Faring badly: Uber struggles to make inroads in Japan

In this picture taken on December 13, 2017, a man takes a taxi at Tokyo station in Tokyo. (AFP)
Updated 17 December 2017
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Faring badly: Uber struggles to make inroads in Japan

TOKYO: Uber may be shredding business models for taxi firms the world over but it is struggling to make inroads in Japan, where risk-averse passengers prefer to stick to their high-quality traditional taxi service.
Japan, with its wealthy customer base and megacities like Tokyo, should represent rich pickings for Uber.
In 2015, the national market for taxis had a turnover of 1.73 trillion yen ($15.2 billion), according to transport ministry data.
There are 50,000 taxis in Tokyo alone — instantly recognizable with their impeccable polished exteriors and doors that open automatically to let valued customers board effortlessly.
And with hailing a taxi rarely taking more than a few seconds in the major cities, there has been sluggish take-up of Uber, where consumers order an unlicensed car via smartphone.
“Japanese people don’t like taking risks, they are risk averse. They are quite strict when it comes to the quality of service,” said Ichiro Kawanabe, CEO of Nihon Kotsu, the main Tokyo taxi firm founded by his grandfather in 1928.
Given this, “when Uber tried to messily enter the market, no one wanted them,” Kawanabe, who is also chairman of the Japanese taxi federation, told AFP.
Uber also ran up against local legislation — it is strictly forbidden to operate a taxi without a license.
So it tried to enter the Japanese market via another route, setting up a pilot carsharing service in 2015 in the western city of Fukuoka.
Uber said it was a study into the needs of the local community but authorities quickly slammed on the brakes, saying it could be considered an unlicensed taxi service and raising questions of safety.
Kawanabe also pointed to safety issues as being among the reasons Uber had not enjoyed the same success in Japan as it has elsewhere.
“When an accident happens, they don’t take responsibility and say they are just a platform provider. Japan cannot accept this.”
An Uber spokesman said the company’s priority in Japan was to “partner with taxi companies to get licensed drivers using the app to connect with riders.”
The firm has started another pilot system in two rural towns connecting senior citizens with people willing to drive them around and this time the authorities have not clamped down, as it compensates for a lack of public transport and taxis in the areas.
Japan is also a “very important” market for UberEATS, its take-away food delivery service, the spokesman said.
And Kawanabe, a suave and charismatic 47-year-old known as the “prince of taxis,” admitted that Uber had been useful in foisting change on the conservative Japanese taxi industry.
Around nine out of every 10 cab rides in Tokyo is hailed or taken from a rank, with only 10 percent ordered via smartphone, said Kawanabe.
The main reason for this is that fewer than half of the taxis in Tokyo are connected to a smartphone, he said.
“They still use old feature phones instead of smartphones. It’s very difficult for us and app operators to convince them to use apps,” he complained.
In addition, around 80 percent of taxi fares are paid in cash.
This conservatism — combined with excellent public transport systems — led to a decline of one third in taxi passengers between 2005 and 2015, according to the transport ministry.
The industry is just starting to fight back — dropping fares for short rides around Tokyo, for example.
“It took me two years to convince them (to reduce fares) ... and there is still so much that needs to be done,” said Kawanabe.
He has set up a start-up subsidiary, JapanTaxi, to develop apps to connect drivers with passengers and aims to launch a carsharing app next year to push down costs.
But the competition is ferocious.
On the app front, Chinese app developer Didi Chuxing is expecting to launch in Tokyo next year, in partnership with a rival taxi firm.
And Uber is hoping for a large investment from Japanese communications behemoth Softbank.
Between Kawanabe and Uber, there is no love lost.
“They are just so rude, in every way. They think they are like gods and that we are so obsolete,” he said.
“From the point of view of the Japanese taxi companies, you can only call them ‘devils’.


UAE sovereign wealth fund Mubadala pays $271m for stake in Gazprom oil subsidiary

Updated 24 May 2018
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UAE sovereign wealth fund Mubadala pays $271m for stake in Gazprom oil subsidiary

  • Abu Dhabi’s state-owned Mubadala Investment Company (MIC) has agreed to pay $271 million for a 44 percent stake
  • Move underpins a strengthening alliance between Moscow and Opec’s Middle East countries

LONDON: Abu Dhabi’s state-owned Mubadala Investment Company (MIC) has agreed to pay $271 million for a 44 percent stake in an oil subsidiary of Russian gas giant Gazprom. 

The move underpins a strengthening alliance between Moscow and Opec’s Middle East countries, which joined forces to agree a supply-cut deal 18 months ago to stabilize the oil market after the price crashed in late 2014.

