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					                                                                                                                                                                                                                                       ARAB TIMES, THURSDAY, MAY 19, 2011
    BUSINESS                                                                                                                                                                                                                                                                         44

                                                                 Rosneft receives new proposal                                                                                                                             Poland targets shale gas
    Russia’s state-run oil firm Rosneft said on Wednesday                 received proposals going outside the framework of pre-                     Poland is planning a major investment in shale gas, a                 But Poland seems undeterred by the risks, saying it
    it had received new cooperation proposals from BP                     viously concluded agreements,” the Rosneft statement                       potentially huge source of energy — and environmen-                cannot afford to ignore such a valuable reserve of ener-
    after their joint Arctic exploration agreement collapsed              said.                                                                      tally dangerous chemicals — to break free of depend-               gy.
    this week.                                                               Rosneft said these offers’ discussion did not require                   ence on Russian imports and boost its economy.                        Foreign Minister Radek Sikorski noted on
       The Russian giant did not give details nor make clear              the company to extend the Monday deadline of the                              The use of shale gas, pioneered by the US and                   Wednesday how volatile energy markets have
    whether they included a potential new Arctic agree-                   original agreement.                                                        Canada, is controversial for its impact on the environ-            become. Recent world events — particularly the insta-
    ment covering joint exploration of Russia’s northern                     “These proposals make it possible to discuss further                    ment and will be one of the main points on the agenda              bility in North Africa and Japan’s nuclear disaster —
    reserves.                                                             cooperation outside the framework of the already                           when President Barack Obama visits Warsaw on May                   have caused oil prices to soar, hurting the global eco-
       The statement said the offers were made as the                     lapsed agreement,” Russia’s biggest oil producer said.                     27-28.                                                             nomic recovery.
    sides tried to negotiate a way out of a dispute between                  The tie-up’s collapse left Rosneft without a partner                       Some US states were forced to step up environmen-                  “Exploration of our own resources is our chance and
    BP and its TNK-BP Russian joint venture which scup-                   who could provide it with the equipment and techno-                        tal standards after high levels of methane were found              our obligation,” Sikorski said at a conference of experts
    pered the $16 billion deal.                                           logical know-how to tap the remote fields and then                         in tap water, while France recently put a similar project          on shale gas in Warsaw. Shale gas is “a chance to limit
       “As a result of the negotiations... Rosneft has                    deliver their oil to market. (AFP)                                         on hold.                                                           Poland’s and Europe’s dependence on imports.” (AP)

                                                                                             Rompuy speaks at China Europe Int’l Business School

EU president says European recovery, euro strong
SHANGHAI, May 18, (AP): Ailing                      All 27 EU members are reducing their         should downplay the role of the dollar.”
European economies are getting their
houses in order and the euro remains a
                                                 fiscal deficits, Van Rompuy said. And
                                                 although Europe is still muddling through
                                                                                                    Returning to Beijing as he wrapped up
                                                                                                 his visit to China, Van Rompuy met later
                                                                                                                                                                                         Shares of all four banks decline
trustworthy currency, the European               bailouts of Greece and Ireland and work-        Wednesday with Vice President Xi
Union’s president said Wednesday,                ing out arrangements to stabilize               Jinping, who is widely expected to
describing the region’s recovery as “not
bad at all.”
                                                 Portugal, those countries account for only
                                                 7 percent of the gross domestic product
                                                                                                 become China’s next top leader.
