Preview Newsletter
Project Dory Monitoring 22 August 2017
-
Seafood ban on North Korea hits China's border town
Aug 22, 2017 | Global Times
By Deng Xiaoci
Chinese foreign trade ships, which sail to the North Korean side daily to source seafood prodcuts, docked for days at some ports in the Qianyang county, Donggang. -
Sanctions? Solar panel sales to North Koreans are booming for these small businesses
Aug 21, 2017 | The Washington Post
By Gene Marks
Doing business with North Korea is next to impossible nowadays, particularly after the latest round of U.N. sanctions are now restricting shipments of iron, iron ore and seafood from China and other countries. But the sale of solar panels remains legal and some business owners are profiting. -
Chinese provinces heeding Xi's calls to report accurate GDP
Aug 22, 2017 | Nikkei Asian Review
By Issaku Harada And Daisuke Harashima
Chinese President Xi Jinping's campaign against tampered economic data is starting to catch on, with Liaoning Province in the northwest reporting a plunge in nominal gross domestic product in a likely departure from the practices of the past. -
China, Like U.S., Struggles to Revive Industrial Heartland
Aug 22, 2017 | The New York Times
By Michael Schuman
The hulking, brown-brick industrial plants lining the roads were once the backbone of this gritty city. Today, they are outdated and unwanted, and the region is one of the Chinese economy’s most troubled. -
China blasts U.S. 'protectionism' after Trump triggers trade probe
Aug 22, 2017 | CNN Money
By Jethro Mullen and Serena Dong
China has attacked the Trump administration's decision to launch an investigation into some of its trade practices. -
Great Wall Motor of China Sets Its Sights on Jeep
Aug 21, 2017 | The New York Times
By Jack Ewing And Keith Bradsher
China is trying to clamp down on overseas acquisitions by its companies. Hostility is growing in the United States toward Chinese deals. And the auto industry faces substantial change in the form of battery-powered vehicles and autonomous cars. -
Total Buys Maersk Oil
Aug 22, 2017 | Maritime Executive
Total will take over Maersk Oil’s entire organization, portfolio, obligations and rights with minimal pre-conditions. Planned development schedules and investments in strategic and sanctioned projects will be upheld.
Port Mentions - There are no relevant clips to report at this time.
City/Province Mentions
Competitor Mentions - There are no relevant clips to report at this time.
US - China Relations
Industry News
-
Seafood ban on North Korea hits China's border town
Aug 22, 2017 | Global Times
By Deng Xiaoci
Chinese foreign trade ships, which sail to the North Korean side daily to source seafood prodcuts, docked for days at some ports in the Qianyang county, Donggang.
The recent Chinese ban on North Korean seafood imports has had a severe impact on the seafood business in Donggang, a Chinese border port city with North Korea.
Donggang, which is administered by Dandong, northeastern China's Liaoning Province, serves as a national hub for the seafood trade between China and North Korea, with Chinese merchants sailing to North Korean waters to source products, especially during China's summer fishing ban.
During the ban, which usually starts from June 1, but began on May 1 this year, until September 1, China relied heavily on seafood from North Korea.
For example, about 80 percent of the swimming crabs in China are from waters east of North Korea, according to a local seafood merchant named Zhao on Monday.
The price of North Korean swimming crab, which was 10 to 30 yuan ($4.5) every 500 grams, has skyrocketed to 100 yuan every 500 grams, as the legal supply is virtually nil, Zhao added.
On August 14, China's Ministry of Commerce and the General Administration of Customs jointly released a notice declaring that China would impose an import ban on coal, iron, iron ore, lead, lead ore and seafood from North Korea as stated in UN Resolution 2371 unanimously adopted by the UN Security Council on August 5.
The new rule took effect at midnight of August 15, leaving no grace period for the merchants, which caused losses in the hundreds of millions of yuan for seafood merchants of border cities, including those from Hunchun of Northeast Jilin Province and Donggang.
"We never expected it to be implemented that soon, at least not before September, so we placed even bigger import orders in August in a bid to reduce the losses. However, it turned out to work against us," Zhao explained.