“This cements the link between GCC countries and Russia,” Giorgos Beleris, a Dubai-based oil analyst for Thomson Reuters, told Arab News.

Richard Mallinson, co-founder of London research consultancy Energy Aspects and a research associate with the Oxford Institute of Energy Studies, told Arab News that the GCC, and particularly the Saudis, had been talking “about aligning their goals in discussions about whether to extend a cap on crude production beyond 2018.” 

“They are after long-term cooperation, not just a short deal,” Mallinson said.

Shakil Begg, head of oil research for Thomson Reuters in London, said that joint ventures between Russian and Middle Eastern energy companies had become more common.

He added that Russia was still affected by certain sanctions, “so for them, it’s about getting access to technology and expertise.”

“Additional Gazprom production that could come on line is in difficult areas, such as the Arctic,” he said.

A joint statement about the deal from the UAE and Gazprom underlined Begg’s point. 

“For the first time, one of the largest investment funds in the UAE has invested in the Russian assets of Gazprom Neft, based in Western Siberia. The task of beginning cost-effective development of Paleozoic stocks can be more effectively solved within the framework of partnership, combining technological and financial resources,” the statement said.

Importantly, the two companies can make use of each other’s customer base in the Far East where demand, especially from China and India, has been strong.

MP said on its website: “(Our) major projects include exploration, development and production activities in Thailand, Indonesia, Malaysia and Vietnam, where we operate the majority of our assets.

“Southeast Asia continues to be the core region of our operated activities where we have developed an excellent track record of safe and efficient operations,” it added.

In 2017, MP’s average working interest production was about 320,000 barrels per day of oil equivalent.

Begg said: “It appears like this deal is strategic to obtaining a greater share of the light crude market in the Far East.

“The deal involves crude production from several fields operated by Gazprom Neft which feed the ESPO pipeline that supply a number of Chinese refineries and a few in Japan. Given the quality of Russian ESPO is similar to the main crude onshore crudes produced by the UAE (also sold to consumers in the Far East), it is possible that Mubadala are trying to retain/increase its market share in Asia.”

The growing Russian/GCC alliance was underlined recently when Russian energy minister Alexander Novak said a joint organization for cooperation between OPEC and non-OPEC countries may be set up once the current deal on oil output curbs expires at the end of this year.

Saudi Crown Prince Mohammed bin Salman told Reuters in March that Saudi Arabia and Russia were working on a historic long-term pact, possibly 10 to 20 years long, that could extend controls over world crude supplies by major exporters.

Announced at the St. Petersburg Economic Forum, the Russia/UAE agreement is between Gazprom, the Russian Direct Investment Fund RDIF) and MIC offshoot, Mubadala Petroleum (MP).

A statement by RDIF, the sovereign wealth fund of Russia, and MP said that it was creating a joint venture with Gazprom Neft to develop several oil fields in the Tomsk and Omsk regions.

RDIF and Mubadala Petroleum will acquire a 49 percent equity stake in Gazpromneft-Vostok, the operator of the fields. Mubadala Petroleum will hold 44 percent and RDIF 5 percent.

Kirill Dmitriev, CEO of the Russian Direct Investment Fund (RDIF), said: “(This deal) brings the experience and expertise of our Middle East partners to the Russian oil and gas sector. (We) see this as the first step in creating a consortium to pursue further significant investments in the sector.”

Dr. Bakheet Al Katheeri, CEO of Mubadala Petroleum, said: “Through this new partnership, we will not only share but also further build on our expertise and capabilities in oil and gas while adding significant oil production to our existing oil and gas portfolio.”

Gazpromneft-Vostok controls seven subsoil licenses in Tomsk and the neighboring Omsk region; these contain both mature and undeveloped oilfields. Its proven and probable reserves stand at 296 million boe (barrels of oil equivalent), of which more than 80 percent is crude oil. According to the Russian energy ministry, the company produced 1.64 million tons (33,000 bpd) of oil in 2017, down 3 percent year on year.

Gazprom is looking to divest stakes in non-core assets to pay for its capital-intensive projects in the Arctic, namely the East-Messoyakhinskoye, Novoportovskoye and Prirazlomnoye oilfields, according to a report by Edinburgh-based website NewsBase.com.

In February, the company reportedly sold the West-Noyabrskoye field in Yamalo-Nenets to an unnamed buyer, and it is also looking to unload stakes in the Neptune oilfield off the coast of Sakhalin and the Chonsky project in Eastern Siberia. Gazprom Neft reported free cash flow of 65 billion rubles ($1.15 billion) at the end of 2017, versus a negative value a year earlier, NewsBase said.