                                                                                                    “You have made effective efforts in
                                                                                                                                                 Moody’s downgrades Australia’s big four banks
   “Newspaper headlines might some-              of the world’s largest combined economy.        strengthening Europe’s economic gover-
times overshadow that the economic                  “The members of weak economies               nance and addressing the sovereign debt         SYDNEY, May 18, (AFP): Moody’s on               affects the country’s big lenders —          tively high levels of wholesale funding
recovery in Europe as a whole is on track        have to do their homework and have to           crisis,” Xi told Van Rompuy.                    Wednesday downgraded the debt rat-              Australia and New Zealand Banking            and the global financial crisis has
and even gaining momentum in some                put their houses in order and that is what         In both Beijing and Shanghai, Van            ings of Australia’s big four banks to           Group Ltd, Commonwealth Bank of              underlined the speed with which shifts
member states,” Herman Van Rompuy                they are doing,” Van Rompuy said.               Rompuy urged China to do more to make           Aa2, citing their dependence on                 Australia, Westpac Banking Corp,             in investor confidence can impact
said in a speech to the China Europe                Regardless of the challenges all gov-        its economy a level playing field for for-      volatile global lending markets.                and National Australia Bank Ltd.             bank funding.
International Business School in                 ernments face in bringing their deficits        eign business, especially in the area of           The move was well-flagged, with                 “The downgrade reflects our view             “While the major banks have
Shanghai.                                        and debts under control, “the euro              government procurement.                         Moody’s placing the banks on a neg-             of the Australian banking system’s           reduced their sensitivity to disrup-
                                                                                                                                                 ative ratings watch in February, and            structural sensitivity to conditions in      tions in the wholesale funding mar-
                                                 remains a “very strong currency trusted            The EU, which has a population of            brings them in line with the other two          wholesale funding markets,” said             kets, the Australian financial sec-
   “Our economic fundamentals remain             by investors worldwide,” Van Rompuy             about 500 million, is China’s largest           major ratings agencies, Standard &              Patrick Winsbury, senior vice presi-         tor’s long-term, underlying reliance
sound,” he said.                                 said.                                           export market, but European firms have          Poor’s and Fitch, analysts said.                dent based in Moody’s Sydney office.         on offshore debt remains in place,”
   While forecast European growth rates             He also defended the U.S. dollar, say-       been battered by low-cost Chinese tex-             The downgrade was from Aa1 and                  “Australia’s major banks have rela-       he added.
of 1.8 percent this year and 2.0 percent in      ing that challenges to its dominant role in     tiles, leatherwear and other goods.
2012 may appear modest compared with             world finance and trade crop up each            Meanwhile, European companies, along
China’s near 10 percent pace, they reflect       time it weakens, but are premature even         with other foreign firms, complain of reg-      exports, are also an irritant.                     “The impact of one’s exchange rate on     the past six months, as China’s yuan was
the maturity and prosperity of the               though the Chinese currency is bound to         ulatory barriers hindering their ability to       China needs to keep moving toward             the global system is bigger to the extent    allowed to appreciate from roughly 6.6 to
region’s economies.                              eventually take on a more important role.       compete freely in China. Beijing’s cur-         more “appropriate exchange rates,” Van          one’s economy grows,” Van Rompuy             the U.S. dollar to the current level of
   “It is really not bad at all,” he said.          “It is a useless exercise to say we          rency controls, which help boost Chinese        Rompuy said.                                    said, saying progress had been made in       about 6.5.

              Commodities may correct: IMF
                                                                                                 IMF issues warning to Greece;
    New HK exchange to
    have bigger Asia role                                                                        ECB rejects ‘soft restructuring’
    HONG KONG, May 18, (Agencies):               duction after massive disruptions fol-
    Hong Kong’s new commodity
    exchange backed by China’s biggest
                                                 lowing the March 11 earthquake and
                                                 tsunami that wiped out much of the
                                                                                                                                        Athens appoints advisers for privatisation projects
    bank and a Russian tycoon began trad-        country’s industrialized northeast.
    ing Wednesday as the Asian city                 Bank of America Merrill Lynch said
    attempts to challenge established mar-       a survey of fund managers for May               ATHENS, May 18, (RTRS): The IMF warned Greece on                                       their Greek debt but have also made clear that their first priority is ensuring Prime
    kets in Europe and the US                    showed investors growing more confi-                                                                                                   Minister George Papandreou’s government steps up reforms.