Chinese companies have to pay for almost everything, including the fishing and food processing facilities as a condition to conduct trade with North Koreans, and the North Korea will never give their money back, whether the business is thriving or not, according to a number of seafood vendors the Global Times reporter spoke to on Monday.
Under the seafood import ban, Chinese merchants are forbidden from getting their supply from North Korea, having made no revenue since a week ago, and also have to shoulder the expenses of the ships and crew members who are grounded, said Zhang, who invested several thousands of US dollars for his seafood supply from North Korea.
Zhang said he has kept almost all of his ships, which used to carry seafood back and forth daily, docked in the Dataizi port of Donggang for six days due to the ban.
"As part of our strategy, we still have a few ships out there in the sea, hoping tensions on the Korean Peninsula would calm down and the ban would be eased, but it seems impossible anytime soon," Zhang added.
Zhao said he predicts Donggang investors beyond the seafood business will also suffer from the seafood ban, since seafood products used to serve as a "hard currency" alternative to make up for the losses of Chinese companies engaged in the coal business from previous UN sanctions.Few stores at the Donggang Yellow Sea Seafood Products Wholesale Market, the biggest local such market that dispachees goods to across the country, remained operating on Monday. Photo: Deng Xiaoci/GT
No clearance
When asked how strict the ban is, Xu, one of the biggest seafood business operators in Donggang, told the Global Times that custom authorities do not provide services for clearance of these imports.
"And if they find a cargo of smuggled goods worth more than 200,000 yuan, the business owner would be jailed, and each of our foreign trade boats can easily carry products worth more than a million yuan. The jail term would rise depending on the amount involved," Xu added. UN Resolution 2371 is expected to reduce North Korean revenue by approximately $1 billion, the UN website said.
According to an anonymous insider, the seafood export business used to account for about one-third of North Korea's foreign currency earnings.http://www.globaltimes.cn/content/1062481.shtml
-
Sanctions? Solar panel sales to North Koreans are booming for these small businesses
Aug 21, 2017 | The Washington Post
By Gene Marks
Doing business with North Korea is next to impossible nowadays, particularly after the latest round of U.N. sanctions are now restricting shipments of iron, iron ore and seafood from China and other countries. But the sale of solar panels remains legal and some business owners are profiting.
Yuan Huan is a good example. She manages Sangle Solar Power, a shop in the Chinese city of Dandong. Dandong borders North Korea and accounts for about 70 percent of all the trade that goes on between China and its neighbor. According to this report from Agence France-Presse, Huan is frequently visited by North Korean traders with “wads of cash.” North Koreans want solar panels and business is booming for her and other solar panel outlets. Official figures from China report a total of 466,248 solar panels were exported to North Korea last year.
Why the demand? Electricity, among other natural resources, are in short supply in a country where even existing generators are outdated and frequently break down. So many citizens — at least two percent of the country’s population according to some estimates — are investing in solar power as an alternative. The sales of solar panels have so far avoided the ever-growing number of blacklisted products that cannot be sold to North Koreans.
You would think that selling to North Koreans would be a difficult process. But no so. Sangle’s orders are handled through a third-party Chinese logistics company that ships products across the “Friendship Bridge” which connects Dandong to the North Korean city of Sinuiju. Some customers even place orders by phone. “It is actually quite easy for traders to go back and forth,” Huang told AFP. Besides solar panels, shopkeepers in Dandong also report brisk sales of ginseng, dried mushrooms and dried ants (they’re good for joint pain, didn’t you know?) to North Korean consumers.
You would think that the average price of $400 to $2,100 for solar panels would be beyond what the typical North Korean could afford, but many of the country’s urban residents do have adequate disposable income to pay, according to one researcher from Johns Hopkins University.
