China eyes Southeast Asia push with $10 billion Manila airport project

Above, passengers disembark from a Saudi Arabia Airlines plane parked at the tarmac of Ninoy Aquino International airport. Capacity at the Philippines’ main aviation gateway is at critical levels, although private sector proposals have been put forward for the airport’s expansion. (Reuters)
Updated 08 March 2018
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China eyes Southeast Asia push with $10 billion Manila airport project

HONG KONG: CLSA, the offshore platform of Chinese investment bank CITIC Securities, is working on the finance for a new $10 billion airport in Manila as part of its push into Southeast Asia and China’s ambitious Belt and Road initiative.
In an interview this week, CLSA chairman Tang Zhenyi said that CLSA also planned to open new offices in Vietnam, Pakistan and Dubai this year as the Asia-focused broker continued its expansion into investment banking.
Introduced in 2013, the Belt and Road project is aimed at building a modern-day economic “Silk Road,” connecting China by land and sea to Southeast Asia, Pakistan and Central Asia, and beyond to the Middle East, Europe and Africa.
Beijing has called on financial firms to develop overseas lending businesses to help connect China with old and new trading partners including the 10-member Association of Southeast Asian Nations (ASEAN).
The Manila airport project, to be developed south of the Philippine capital, is still awaiting government approval but CLSA has held preliminary talks with potential Chinese backers for the deal, Tang said.
“It looks like we are in good shape to do this. It’s a $10 billion minimum project,” he said. “Citic and CLSA are in the perfect position to talk with all the Chinese financial institutions.”
Tang and CLSA did not give the location or further details of the project. Local media have reported competing airport proposals are currently being studied by the Philippines government.
The involvement in the airport project by CLSA, which was bought by CITIC Securities in 2013, comes at a time it is aggressively expanding its investment banking advisory services beyond its broking origins, by leveraging its China ties.
“China has the capital, has the market. These countries have the need,” he said, referring to the ASEAN countries’ push to boost infrastructure investments.
Tang, who worked for China’s Ministry of Finance and for the World Bank in Washington before joining Citic Group in 2011, became chairman of CLSA in November 2016.
Last year, the company returned to its CLSA branding, dropping the name Citic CLSA, although it does operate as the international arm of CITIC Securities.
As part of its strategy to grab a bigger share of investment banking deals in Asia, CLSA is also in talks with Pakistan’s ministry of finance to help the country sell Panda bonds — debt sold by foreign entities to investors in mainland China.
Tang said CLSA is in the middle of a transformation, and plans to add up to 15 bankers in Southeast Asia this year as it seeks to diversify from its Chinese roots. Of its 120 current bankers, about 80 are involved with China-related projects and 40 with ASEAN business.
“We are hoping by adding more ASEAN content into the whole company, we will see it more 50-50 (between ASEAN and China).”


Russia backs OPEC oil output hike

Updated 14 min 41 sec ago
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Russia backs OPEC oil output hike

  • Saudi Arabia, supported by Russia, was strongly in favor of pumping more oil to allay fears of a supply crunch and ease concerns about the high prices
  • ussia on Saturday joined an OPEC-led pledge to boost oil production in response to growing global demand

VIENNA: Russia on Saturday joined an OPEC-led pledge to boost oil production in response to growing global demand, capping a week of tense diplomacy for the grouping that averted a damaging rift between arch foes Iran and Saudi Arabia.
Speaking after a meeting in Vienna, Russian Energy Minister Alexander Novak said the agreement would give the OPEC and non-OPEC countries cooperating in a landmark supply-cut pact the necessary “flexibility” to prevent the market overheating.
The non-cartel countries in the so-called OPEC+ alliance were widely expected to give their backing after ministers from the Organization of Petroleum Exporting Countries already agreed on Friday to boost output from July.
“We came to the conclusion that what was needed was about a million barrels of additional production,” Saudi Arabia’s Energy Minister Khalid Al-Falih told a press conference.
The proposal is the result of a compromise hammered out in days of fractious talks in Vienna dominated by Iran’s resistance to easing an 18-month-old supply-cut deal credited with lifting oil prices to multi-year highs.
Saudi Arabia, supported by Russia, was strongly in favor of pumping more oil to allay fears of a supply crunch and ease concerns about the high prices in major consumer countries like the United States, China and India.
But Iran, bracing for the impact of fresh US sanctions on its oil exports, fiercely objected to raising output targets, as did countries like crisis-hit Venezuela and Iraq who are unable to raise output in the near term.
But in the end, a vaguely-worded statement that made no mention of the one-million figure allowed all sides to save face.
Ministers also acknowledged that production problems in some countries meant the real number of extra barrels coming to the market would be several hundred thousand less.
Markets were disappointed with the modest output hike, sending crude prices soaring on Friday.
Brent crude added $2.50 to finish at $75.55 a barrel, while the US benchmark West Texas Intermediate gained $3.04 at $68.58 per barrel.
The supply-cut pact clinched in late 2016 between 24 OPEC and non-cartel members, which is set to run until the end of the year, called on participants to trim output by 1.8 million barrels a day.
But production constraints and geopolitical factors have seen several nations exceed their restriction quotas, keeping some 2.8 million barrels off the market, according to OPEC.
By now agreeing to collectively raise output by a million barrels, countries are simply committing to comply fully with the original pact — allowing the bloc to increase supply without unwinding the deal.
But the joint communique did not spell out how the new barrels would be divvied up, a key issue given Iran’s insistence that cartel members should not to be allowed to offset other members’ involuntary production losses.
Grilled by reporters, Saudi’s Falih said a technical committee would work out the details but that the aim was not to be “overly strict” about exact allocations per country.
“We as Saudi Arabia obviously can deliver as much as the market would need but we are going to be respectful of the one-million barrel cap,” he said.
Russia, Saudi Arabia and its Gulf allies Kuwait and the United Arab Emirates are among the few countries that can realistically ramp up production immediately.
Iran is bracing for production shortfalls because of renewed sanctions following US President’s Donald Trump’s decision to quit the international nuclear deal.
In Venezuela, an economic and political crisis has savaged petroleum production while fighting between rival factions has damaged key oil infrastructure in Libya.
Geopolitical tensions loomed large over this week’s meetings in the Austrian capital, and US President Donald Trump was the elephant in the room.
Trump has repeatedly lashed out at OPEC on Twitter in recent months, piling pressure on key ally Riyadh to boost output as he hopes for lower pump prices before US voters go to the polls for mid-term elections in November.
The US leader weighed in again on Friday, tweeting: “Hope OPEC will increase output substantially. Need to keep prices down!“
Iran’s Zanganeh accused Trump of trying to politicize OPEC and said it was US sanctions on Iran and Venezuela that had helped push up oil prices.
Asked whether Trump had influenced discussions, Novak replied: “Twitter is not one of the instruments that we base our decisions on.”
Novak also brought Russia’s football fever to Vienna, presenting a stuffed animal version of the World Cup’s wolf mascot to OPEC secretary general Mohammad Barkindo from Nigeria, whose country last night beat Iceland 2-0.