                                                                                                 Wednesday that a drive to shore up its troubled finances                                  “The programme will not remain on track without a determined reinvigoration of
       Exchange officials said that Asian        dent in Japan’s ability to rebound from
    countries, especially China and India,       the disasters.                                  would fail unless Athens redoubled its reform efforts, and the                         structural reforms in the coming months,” Poul Thomsen, an International Monetary
    have been driving demand for global             In April’s survey, respondents were          ECB hit back at suggestions a debt restructuring might be the                          Fund envoy who arrived in Greece last week to assess its progress in meeting fiscal tar-
    commodities and the new exchange is          divided evenly between those expect-                                                                                                   gets linked to its EU/IMF bailout.
                                                                                                 solution.                                                                                 “Unless we see this invigoration, I think the programme will run off track,” he said,
    aimed at helping traders in the region       ing the country’s economy to weaken               European finance ministers broke a taboo this week and acknowledged for using some of the strongest language since Greece sealed the 110 billion euro rescue
    have a bigger say in setting prices.         in the next year and those expecting it
    Trading of gold and other major com-         to strengthen. This month, a net 59             the first time that some form of restructuring might be required to ease one year ago.
    modities has traditionally been domi-        percent expected it to strengthen, the          Greece’s debt burden, which at 150 percent of annual output is among the                  After Thomsen spoke, Greek Finance Minister George Papaconstantinou vowed to
    nated by exchanges in Chicago, New           bank said.                                      highest in the world.                                                                  press ahead with budget consolidation efforts. He raised the prospect of firing some
    York and London.                                Reports that Japan’s Renesas                   They have said they could ask private creditors to agree to extend the maturities of public sector employees and said the government would seek talks with the opposition
       The only product available to trade       Electronics Corp. — a major provider                                                                                                                                                to discuss ways out of the crisis.
    so far on the Hong Kong Mercantile           of microprocessors that control brakes,                                                                                                                                                  Facing a third straight year of reces-
    Exchange is a futures contract for one       engines and transmissions for cars ‚Äî                                                                                                                                                sion, Papandreou’s government is strug-
    kilogram of gold with physical deliv-        will boost production at a key plant                                                                                                                                                  gling to rein in rampant tax dodging and
    ery in Hong Kong. Some 3,415 con-            helped lift sentiment, Kyodo news                                                                                                                                                     has come under pressure to sell off tens of
    tracts worth $163.3 million were trad-       agency reported, citing analysts.                                                                                                                                                     billions of euros in state assets to plug
    ed by late afternoon.                        Renesas shares soared 5.8 percent.                                                                                                                                                    gaping budget holes.
       A silver contract will start trading in      South Korea’s Kospi climbed 1.6                                                                                                                                                       Under its rescue terms, Athens was to
    July. To capitalize on growing investor      percent to 2,135.78, with automakers                                                                                                                                                  cut its deficit to 7.6 percent of GDP this
    demand for China’s gradually                 and shipbuilders leading the way.                                                                                                                                                     year. Without further measures, Thomsen
    strengthening currency, a yuan-              Hyundai Heavy Industries Co., South                                                                                                                                                   said, Athens would not be able to get it
    denominated gold futures contract will       Korea’s leading shipbuilder, shot up                                                                                                                                                  much below 10 percent.
    launch in the autumn.                        6.6 percent. Kia Motors Corp. jumped                                                                                                                                                     Concerns about Greek debt pushed the
       Other products involving precious         3.7 percent.                                                                                                                                                                          euro below $1.42 and sent the risk premi-
    and base metals, agriculture, energy            Mainland       China’s      Shanghai                                                                                                                                               ums on Greek 10-year bonds to their
    and commodity indexes are also in the        Composite Index rose 0.7 percent to                                                                                                                                                   highest level in a week. The cost of insur-
    pipeline. Shareholders in the exchange       2,872.77 and the smaller Shenzhen                                                                                                                                                     ing government debt against default also
    include Industrial & Commercial              Composite Index advanced 0.5 percent                                                                                                                                                  rose.
