“Let China sleep, for when she wakes, she will shake the world,” as Napoleon is said to have observed.
In the past two decades, China’s prodigious appetite has indeed shaken up the world of commodities, sending demand and prices soaring. But one commodity, natural gas, has escaped China’s grasp - until recently.
China is the world’s largest importer of oil, takes in two thirds of soya beans and seaborne iron ore; it is the biggest generator of electricity; and it consumes half of all the world’s coal, aluminium and copper. It has a third of all the solar power in the world and the third-largest nuclear power industry. In three years, it used more cement to build its new cities, airports and bridges than the US did in the entire 20th century. From 2003 onwards, its soaring energy demand sent oil prices to record heights, and therefore indirectly caused the Arabian Gulf’s economic boom as well as underpinning the Putinist system in Russia.
But in gas, China is not a dominant player. It consumes just 6.6 per cent of the world’s total, although it is still the world’s third-largest market after the US and Russia.
China’s endowment of gas is relatively limited compared to its population and economy and it has vast coal resources, which it has always relied on for cheap, secure energy and jobs.
It has become clear this coal addiction is unsustainable – the country releases more than a quarter of the world’s carbon dioxide, making it the planet’s biggest single greenhouse gas emitter by far. And local pollution, the mercury, acidic sulphur oxides and fine particulates, cuts life expectancy by at least three years and leaves a semi-permanent “brown cloud” hovering over Asia.
But in 2017, China decided to get tough on pollution. It banned coal heating across the 200,000 square kilometre Beijing-Tianjin-Hebei Capital Economic Circle area in the north, aiming to replace it with gas and electricity. Policy issued in June last year called for converting industries to use gas and the development of gas power plants. The resulting surge in demand, up more than 15 per cent in one year, caused shortages, as pipelines, storage and import terminals were unable to keep up.
There had been a fear that the global liquefied natural gas (LNG) market would be over supplied for years, as a wave of recent mega-projects in Australia, the US and elsewhere reached completion. Prices halved from 2015 to 2016, but they rebounded in 2017 as China’s LNG imports rose 50 per cent.
Now, the industry is growing confident in strong Chinese demand, to the point of approving new projects to hit the market in the early 2020s. The country overtook South Korea as the world’s second-largest LNG buyer last year, and imports are set to more than double by 2025; only Japan is now ahead of it.
Meanwhile, Russia’s chose to bet big on its “Power of Siberia” pipeline to eastern China, whose cost, along with the field developments to feed it, is estimated at $55 billion. From receiving almost no gas from Russia today, China next year will suddenly vault to its second-largest customer after Germany.
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So China has suddenly become a key driver of global natural gas markets. And this makes the outlook for gas more promising but much more uncertain. The Middle Kingdom’s use of gas is determined by a complex interplay of economics and policy, and much of the economic side comes down to decisions by individual Chinese households and industries in the face of constantly shifting government directives.
On the policy side, the gas shortages seen last winter were undesirable, so the government may ease off on coal conversion until infrastructure catches up. And the escalating tariffs by the White House on imports from China have led Beijing to retaliate against US products, including LNG. This in turn casts doubt over the long list of American LNG export projects on the drawing board, or causes them to scramble to find buyers elsewhere.
Unlike Japan, South Korea and Taiwan, the leading LNG importers historically, China has ample access to other sources of energy – its own coal and gas, and gas imports from Central Asia, Russia and Burma. How much it chooses to rely on seaborne LNG versus alternatives depends on relative prices as well as decisions on pollution and security of supply.
If China relaxes the grip of its big state companies on the domestic market, it could establish a key pricing hub in the north-east, where LNG imports, local gas and pipelines from Central Asia and Russia converge.
This is also an important geopolitical shift. The economic fates of Russia’s Siberian hinterland and Central Asia, particularly Turkmenistan, will be more closely bound to their giant eastern neighbour. China will have to manage greater dependence on imports, including those brought in through sea lanes through the Indian Ocean, a vulnerability it is already familiar with in oil.
The leading Chinese oil firms will acquire their own LNG technology and take stakes in overseas projects. They have sought to invest in US shale in Alaska and West Virginia but this looks problematic as trade war concerns mount. Instead they will turn to Australia, East Africa and the Middle East.
Gas may still only be an aperitif in China’s vast energy complex but the country’s enourmous appetite means its every move matters.
The turn to gas is good news for choking Chinese citizens and the global climate. It will delight gas exporters but brings a whole new set of strategic conundrums.
Robin M Mills is CEO of Qamar Energy, and author of The Myth of the Oil Crisis
Getting there
The flights
Flydubai operates up to seven flights a week to Helsinki. Return fares to Helsinki from Dubai start from Dh1,545 in Economy and Dh7,560 in Business Class.