How long will this the solar panel boom continue? No one knows for sure. “It seems that overall, there are fewer North Korean traders coming over recently, but we’re not affected by what’s happening politically,” Shi Zhiyong, who manages another solar power shop, told the AFP.
https://www.washingtonpost.com/news/on-small-business/wp/2017/08/21/sanctions-solar-panel-sales-to-north-koreans-are-booming-for-these-small-businesses/?utm_term=.93587d8022f4
-
Chinese provinces heeding Xi's calls to report accurate GDP
Aug 22, 2017 | Nikkei Asian Review
By Issaku Harada And Daisuke Harashima
Liaoning posts almost 20% decline in nominal GDP for January-June
BEIJING/DALIAN, China -- Chinese President Xi Jinping's campaign against tampered economic data is starting to catch on, with Liaoning Province in the northwest reporting a plunge in nominal gross domestic product in a likely departure from the practices of the past.
Liaoning's nominal GDP shrank 19.6% on the year in January-June to 1.02 trillion yuan ($154 billion). Meanwhile, its real GDP grew 2.1% and both consumer and wholesale prices have gained. But logic dictates that if prices are on the rise, nominal GDP must be outperforming real GDP.
Gov. Chen Qiufa, Liaoning's No. 2 official, acknowledged in January that a number of cities and counties had been overstating fiscal revenues from 2011 to 2014.
During the National People's Congress in March, Xi told representatives from Liaoning that legitimate figures were the most appealing ones. Premier Li Keqiang, who rose through the ranks of the Communist Youth League, once led the province. Xi's comments were likely meant to curb the league ahead of a party leadership reshuffle this fall.
Liaoning's data suggests that the province had been tampering with a number of figures, including fiscal revenue. The 20% drop in GDP was likely a result of truthful reporting for January-June in comparison to the inflated figures published previously.
Liaoning has long been rumored to be falsifying its economic data, given its continued growth in real terms despite the downturn in its heavy industries. It reported negative growth for the first time in January-March 2016. But the economy had been facing trouble before then, a local business manager said.
China's anti-corruption watchdog announced in June that Jilin Province and Inner Mongolia had also been faking data. More provinces could admit to wrongdoing.
The Chinese government passed a new law this month to crack down on inflated economic data. But regional officials still get rated mainly on local GDP and tax revenue. High growth targets set by the party also contribute to the propensity to overstate figures. Structural reforms will be crucial to ensuring accurate reporting.
https://asia.nikkei.com/Politics-Economy/Economy/Chinese-provinces-heeding-Xi-s-calls-to-report-accurate-GDP
-
China, Like U.S., Struggles to Revive Industrial Heartland
Aug 22, 2017 | The New York Times
By Michael Schuman
SHENYANG, China — The hulking, brown-brick industrial plants lining the roads were once the backbone of this gritty city. Today, they are outdated and unwanted, and the region is one of the Chinese economy’s most troubled.
A short drive away, however, a newly minted industrial park offers reasons for optimism. Liu Qi, the chairman of PQI Industrial Technology Group, opened an $18 million factory there last year, equipped with whirring robots that pound out car parts for the German automaker BMW.
The factory, and the more than 200 jobs it has created, is just one small part of a grand plan led by China’s government to rejuvenate Shenyang, a city of eight million, by replacing stumbling state industries with modern manufacturing and start-up companies.
“When things hit bottom, there is an opportunity for things to go up,” Mr. Liu, 46, said.
Whether the rejuvenation happens will shape not just the future of Shenyang, but also, potentially, the entire Chinese economy. The city’s woes represent a broader problem: There are too many unproductive, debt-laden factories that are losing business as China’s growth slows. If Beijing fails to overhaul those crumbling industries and revive the communities that rely on them, Shenyang and the surrounding area — and other similar regions — could weigh heavily on the country’s economic progress.
“When things hit bottom, there is an opportunity for things to go up,” Mr. Liu, 46, said.
Whether the rejuvenation happens will shape not just the future of Shenyang, but also, potentially, the entire Chinese economy. The city’s woes represent a broader problem: There are too many unproductive, debt-laden factories that are losing business as China’s growth slows. If Beijing fails to overhaul those crumbling industries and revive the communities that rely on them, Shenyang and the surrounding area — and other similar regions — could weigh heavily on the country’s economic progress.
The story of Shenyang will probably sound familiar in places like Midwestern towns in the United States that have seen important industries decline or depart. During China’s go-go years, when factories, roads and housing were constructed with wild abandon, the city’s heavy industrial companies, many of them owned by the state, boomed.