    Bank of China Ltd., the country’s            to 1,202.70. Huaneng Power                                                                                                                                                               Euro zone ministers have not spelled
    biggest state-owned commercial               International gained 1.3 percent amid                                                                                                                                                 out how what they refer to as a “reprofil-
    lender, and Cosco Group, a state-            reports the government might allow a                                                                                                                                                  ing” of Greek debt would work.
    owned shipping company. EN+                  slight increase in electricity rates for                                                                                                                                              Convincing private holders of Greek
    Group, a mining and energy group             some regions hit by power shortages.                                                                                                                                                  bonds to voluntarily accept later repay-
    controlled by Russian tycoon Oleg            Coal miner and power producer China                                                                                                                                                   ment could be difficult and require costly
    Deripaska, is also a shareholder.            Shenhua Energy added 0.9 percent.                                                                                                                                                     guarantees to avoid a hit to banks.
       Hong Kong’s attempt to wrest the             Hong Kong’s Hang Seng rose 0.5                                                                                                                                                        Such a move would buy Greece more
    commodities trading crown from the           percent to 23,011.14 and Australia’s                                                                                                                                                  time but not reduce its overall debt bur-
    West follows one by Singapore last           S&P/ASX 200 inched up 0.2 percent                                                                                                                                                     den. Many economists believe it would
    year. The Singapore Mercantile               to 4,693.70.                                                                                                                                                                          be followed by a more aggressive restruc-
    Exchange opened for business in                 Peter Elston, a strategist at                                                                                                                                                      turing involving “haircuts”, or forced
    August billing itself as a “new-genera-      Aberdeen Asset Management in                                                                                                                                                          losses, of 50 percent or more from 2013,
    tion” market poised to ride a “new           Singapore, said Asian stock markets                                                                                                                                                   when policymakers have said they could
    world economic order” led by Asian           enjoyed a bounce that was nothing                                                                                                                                                     opt for radical steps.
    growth.                                      “beyond a slight technical reaction to                                                                                                                                                   The European Central Bank, which
       The Singapore market trades about         recent weakness.”                                                                                                                                                                     holds up to 50 billion euros in Greek sov-
    1,000 contracts for gold, silver, copper,       “There are so many issues out there                                                                                                                                                ereign bonds on its own books, has
    crude oil and currency futures worth         causing a bit of market indigestion,            Greece’s Prime Minister George Papandreou speaks during an Economist conference in Lagonissi, near Athens on May                      warned that even a “soft restructuring”
    $30 million to $50 million daily but so      that’s really what’s caused the weak-           17. Papandreou once again ruled out a restructuring of Greece’s debilitating public debt, and said his Socialist govern-
                                                                                                 ment was focused on cutting the budget deficit to achieve primary surpluses, while pushing through a new platform of                  would put the stability of the euro zone at
    far has made little impact globally.         ness in markets in recent days,” he                                                                                                                                                   risk and officials were out in force reiter-
       Its trading volumes are dwarfed by                                                                                               reforms and privatisations through 2015. (AP)
                                                 said. Rising oil prices sent crude and                                                                                                                                                ating that message on Wednesday.
    CME Group, which operates futures            energy shares higher. CNOOC Ltd.,
    markets in New York and Chicago that         China’s main offshore oil and gas pro-                                   Developing countries in race for IMF top job                                                                                        Opposed
    traded an average of 230,000 gold con-       ducer, bounced 1.5 percent higher.                                                                                                                                                              “I’m opposed to soft restructuring
    tracts a day in April. Thousands of dif-     Shanghai-listed Shanxi Guoyang New                                                                                                                                                           because I don’t know what it means.