The stay
Golden Crown Igloos in Levi offer stays from Dh1,215 per person per night for a superior igloo; www.leviniglut.net
Panorama Hotel in Levi is conveniently located at the top of Levi fell, a short walk from the gondola. Stays start from Dh292 per night based on two people sharing; www. golevi.fi/en/accommodation/hotel-levi-panorama
Arctic Treehouse Hotel in Rovaniemi offers stays from Dh1,379 per night based on two people sharing; www.arctictreehousehotel.com
Killing of Qassem Suleimani
Mountain Classification Tour de France after Stage 8 on Saturday:
- 1. Lilian Calmejane (France / Direct Energie) 11
- 2. Fabio Aru (Italy / Astana) 10
- 3. Daniel Martin (Ireland / Quick-Step) 8
- 4. Robert Gesink (Netherlands / LottoNL) 8
- 5. Warren Barguil (France / Sunweb) 7
- 6. Chris Froome (Britain / Team Sky) 6
- 7. Guillaume Martin (France / Wanty) 6
- 8. Jan Bakelants (Belgium / AG2R) 5
- 9. Serge Pauwels (Belgium / Dimension Data) 5
- 10. Richie Porte (Australia / BMC Racing) 4
UAE currency: the story behind the money in your pockets
Results
6.30pm: Al Maktoum Challenge Round-2 Group 1 (PA) US$75,000 (Dirt) 1,900m
Winner: Ziyadd, Richard Mullen (jockey), Jean de Roualle (trainer).
7.05pm: Al Rashidiya Group 2 (TB) $250,000 (Turf) 1,800m
Winner: Barney Roy, William Buick, Charlie Appleby.
7.40pm: Meydan Cup Listed Handicap (TB) $175,000 (T) 2,810m
Winner: Secret Advisor, Tadhg O’Shea, Charlie Appleby.
8.15pm: Handicap (TB) $175,000 (D) 1,600m
Winner: Plata O Plomo, Carlos Lopez, Susanne Berneklint.
8.50pm: Handicap (TB) $135,000 (T) 1,600m
Winner: Salute The Soldier, Adrie de Vries, Fawzi Nass.
9.25pm: Al Shindagha Sprint Group 3 (TB) $200,000 (D) 1,200m
Winner: Gladiator King, Mickael Barzalona, Satish Seemar.
Premier League results
Saturday
Tottenham Hotspur 1 Arsenal 1
Bournemouth 0 Manchester City 1
Brighton & Hove Albion 1 Huddersfield Town 0
Burnley 1 Crystal Palace 3
Manchester United 3 Southampton 2
Wolverhampton Wanderers 2 Cardiff City 0
West Ham United 2 Newcastle United 0
Sunday
Watford 2 Leicester City 1
Fulham 1 Chelsea 2
Everton 0 Liverpool 0
Profile of Foodics
Founders: Ahmad AlZaini and Mosab AlOthmani
Based: Riyadh
Sector: Software
Employees: 150
Amount raised: $8m through seed and Series A - Series B raise ongoing
Funders: Raed Advanced Investment Co, Al-Riyadh Al Walid Investment Co, 500 Falcons, SWM Investment, AlShoaibah SPV, Faith Capital, Technology Investments Co, Savour Holding, Future Resources, Derayah Custody Co.
Our family matters legal consultant
Name: Hassan Mohsen Elhais
Position: legal consultant with Al Rowaad Advocates and Legal Consultants.
Mercer, the investment consulting arm of US services company Marsh & McLennan, expects its wealth division to at least double its assets under management (AUM) in the Middle East as wealth in the region continues to grow despite economic headwinds, a company official said.
Mercer Wealth, which globally has $160 billion in AUM, plans to boost its AUM in the region to $2-$3bn in the next 2-3 years from the present $1bn, said Yasir AbuShaban, a Dubai-based principal with Mercer Wealth.
“Within the next two to three years, we are looking at reaching $2 to $3 billion as a conservative estimate and we do see an opportunity to do so,” said Mr AbuShaban.
Mercer does not directly make investments, but allocates clients’ money they have discretion to, to professional asset managers. They also provide advice to clients.
“We have buying power. We can negotiate on their (client’s) behalf with asset managers to provide them lower fees than they otherwise would have to get on their own,” he added.
Mercer Wealth’s clients include sovereign wealth funds, family offices, and insurance companies among others.
From its office in Dubai, Mercer also looks after Africa, India and Turkey, where they also see opportunity for growth.
Wealth creation in Middle East and Africa (MEA) grew 8.5 per cent to $8.1 trillion last year from $7.5tn in 2015, higher than last year’s global average of 6 per cent and the second-highest growth in a region after Asia-Pacific which grew 9.9 per cent, according to consultancy Boston Consulting Group (BCG). In the region, where wealth grew just 1.9 per cent in 2015 compared with 2014, a pickup in oil prices has helped in wealth generation.