A rush of wealth was plowed into new apartment towers and shopping malls in Shenyang. The city still has an industrial air, with central office blocks designed in a near-uniform drab brown, matching its factory complexes.
But as China’s investment binge fizzled, Shenyang and its factories sputtered. Last year, the economy of the northeastern province of Liaoning, of which Shenyang is the capital, shrank 2.5 percent — a shocking figure in a country accustomed to seemingly endless expansion. Other major cities have sped ahead of Shenyang in the development of the high-tech and service companies expected to propel China’s future growth.
The entire northeast of the country, where much heavy industry has been concentrated, runs the risk of being left badly behind. The decay of this factory zone has left Beijing with a similar knotty problem to the one that has plagued Washington for decades: how to resurrect down-on-their-luck areas.
In the United States, President Trump plans to streamline regulation, cut corporate taxes and renegotiate trade pacts to bring factory jobs back to troubled towns.
Around the world, state intervention to attempt to stimulate a domestic economy is not unusual. But officials in China, as is often the case, have adopted a much more hands-on approach. With lavish incentives and initiatives, they are trying to attract investment to the region and to upgrade its industries.
Shenyang is a crucial test case. The city has set up a $7 million fund to support high-tech industries, promised a $30,000 bonus for some technology firms, and offered to pare the corporate tax rate for companies in favored sectors.
Mr. Liu’s factory opened inside the China-Germany Equipment Manufacturing Industrial Park, introduced in late 2015 to try to attract advanced production in robotics, automotive components and other industrial sectors. The government offers a 30 percent discount on land, streamlined regulations and other perks for companies that set up in the facility. PQI is now negotiating for rent breaks and cheap land for his current factory, as well as for future investments.
Zhang Yanzan, the park’s deputy director, says that, since its opening, more than 140 factories have been completed or are underway, hauling in a total investment of nearly $6 billion. “We hope this park can be an example for other areas,” he said.
The city authorities are also striving to persuade local college graduates to start companies in Shenyang by offering subsidies. The effort is focused on a shopping arcade of fast-food restaurants and computer outlets that had Start-Up and Innovation Street added to its name in 2015.
On the top floor of one office tower in the area is an incubator called Phoenix Valley, founded by two Shenyang-born businessmen. One room is a cafe, where budding entrepreneurs swap tips over cappuccinos and browse shelves of books on business building. Next door, desks can be rented in a communal office for 300 renminbi, or about $45, a month. The incubator has more than 100 members and will soon open a second office in the city.
“The development in Shenyang is not as fast as in Beijing and Shenzhen, but if start-ups are really good at what they do, they will have more potential to grow,” said Hong Qifan, who founded Phoenix Valley with his business partner, Ma Ke, citing China’s capital and one of its southern boom towns.
Shenyang’s taxpayers are contributing to the effort. Some entrepreneurs are eligible for subsidized housing, with rent costing the equivalent of $30 a month. This year, Phoenix Valley received a cash handout from the central and municipal governments worth more than $70,000. Local officials also helped the incubator’s founders negotiate a below-market rent for its headquarters.
Occupying one of the Phoenix Valley desks recently was Tao Qiuchen, 25, a Shenyang native who has founded a company called Hong Mo Fang Enterprise Management, which plans parties. In less than a year, Mr. Tao has hired 20 employees, thanks in part to the local government, which pays the interest on the $24,000 bank loan he took out to start the business.
The government programs “are definitely helping the economy,” he said.
Still, Innovation Street pales in comparison to the efforts in hot spots like Beijing and Hangzhou, a city in the east, which have not only higher salaries, but also entire neighborhoods of start-up centers. And the residents of Phoenix Valley complain that venture capital and talent are scarce in Shenyang.
Other initiatives in the city seem to be generating more buzz than business. In April, Shenyang opened a branch of the provincial free-trade zone, in which companies can benefit from reduced red tape, discounted land and other advantages. At its offices, in the corner of a gargantuan, columned hall worthy of a Star Trek set, dozens of businesspeople and their agents lined up to register companies.
