

Statoil, which is 67 percent owned by the Norwegian government, is one of the world’s biggest oil and gas companies with production of almost 2 million barrels of oil equivalent a day in 2016. It gets more than a third of its output from overseas.

Saetre made the trip to Washington on his way to the CERAWeek energy conference in Houston this month, which drew energy industry bosses from Moscow to Riyadh.

He has asked his staff to set up a new trip to the U.S. in the hope of a better outcome.

Republican Lawmakers Concerned About Trump’s Trade Agenda

Trade

Republican lawmakers are concerned about where President Trump is headed on trade and are asking who in the administration is in charge of policies that could affect their home-state economies.

Their biggest worries are what will replace the Trans-Pacific Partnership — the largest trade deal in U.S. history until it was scrapped by President Trump — and the future of NAFTA, which the president has called “the single worst trade deal in history.”

Trump talked tough on trade during the campaign, pledging to renegotiate deals that he said have ripped off American workers. But many lawmakers on Capitol Hill are confused about what comes next amid crosstalk from different voices in the administration.

Another trade-related concern is Speaker Paul Ryan (R-Wis.) push for a 20-percent across-the-board tax on imports that some Republicans fear could play havoc with export markets. The Trump administration has sent mixed signals on that idea as well.

Texas, the most populous Republican state in the country, is heavily dependent on trade with Mexico; a trade war could cause significant disruptions to its economy.

“I talked to group of people from Texas today, from San Antonio, and I said the two things that concern me the most about the Texas economy are the negotiation of NAFTA and the border adjustment tax,” Senate Republican Whip John Cornyn (Texas) told reporters this past week.

“There’s some uncertainty about the direction of the administration,” Cornyn added in a later interview. “For my state it’s a big deal, and I would argue it’s also a big deal for the country. Six million American jobs depend on bi-national trade with Mexico alone.”

A group of Republican senators met privately with two Trump administration officials on Tuesday: Peter Navarro, who heads the White House office on trade and industrial policy, and Jason Greenblatt, the administration’s special representative for international negotiations.

The administration officials laid our four broad goals and a 13-point agenda for trade, but lawmakers were left with questions. They want to know what concrete progress is being made to negotiate bilateral trade deals to replace the Trans-Pacific Partnership, which Trump pulled out of shortly after taking office.

“I’m not sure where they’re going,” said Sen. John Thune (R-S.D.), the third-ranking member of the GOP leadership, who attended the meeting. “They clearly have a different view on some of these trade matters than has been the sort of traditional Republican trade view on Capitol Hill.”

Diplomats in State of Confusion Over US Transition

Government

The former prime minister of Norway was detained and questioned at a Virginia airport because he had a passport stamp from a visit to Iran. He was forced to call his embassy, which reached out to State, according to diplomats.

 

Washington (CNN) – From Moscow to Monrovia, there’s a new guessing game: What’s going on with US foreign policy?

And is there anyone at the State Department to call to find out?

With the new president signaling significant changes in the US approach to the world, key job openings at the oldest US Cabinet agency remain unfilled, leaving some of the State Department’s day-to-day business frozen and foreign capitals unsure whom to reach out to for clarity on new directions the US may take.

Our people are trying to understand who is dealing with what,” said one source within Russia’s Foreign Ministry who spoke to CNN on condition of anonymity. “Half of the top management of the State Department has gone.”

While all presidential transitions have their rough patches, they seldom come with uncertainty about US positions on long-stable pacts such as NATO, usually staid partnerships such as the US-Mexico alliance or the possibility of the 180-degree shift President Donald Trump seems to be contemplating on US-Russia ties or his executive order banning travelers from seven countries.

The policy murkiness is compounded by the fact that the administration didn’t seem ready to immediately take on the duties of running the State Department, several diplomats and State staffers said.

The White House didn’t respond to requests for comment.

America’s Biggest Tech Firms Have Stepped Into Legal Fight Against Travel Ban

Government

A total of 97 companies — including Apple, Facebook and Microsoft — filed a court motion Sunday night declaring that Trump’s executive order on immigration “violates the immigration laws and the Constitution.”

The ban represents “a sudden shift in the rules governing entry into the United States, and is inflicting substantial harm on U.S. companies,” says the court document, whose backers also include Twitter, Netflix and Uber.

It’s the latest move by the tech industry to oppose Trump’s controversial order, which has run into hurdles in the U.S. court system.

Oil Optimism Is Back as Norway Predicts Worst Is Behind Us

Energy

The man overseeing energy policy in western Europe’s biggest oil-producing nation says the worst downturn in the history of Norway’s offshore industry appears to have bottomed out as OPEC’s historic deal continues to reverberate across the globe.

Terje Soviknes, who was named as Norway’s next petroleum and energy minister on Tuesday, replacing Tord Lien, said the oil and gas industry has put the worst behind it.

“There’s renewed optimism in the oil and gas industry,” he told Bloomberg after a press conference in Oslo. “The change in the oil price curve we’ve seen lately has contributed to that.”

Norway earlier this month gave public backing to OPEC’s agreement to cut oil production in tandem with non-members, though it gave no indication it would reverse its previous refusal to directly collaborate with the group. Norway’s oil production has fallen by half since a 2000 peak, but is on track to rise for a third consecutive year after beating the government’s own forecasts by 5 percent this year through November, according to figures released by the Norwegian Petroleum Directorate on Wednesday.

Speaking to reporters in his new office, Soviknes said Norway should expect to live off its fossil fuel industry for “decades to come.”