BCG is forecasting MEA wealth will rise to $12tn by 2021, growing at an annual average of 8 per cent.
Drivers of wealth generation in the region will be split evenly between new wealth creation and growth of performance of existing assets, according to BCG.
Another general trend in the region is clients’ looking for a comprehensive approach to investing, according to Mr AbuShaban.
“Institutional investors or some of the families are seeing a slowdown in the available capital they have to invest and in that sense they are looking at optimizing the way they manage their portfolios and making sure they are not investing haphazardly and different parts of their investment are working together,” said Mr AbuShaban.
Some clients also have a higher appetite for risk, given the low interest-rate environment that does not provide enough yield for some institutional investors. These clients are keen to invest in illiquid assets, such as private equity and infrastructure.
“What we have seen is a desire for higher returns in what has been a low-return environment specifically in various fixed income or bonds,” he said.
“In this environment, we have seen a de facto increase in the risk that clients are taking in things like illiquid investments, private equity investments, infrastructure and private debt, those kind of investments were higher illiquidity results in incrementally higher returns.”
The Abu Dhabi Investment Authority, one of the largest sovereign wealth funds, said in its 2016 report that has gradually increased its exposure in direct private equity and private credit transactions, mainly in Asian markets and especially in China and India. The authority’s private equity department focused on structured equities owing to “their defensive characteristics.”
England's Ashes squad
Joe Root (captain), Moeen Ali, Jimmy Anderson, Jofra Archer, Jonny Bairstow, Stuart Broad, Rory Burns, Jos Buttler, Sam Curran, Joe Denly, Jason Roy, Ben Stokes, Olly Stone, Chris Woakes.
Fanney Khan
Producer: T-Series, Anil Kapoor Productions, ROMP, Prerna Arora
Director: Atul Manjrekar
Cast: Anil Kapoor, Aishwarya Rai, Rajkummar Rao, Pihu Sand
Rating: 2/5
DUBAI WORLD CUP RACE CARD
6.30pm Meydan Classic Trial US$100,000 (Turf) 1,400m
7.05pm Handicap $135,000 (T) 1,400m
7.40pm UAE 2000 Guineas Group Three $250,000 (Dirt) 1,600m
8.15pm Dubai Sprint Listed Handicap $175,000 (T) 1,200m
8.50pm Al Maktoum Challenge Round-2 Group Two $450,000 (D) 1,900m
9.25pm Handicap $135,000 (T) 1,800m
10pm Handicap $135,000 (T) 1,400m
The National selections
6.30pm Well Of Wisdom
7.05pm Summrghand
7.40pm Laser Show
8.15pm Angel Alexander
8.50pm Benbatl
9.25pm Art Du Val
10pm: Beyond Reason
Tailors and retailers miss out on back-to-school rush
Tailors and retailers across the city said it was an ominous start to what is usually a busy season for sales.
With many parents opting to continue home learning for their children, the usual rush to buy school uniforms was muted this year.
“So far we have taken about 70 to 80 orders for items like shirts and trousers,” said Vikram Attrai, manager at Stallion Bespoke Tailors in Dubai.
“Last year in the same period we had about 200 orders and lots of demand.
“We custom fit uniform pieces and use materials such as cotton, wool and cashmere.
“Depending on size, a white shirt with logo is priced at about Dh100 to Dh150 and shorts, trousers, skirts and dresses cost between Dh150 to Dh250 a piece.”
A spokesman for Threads, a uniform shop based in Times Square Centre Dubai, said customer footfall had slowed down dramatically over the past few months.
“Now parents have the option to keep children doing online learning they don’t need uniforms so it has quietened down.”
2025 Fifa Club World Cup groups
Group A: Palmeiras, Porto, Al Ahly, Inter Miami.
Group B: Paris Saint-Germain, Atletico Madrid, Botafogo, Seattle.
Group C: Bayern Munich, Auckland City, Boca Juniors, Benfica.
Group D: Flamengo, ES Tunis, Chelsea, (Leon banned).
Group E: River Plate, Urawa, Monterrey, Inter Milan.
Group F: Fluminense, Borussia Dortmund, Ulsan, Mamelodi Sundowns.
Group G: Manchester City, Wydad, Al Ain, Juventus.
Group H: Real Madrid, Al Hilal, Pachuca, Salzburg.
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COMPANY PROFILE
Company name: Letstango.com
Started: June 2013
Founder: Alex Tchablakian
Based: Dubai
Industry: e-commerce
Initial investment: Dh10 million
Investors: Self-funded
Total customers: 300,000 unique customers every month