But the zone’s rules do not require these businesspeople to start any actual operations there. Tian Jiawei, a manager at an agricultural company based near Shenyang, registered an export-import firm, but has no plans to open an office or hire workers.
“I’m not sure what kind of tax break I might enjoy, but I didn’t want to miss the opportunity,” he said.
More problematic: Shenyang’s incentive programs are not unique. “Every province and city in China has policies to encourage investment and start-ups,” said Zhao Xijun, deputy dean of the School of Finance at Renmin University in Beijing. “If northeast cities just do the same, they won’t be able to compete with those who are already ahead of them.”
The result is that, even with its active officials, China may find reviving its troubled industrial towns every bit as challenging as Western countries like the United States do.
“Shenyang still has a long way to go,” Mr. Liu, the factory owner, said. “It is like grass that you burn to the ground. It is going to grow back. You just don’t see it at the moment.”
https://www.nytimes.com/2017/08/22/business/economy/china-factories-industrial-economy.html?_r=0
-
China blasts U.S. 'protectionism' after Trump triggers trade probe
Aug 22, 2017 | CNN Money
By Jethro Mullen and Serena Dong
China has attacked the Trump administration's decision to launch an investigation into some of its trade practices.
The Chinese Commerce Ministry on Monday issued a statement expressing "strong dissatisfaction with the U.S. approach to unilateralism and protectionism."
Following a request from President Trump, U.S. Trade Representative Robert Lighthizer on Friday announced he was formally starting an investigation into whether China is unfairly getting hold of American technology and intellectual property.
"After consulting with stakeholders and other government agencies, I have determined that these critical issues merit a thorough investigation," Lighthizer said in a statement.
Based on a U.S. trade law from 1974, the probe appears set to strain relations between the world's two largest economies. It's expected to last at least a year, but could eventually allow Trump to impose tariffs on Chinese imports or take other punishing trade actions.
Trump has struggled to follow through on his combative rhetoric on trade with China during his campaign. Rather than confrontation, he has opted for negotiation while seeking Beijing's help in efforts to rein in North Korea's nuclear weapons program.
But he has voiced frustration with the lack of progress in recent weeks.
The Chinese Commerce Ministry said it was "irresponsible for the U.S to defy World Trade Organization rules and to investigate trade with China in accordance with U.S domestic law."
It said China will "closely monitor the progress of the investigation and will take all appropriate measures to safeguard its legitimate rights and interests."
By focusing specifically on alleged Chinese theft of U.S. intellectual property, the Trump administration is acting on a complaint expressed by a wide array of American companies that do business in China.
China is accused of trying to take shortcuts to help its domestic industries by spying, hacking or forcing companies to share sensitive commercial information, like software code or product designs.
The Chinese Commerce Ministry disputed the accusations, saying they aren't "objective."
When big companies set up operations in developing economies, it's not unusual for them to share some of their technology with their local partners and employees.
But critics say China takes things too far by effectively making the handover of sensitive information a precondition for gaining access to its huge market. They say it's using its economic clout to give Chinese firms an unfair advantage.
http://money.cnn.com/2017/08/21/news/economy/china-us-trump-trade-probe/index.html
-
Great Wall Motor of China Sets Its Sights on Jeep
Aug 21, 2017 | The New York Times
By Jack Ewing And Keith Bradsher
China is trying to clamp down on overseas acquisitions by its companies. Hostility is growing in the United States toward Chinese deals. And the auto industry faces substantial change in the form of battery-powered vehicles and autonomous cars.
None of that deterred one Chinese automaker, Great Wall Motor Company, from saying on Monday that it was interested in buying the Jeep brand — a quintessentially American car that is known for its sport utility vehicles and pickup trucks, but that also has a strong resonance in China.
Fiat Chrysler Automobiles, the Italian-controlled company that owns Jeep, said it had not heard from Great Wall, however, suggesting that considerable ground would have to be covered before a deal could be reached.
Still, the comments from Great Wall signal China’s continuing interest in becoming a global force in the auto industry. Chinese carmakers have shown interest in expanding outside their home market in recent years, and the fastest way to do that would be to acquire an existing automaker.
