Tech icon defies China return order and sends wife instead

Jia Yueting is staying put in the US despite being ordered to return back to China. (AFP)
Updated 03 January 2018
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Tech icon defies China return order and sends wife instead

BEIJING: A major Chinese tech entrepreneur has defied regulators’ orders to return home, writing on Tuesday that his wife and brother would deal with the debt woes plaguing his LeEco conglomerate.
Jia Yueting, the 44-year-old head of a tech empire that has spanned electric cars and smartphones, posted a letter on social media to the Beijing branch of the China Securities Regulatory Commission, which last week ordered him to return to China before the end of 2017.
The one-time billionaire is believed to be in the US, attempting to build up his Los Angeles-based electric car company Faraday Future. He was added to a national blacklist of debt defaulters by Chinese courts last month over hundreds of millions of dollars in unpaid loans.
“I have entrusted (his wife) Ms. Gan Wei and (brother) Mr. Jia Yuemin with full power to exercise my rights as the public company shareholder and fulfil my shareholder responsibilities,” Jia wrote in the letter published on the Twitter-like Weibo platform.
He said Gan and Jia Yuemin would deal with the debt issues of Leshi Internet, LeEco’s main publicly traded arm.
Separately on her own Weibo account, Gan said she would be meeting creditors to “resolve the debt problems.”
The 33-year-old Gan, an actress and producer on several feature films, said her husband owed 6.9 billion yuan ($1 billion) on loans connected to pledged shares. He has paid 1.7 billion yuan in interest on related loans since 2014, she wrote.
Leshi Internet’s filings show that nearly all of Jia’s shares were pledged to back loans, though a Beijing court said last month that it had seized more than one billion shares — Jia’s entire holding — of Leshi Internet to repay creditors.
The court also seized Jia’s two homes in Beijing and $200,000 from a bank account.
“Jia Yueting has no other bank deposits available, no other home registration records, and no vehicle registration records,” the Beijing First Intermediate Court said at the time.
Gan said in a New Year’s Eve Weibo post she had “returned to complete a mission.” Her location was tagged as Beijing airport.
Leshi Internet had a market capitalization of roughly $9.4 billion in April last year, but it has suspended trading in its shares since then.
Investment firms have already marked down their holdings. If the company were to delist completely, it could be one of the largest failures of a Chinese publicly traded company — possibly wiping out the investments of its 185,000 shareholders.
Jia in his letter blamed LeEco’s debt woes on one bank which sued him after he was “only a mere two weeks overdue on a 30 million interest payment.”
Afterwards, in July, as creditors began to swarm, “the production and operation of non-public companies came to an abrupt halt,” he wrote.
“Over 10,000 employees were forced to be dismissed, and the only thing left for the company was to sell its assets to repay the debt.”
Jia founded the troubled conglomerate in 2004 as an online video streaming platform, but pushed the tech company into
a variety of new business lines — from gaming to sports and,
more recently, cars.
He brought in hundreds of small-time investors to fund the rapidly growing list of projects, publicly announcing more than $3 billion in funding for the far-flung projects, which now appears in jeopardy.
Jia’s Los Angeles-based electric car company Faraday Future has said it is in the process of raising $1 billion to start production of electric cars.
The “US FF company (Faraday Future) financing has already achieved major progress,” Jia wrote.
“At present there is much work to be done for me to push it
forward.”
— AFP


Exxon faces setback in Iraq as oil and water mix

Updated 20 April 2018
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Exxon faces setback in Iraq as oil and water mix

  • Exxon’s talks with Iraq on water project hit problems
  • Losing the contract could deal a blow to Exxon’s broader Iraqi plans

LONDON: Talks between Exxon Mobil and Iraq on a multibillion-dollar infrastructure contract have reached an impasse, Iraqi officials and two industry sources said, in a potential setback to the oil major’s ambitions to expand in the country.

More than two years of negotiations on awarding the US firm a project to build a water treatment facility and related pipelines needed to boost Iraq’s oil production capacity have hit difficulties because the two sides differ on contract terms and costs, the officials and sources told Reuters.

Unless the differences can be resolved, the project could be awarded to another company in a tender, the officials said, without elaborating on the points of dispute.

Losing the contract could deal a blow to Exxon’s broader Iraqi plans, as it would be handed rights to develop at least two southern oilfields — Nahr Bin Umar and Artawi — as part of the deal.

Exxon declined to comment.

Further delays to the project could also hold back the oil industry in Iraq, OPEC’s second-largest producer; the country needs to inject water into its wells or risk losing pressure and face severe decline rates, especially at its mature oilfields. As freshwater is a scarce resource in Iraq, using treated seawater is one of the best alternatives.

The Common Seawater Supply Project (CSSP), which would supply water to more than six southern oilfields, including Exxon’s existing West Qurna 1 field and BP’s Rumaila, was initially planned to be completed in 2013 but has now been delayed until 2022.

“The CSSP would be expensive and challenging but there’s opportunity here (for Exxon) ... to get access to resources on a very large scale and to achieve something and really make a difference to its own business,” said Ian Thom, principal analyst at consultancy Wood Mackenzie.

Many of the world’s biggest oil companies, such as BP, Total, Royal Dutch Shell and Eni, have operations in Iraq, where a low-return environment and strict contract terms have squeezed returns in recent years.

With total oil production at West Qurna 1 at around 430,000 bpd, Exxon’s presence in Iraq is small compared with dominant player BP whose Rumaila oilfield accounts for around a third of the country’s total production of about 4.4 million bpd.

While the Texas-based firm is looking to grow in Iraq, its geographical focus remains on the Americas, including US shale fields and Brazil, in contrast to rivals such as France’s Total and Italy’s Eni who have been significantly expanding their activities in the Middle East in recent years.

The talks between Iraqi authorities and Exxon are still ongoing, according to the industry sources and officials from the Iraqi oil ministry.

However the state-run Basra Oil Company (BOC), which is overseeing the project, said it could now tender the project this month in a parallel process with the aim of completing a first phase by 2022.

“We have this one approach but we can have another approach as well,” Abdul Mahdi Al-Ameedi, head of the Iraqi oil ministry’s licensing and contracts office, told Reuters.

Iraq chose Exxon to coordinate the initial studies of the CSSP in 2010. At the time, Baghdad aimed to raise its oil production capacity to 12 million barrels per day (bpd) by 2018, rivalling Saudi Arabia. That target has been missed and been cut to 6.5 million bpd by 2022 from around 5 million bpd now.

Negotiations with Exxon fell through in 2012 due to red tape and cost disputes. In 2015, the company re-entered talks with the oil ministry, this time in partnership with China’s CNPC and with the CSSP folded into a much bigger development project known as the Integrated South Project. 

CNPC did not reply to a request for comment.

For Iraq, going down the non-Exxon route raises two major concerns: How to integrate the project between the water treatment facility and the oilfields and how to finance the project, Thom said.

Two Iraqi oil sources told Reuters that taking the non-Exxon path would raise financing concerns for Iraq.

Projected costs of the scheme have not been disclosed, but engineering studies have put the cost of treating 12.5 million bpd of seawater transported to six oilfields at $12 billion.

The capacity has been revised downwards, with the first phase set to have a 5 million bpd of water, and in the second phase an additional 2.5 million bpd of water will be added for additional fields.