Slovakia to feel most pain from Trump car tariffs

The carmaking sector has a 44 percent share of Slovakia’s total industrial production and 35 percent of its exports. (AFP)
Updated 01 July 2018
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Slovakia to feel most pain from Trump car tariffs

  • Slovakia boasts Germany’s Volkswagen — the country’s biggest private-sector employer — France’s PSA and South Korean Kia along with more than 300 automotive supply companies
  • Carmakers based in Slovakia have so far declined to comment on possible US tariffs

BRATISLAVA, Slovakia: As the world’s largest per capita car producer, Slovakia stands to be hit hardest if US President Donald Trump makes good on his threat to impose a 20 percent tariff on cars imported from the EU, analysts say.
Trump’s threat was the latest salvo in an escalating trade war that saw the European Union slap duties on US-made jeans and motorcycles in a tit-for-tat response to US tariffs on European steel and aluminum exports.
The specter of US tariffs that sent shares in Fiat Chrysler, Daimler and BMW tumbling on European stock exchanges also spooked Slovakia’s automotive sector.
It boasts Germany’s Volkswagen — which is Slovakia’s biggest private-sector employer — France’s PSA and South Korean Kia along with more than 300 automotive supply companies.
All told, they generate over 300,000 jobs in the eurozone country of 5.4 million. Jaguar Land Rover will also open a new plant in September.
This makes Slovakia the EU’s leading car and car part exporter to the United States in terms of share of GDP — and the most vulnerable to tariffs.
“The ratio of overseas car exports to Slovakia’s GDP is significantly the highest among all countries of the EU, with it being up to 1.7 percent,” the Slovak Institute for Financial Policy (IFP) said in a study.
“An increase in customs duties on car imports would have the biggest impact on Slovakia,” it concluded.
As the only Slovakia-based carmaker that exports directly to the US, Volkswagen — and its many local suppliers — will suffer the most should US tariffs be slapped on the high-end Touareg, Audi Q7 and Porsche Cayenne models produced at its Bratislava plant.
Overall, the carmaking sector has a 44 percent share of Slovakia’s total industrial production and 35 percent of its exports.
Last year, 1,001,520 cars rolled off assembly lines in Slovakia and exports were worth €3.7 billion ($4.3 billion).
Annual production has exceeded one million cars in each of the last three years and is forecast to grow by more than a third by 2020.
A 25 percent tariff on cars could cost Slovakia approximately €90 million, according to IFP calculations.
Tariffs would “definitely pose a challenge for Slovak carmakers reaching out to customers in the United States,” Jan Pribula, Secretary General of the Automotive Industry Association of the Slovak Republic (ZAP), said.
Slovak Economy Minister Peter Ziga has said that Bratislava would rally for unity across the EU in the interests of keeping the car sector tariff-free.
Carmakers based in Slovakia have so far declined to comment on possible US tariffs.
“As these plans are only speculations, we will not comment on them,” Volkswagen Slovakia spokesman Michal Ambrovic said.
The German company’s Slovak operation produced 361,776 cars last year, and 99.7 percent of its production was exported, with 20 percent to the US, according to an internal report made available to AFP.
Groupe PSA Slovakia, maker of Citroën C3 and Peugeot 208 in Trnava, also declined to comment on the tariff impact, but spokesman Peter Svec did say that its plant does not sell to the US market.
PSA produced 335,296 cars in 2017, 91 percent of its production was sold to customers EU countries, according to the company annual report.
KIA Slovakia spokesman Andrej SaHajj also confirmed that sales of its vehicles are restricted to Europe.


Adnoc signs deal with Eni on Ghasha concession

Updated 13 November 2018
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Adnoc signs deal with Eni on Ghasha concession

  • ADNOC grants Eni 25 percent stake in ultra sour gas project
  • Follows Adnoc award to France's Total

LONDON: The Abu Dhabi National Oil Company (ADNOC) has granted the Italian oil company Eni a 25 percent stake in an off-shore gas mega-project, in a move that will support the emirate’s efforts to become self-sufficient in gas.
The energy company is now in discussions with other potential partners for the remaining 15 percent of the available 40 percent stake in the concession earmarked for foreign companies.
The award covers the Ghasha ultra-sour gas concession just off the coast of the UAE, including the Hail and Dalma and other offshore fields. Eni will contribute 25 percent of the development cost of the project which is likely to cost billions of dollars.
The deal comes just days after ADNOC awarded a 40 percent stake to French oil firm Total on Nov. 11 to explore and develop its Ruwais Diyab unconventional gas concession.
The Ghasha gas fields are estimated to hold trillions of standard cubic feet of recoverable gas, according to a company statement.
Once on stream, the project is expected to produce more than 1.5 billion cubic feet of gas per day. This could provide enough gas to supply electricity to more than 2 million homes, said ADNOC.
The project is set to produce 120,000 barrels of oil and high-value condensate per day once complete, the company said.
“ADNOC is committed to ensuring a stable and economic gas supply to the UAE, which is a core component of our 2030 strategy,” said Sultan Ahmed Al-Jaber, UAE minister of state and ADNOC group CEO.
“Development of our Hail, Ghasha and Dalma ultra-sour gas offshore resources, at commercial rates, will make a significant contribution towards delivering that strategic imperative and bringing forward the day when the UAE will not only be self-sufficient in gas but also transitions to net exporter of gas,” he said.
Eni won its first concession rights in the emirate’s oil and gas sector earlier this year, with Adnoc granting the Italian firm a 10 percent interest in its Umm Shaif and Nasr concession and a 5 percent stake in the Lower Zakum concession in March.
“We are pursuing a strategy of growing in the Middle East and today’s signature is further confirmation of our willingness to root our presence in Abu Dhabi,
following the agreements signed last March, with Adnoc,” said Eni CEO, Claudio Descalzi, in a statement.
ADNOC is exploring opportunities beyond Abu Dhabi, having also signed a framework agreement with the Uzbek energy company, Uzbekneftegaz on Tuesday.
The agreement will see the Gulf company provide advice on Uzbekistan’s upstream and downstream operations.