Fiat Chrysler is an obvious target because its chief executive, Sergio Marchionne, has signaled interest in finding a buyer. It would also be relatively cheap, valued at $19 billion on the stock market.Continue reading the main storyRELATED COVERAGEFiat Chrysler Joins BMW in Race to Make Self-Driving Cars AUG. 16, 2017Volvo, Betting on Electric, Moves to Phase Out Conventional Engines JULY 5, 2017G.M. Chief Flatly Dismisses a Merger Overture From Fiat Chrysler JUNE 9, 2015
The automaker owns the Chrysler, Dodge, Ram and Jeep brands, as well as the Fiat, Alfa Romeo and Maserati brands in Europe.
The seriousness of Great Wall’s interest in a deal could not immediately be determined, and a company spokeswoman declined to say whether the two parties had even met. The Chinese carmaker, controlled by the billionaire Wei Jianjun, has struggled in recent years to find success with new models in China, but it has since enjoyed faster-growing revenue and profit from freshened-up models of S.U.V.s.
In a statement on Monday, Fiat Chrysler said it had “not been approached by Great Wall Motors in connection with the Jeep brand, or any other matter relating to its business.” The carmaker’s shares were nevertheless up 4 percent in Milan.
Jeep has a strong link to China, as it was one of the first foreign brands to enter the country, initially shipping parts to China for assembly in the late 1970s, before a joint venture called Beijing Jeep was created in 1983.
Gerald C. Meyers, at the time the chairman and chief executive of American Motors, which owned the Jeep brand, has said that he initially saw China as a low-cost place to build vehicles for the Australian market, and never anticipated that the country would grow into such a major well of customers.
Chrysler, which bought American Motors in 1987, later decided not to invest in a big expansion of manufacturing operations in China, hoping instead to import Jeeps from the United States. But Jeep was hurt by very steep Chinese tariffs on imported vehicles; for many years, as a consequence, models like the Grand Cherokee cost twice as much in China as in other countries.
Jeep’s difficulties in China, and the extent to which it found itself transferring considerable technology to China in exchange for short-term financial gains, were an early lesson for Western businesses and the Chinese government alike, and were chronicled in a popular 1989 book, “Beijing Jeep.”
The brand’s experience is far from unique, as a long list of Western companies have seen Chinese companies absorb their technology and become global competitors in sectors like diesel freight locomotives, high-speed electric trains and power station turbines.
Tariffs and other taxes shielded the domestic automotive industry in particular from international competition and allowed companies like Great Wall to grow into strong competitors. Chinese manufacturers now hold not only much of their home country’s market for sport utility vehicles, but also large shares of emerging markets in South America, Africa and Southeast Asia, where cost-conscious buyers like Chinese producers’ deeply discounted prices and don’t mind the basic designs and sometimes uneven quality.
More recently, Fiat Chrysler has been expanding Jeep manufacturing in the past two years in China, starting production in Changsha and Guangzhou, two big manufacturing centers in the country’s southeast. But it now faces well-financed domestic competitors with highly developed supply chains and considerable economies of scale.
Great Wall’s expression of interest might prod other suitors to come forward and start a process that could lead to Fiat Chrysler’s sale or breakup. Companies such as Volkswagen might be interested in parts of Fiat Chrysler such as Alfa Romeo, a maker of small and midsize passenger cars known for their Italian styling.
There is a precedent for a Chinese acquisition of a European automaker — Zhejiang Geely Holding Group bought Volvo Cars of Sweden seven years ago.
But any deal between Fiat Chrysler and Great Wall would face considerable obstacles.
From the American perspective, politicians including President Trump have criticized China’s trade policies, and a number of lawmakers in the United States have called for tighter reviews of foreign deals, particularly ones involving China.
And China itself has tightened limits on acquisitions of foreign properties, out of concern that too much money has left the country to chase hotels and soccer clubs, among other entities.
For foreign auto brands, though, Beijing might make an exception. Despite being the world’s largest auto producer, and having made slow progress building cars for foreign brands like Ford and selling them abroad, China still exports only a tiny proportion of the vehicles it makes.
