South Korea approves welfare-focused budget

Updated 02 January 2013
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South Korea approves welfare-focused budget

SEOUL: South Korea's Parliament yesterday approved a revised government budget for 2013 that focuses more on welfare in response to the next president's pledge to increase social spending.
The legislature ratified total spending of 342 trillion won ($ 319.46 billion), down from the government's proposal of 342.5 trillion.
It marked the first time in South Korea's history that a budget bill has been approved after the beginning of the fiscal year, which is the same as the calendar year.
The revised budget calls for cutting defense expenditure while spending more on social welfare and public construction projects.
Incoming President Park Geun-Hye, who takes office next month, has promised to expand free child care, subsidize college tuition fees and increase support for the poor.
Welfare spending this year will reach about 100 trillion won, higher than the government's proposal of 97 trillion won.
Rival parties had pushed for a bolder fiscal policy to stimulate the economy but reached a deal with the government to save any such measures for the future.
The Finance Ministry has delayed its plan to achieve a balanced budget by a year until 2014. The country's overall sovereign debt was estimated at 34 percent of gross domestic product in 2012.
Meanwhile, South Korea's trade surplus in 2012 shrank 7.1 percent to $ 28.6 billion in 2012, data showed yesterday, as exports were hit by shrinking demand in the key European market.
Overseas shipments fell 1.3 percent to $ 548.2 billion last year, while imports slipped 0.9 percent to $ 519.5 billion, the Ministry of Knowledge Economy said.
The 2012 trade surplus figure is down from $ 30.8 billion in 2011 and well off the $ 41.2 billion in 2010, it said.
In December alone, exports fell 5.5 percent from a year ago to $ 45.1 billion and imports retreated 5.3 percent to $ 43.07 billion.
Shipments to Europe in 2012 plunged 12.5 percent year-on-year to $ 47.6 billion, while exports to top destination China, which suffered a slowdown in growth during the year, fell 0.1 percent to $ 130 billion.
The numbers come a day after official figures showed inflation slowed to a four-month low of 1.4 percent in December, giving the central bank leeway to loosen monetary policy to boost economic growth.
Bank of Korea policymakers left the key interest rate unchanged at 2.75 percent in a meeting last month, after trimming it twice throughout the year.
South Korea's economy expanded at its slowest pace in three years in the three months to September, hit by falling demand overseas, with Europe gripped by a debilitating debt crisis. The government has warned that 2013 will likely be equally tough.


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.