Saudi oil output halved; SA’s new oil laws; CR’s envoys into Africa; HK tourism drops 40%

By Alec Hogg

  • Friction between the US and Iran escalated to a dangerous level after Saturday’s attack on a critical Saudi Arabian oil facility which knocked out half the country’s crude production – around 5.7m barrels a day or 5% of global oil supply. US Secretary of State Mike Pompeo blamed Iran for the apparently co-ordinated strikes. He dismissed claims from Iran-allied Houthi rebels in Yemen who claimed responsibility, saying they had sent 10 drones to strike at critical Saudi facilities. Pompeo didn’t explain how the US believes Iran was to blame or where the strikes originated. According to the official Saudi news agency, US president Donald Trump called the Saudi crown prince Mohammed bin Salman after the strikes, offering to co-operate with the kingdom in supporting its security and stability. On Sunday Iran rebuffed any suggestion that it was involved. Its foreign minister Javad Zarif said after the US had failed at its “max pressure” campaign it is now focusing on “max deceit”. The Saudi stock market dropped 3% on Sunday, and analysts expect that when markets re-open the oil price will trade at least 20% higher as a result of the disruption to oil supply.
  • Political turmoil engulfing Hong Kong continued as tens of thousands of protestors again ignored a police ban to embark on their 15th successive weekend of rolling mass action. A crowd estimated by organisers at a million people, walked more than two miles from a shopping district where usually busy stores were shuttered, many chanting “Five demands! Not one less!,” “Fight for freedom!” and “Revolution of our times!” As is becoming increasingly common, the demonstrations turned violent on Sunday with hundreds of protestors hurling bricks and Molotov cocktails into lines of riot police outside the government headquarters. Police used water cannon with blue dye to later identify activists. Meanwhile, Hong Kong’s airport authority says passenger volume dropped 12% in August and tourist arrivals fell 40%, the biggest decline since May 2003 when Hong Kong was grappling with the deadly SARS virus.
  • South African President Cyril Ramaphosa has dispatched three officials to seven African nations in the wake of a recent spate of xenophobic attacks. According to Bloomberg, Ramaphosa’s brother in law, former Energy minister Jeff Radebe, Ambassador Kingsley Mmabolo and a veteran ANC leader Khulu Mbatha, will visit Nigeria, Niger, Ghana, Senegal, Tanzania, the Democratic Republic of Congo and Zambia. A statement emailed on Sunday by the presidency reads “The special envoys will brief governments in the identified African countries about the steps that the South African government is taking to bring a stop to the attacks and to hold the perpetrators to account.” Clashes erupted three weeks ago after a taxi driver was shot dead in Pretoria, allegedly by a suspected Nigerian drug dealer. Scores of foreign-owned shops were subsequently torched and looted in the ensuing violence as the attacks spread to Johannesburg. At least 12 people have died in the violence and more than 50 shops and several vehicles destroyed.
  • South Africa’s government has revised an onerous proposal shelved four years ago, and is drafting a new law aimed at securing it a free carry of 10% in all new oil and gas ventures. The previous proposal mooted a 20% free carry for government plus the right to acquire a further 60% at a price determined by the state. As a result of that proposal, the two biggest explorers in the country, multinationals Total and Shell, put their projects on ice. Bloomberg reports that the new legislation is expected to be presented to Parliament in the final quarter of 2019. It was outlined to lawmakers on Friday by the Department of Mineral Resources and Energy. Apart from the 10% free carry, it also proposed that the State acquire rights to 10% of the production at no cost. The Department also wants contracts to include 10% for BEE partners and for Treasury to impose royalties ranging from 0.5% to 5% on profits. The proposals are in line with other African countries. Bloomberg reports that Ghana stipulates a free carry of at least 15% and Senegal last year proposed a carried interest of 10% in exploration projects and up to 30% in operational fields.
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