A major issue for Chinese automakers is a lack of brand recognition overseas. Even at home, most Chinese car buyers prefer Chevrolets, Fords and Volkswagens made by foreign companies working with local partners.
A shift to electric vehicles could provide an opening for Chinese automakers. The country is already the largest market for battery-powered cars, and buying an existing auto brand could provide a platform for a Chinese company to sell electric cars abroad.
Geely Holding established a template when it acquired Volvo. Volvo’s revenue has grown, in part because of rising sales in China, and Geely has provided funds that have allowed Volvo to invest more in new products and expansion, including at a new factory in Berkeley County, S.C.
Last month, Volvo became the first traditional carmaker to say it would phase out cars powered solely by diesel or gasoline motors. Beginning in 2019, all new models will be either hybrids or powered solely by battery.
Previous efforts by Chinese automakers to strike overseas deals have not succeeded: A Chinese company tried, but failed, to buy the Hummer brand in 2010.
https://www.nytimes.com/2017/08/21/business/jeep-fiat-chrysler-great-wall-china.html
-
Aug 22, 2017 | Maritime Executive
A.P. Møller - Maersk signed an agreement to sell Maersk Oil to Total for $7.45 billion on Monday.
Total will take over Maersk Oil’s entire organization, portfolio, obligations and rights with minimal pre-conditions. Planned development schedules and investments in strategic and sanctioned projects will be upheld.
With the agreement A.P. Moller - Maersk is taking a material step forward in its strategy to separate out its oil and oil related activities. The separation of the energy businesses was decided as part of last year’s strategic decision to focus A.P. Moller - Maersk’s future activities on transport and logistics, as well as a result of recent years’ oil and gas industry and market developments. Maersk Oil is the first of the four energy companies of A.P. Moller - Maersk for which a future structural solution has now been identified. The solutions for Maersk Drilling, Maersk Supply Service and Maersk Tankers remain to be defined before the end of 2018.
“In determining the best future ownership structure for Maersk Oil, it has been imperative for us that the capabilities and assets created in Maersk Oil continue to be developed and that long-term investments are upheld, especially in the Danish part of the North Sea,” says Søren Skou, CEO of A.P. Moller - Maersk and continues:
“The valuation of Maersk Oil and Total’s commitment is a testament to the quality and standing of Maersk Oil. In addition, the agreement will strengthen the financial flexibility of A.P. Moller - Maersk and free up resources to focus our future growth on container shipping, ports and logistics.”
Denmark will become the regional hub for all Total’s operations in Denmark, Norway and the Netherlands, based on Maersk Oil’s capabilities and strong position in the North Sea region.
“By selling to Total, we ensure a continued Danish stronghold in the North Sea based on Maersk Oil’s leading position within technology development and its track record as a lean, efficient and trusted partner. Importantly, Maersk Oil will remain close to its technology and innovation partners at the Danish technical institutions and in the oil and gas service industry to the benefit of all parties,” says Claus V. Hemmingsen, Vice CEO of A.P. Moller - Maersk and CEO of the Energy division.
A.P. Moller - Maersk has been the main operator in the Danish North Sea for half a century, establishing and maintaining Denmark’s position as self-sufficient within oil and gas. In addition, Maersk Oil has significant presence in the British and Norwegian sectors, with nine licenses in Norway, including an 8.44 percent ownership of Johan Sverdrup, one of Norway’s largest discoveries ever. In the United Kingdom, Maersk Oil operates several offshore installations, as well as leading a number of project developments; most notably the Culzean gas development, where Maersk Oil is the operator and holds a 49.9 percent ownership.
The agreement is subject to regulatory approval from relevant authorities, including the Danish Minister of Energy, Utilities and Climate and relevant competition authorities. Closing is expected to take place during first quarter, 2018.
https://maritime-executive.com/article/total-buys-maersk-oil
Port Mentions - There are no relevant clips to report at this time.
City/Province Mentions
Competitor Mentions - There are no relevant clips to report at this time.
US - China Relations
Industry News
Add recipients
Suggested