                                                                                                 Europe moves to protect ‘job claim’
    ferent types of commodity, currency          Energy Co. Ltd. rose 2.9 percent.                                                                                                                                                            Nobody knows what it means,” Lorenzo
    and equity index futures are traded on                                                                                                                                                                                                    Bini-Smaghi, a member of the bank’s
    CME’s markets, which had an average                     Also:                                                                                                                                                                             executive board, said in Milan.
    daily turnover of 12.1 million con-          SINGAPORE: Commodity prices are                                                                                                                                                                 Speaking in Athens at the same confer-
    tracts in April.                             likely to fall further in the next month        BERLIN, May 18, (AP): Europe is moving          for Greece, Ireland and Portugal and is         percent of voting share to emerging and      ence as Thomsen, ECB board member
       The Hong Kong Mercantile                  or two before rebounding towards the            quickly to protect its traditional claim to     playing an important part in monitoring         developing countries, but all the changes    Juergen Stark warned policymakers that
    Exchange is betting that it will benefit     end of the year as demand continues to          the top job at the IMF ahead of the expect-     those countries’ compliance with the loan       have not taken effect yet.                   it was an “illusion” to think such a move
    from its proximity to mainland China         grow, prompting MF Global to expand             ed departure of current chief Dominique         conditions.                                        Germany’s Steegmans said at a gov-        would resolve Greece’s problems.
    to drive trading volume. Hong Kong is        its presence in the sector, a senior com-       Strauss-Kahn, fending off any demand               South Africa’s finance minister, howev-      ernment press briefing that Europe has          European politicians, however, are
    a special administrative region of           pany executive said.                            from developing countries to claim the job      er, said that a new IMF chief should come       “an abundance of highly qualified candi-     under pressure from angry taxpayers to
    China with its own financial system.            Brokerage MF Global Holdings,                for their own.                                  from a developing nation to reflect the         dates.”                                      broaden out the burden of their bailouts
       “With our strategic location in Hong      with a market value of $1.4 billion,               Strauss-Kahn’s arrest on sex charges has     interests of all countries.                        Steegmans didn’t name any potential       to include banks that have lent to Greece
    Kong, HKMEx is ideally positioned to         maintained its long-term bullish out-           put new focus on the informal arrangement          “It is against this background that South    candidates or say whether Germany itself     by buying up their bonds.
    facilitate trading in commodities            look for the commodities and expected           under which a European heads the IMF            Africa calls for a candidate from a devel-      might propose one. But he said it “makes        Euro zone countries, together with the
    between China and the rest of the            prices to rise 10-20 percent over the           and an American the World Bank.                 oping country to be given the opportunity       a lot of sense” to have an IMF chief who     IMF, bailed out Greece and Ireland last
    world,” said exchange president Albert       next 12 months from current levels              Europeans are citing the IMF’s key role in      to be the Managing Director of the IMF,”        is “very familiar” with “Europe’s particu-   year, and approved a new 78 billion euro
    Helmig.                                      due to a weaker dollar and rising glob-         fighting the eurozone’s debt crisis as a key    Pravin Gordhan said in a statement. “Such       larities, the currency questions and also    rescue for Portugal on Monday.
       Markets in the Chinese cities of          al demand.                                      reason to keep the job on their continent.      a candidate will bring a new perspective        the political circumstances here.”              Governments have pledged not to
    Shanghai, Dalian and Zhengzhou trade            “We will see some weakness                      But many developing nations note that        that will ensure that the interests of all         Chancellor Angela Merkel has made         force any losses on private holders of
    high volumes of commodities includ-          between now and the end of summer               because of their increasing wealth and role     countries, both developed and developing,       the same point, along with several           Greek debt before 2013, when a new
    ing gold, fuel oil, rubber and industrial    and then I think we are going to see a          in the global economy, they should have a       are fully reflected in the operations and       European finance ministers. Possible         anti-crisis facility — the European
    metals. However, those markets are           steady move up,” MF Global’s Head               chance to name the successor.                   policies of the IMF.”                           candidates mentioned in news media           Stability Mechanism (ESM) — is due to
    off-limits to foreign traders and there-     of Commodities Fred Demler told                    German government spokesman                                                                  speculation include French Finance           take effect. But they say a voluntary debt
    fore don’t play any role in setting glob-    Reuters.                                        Christoph Steegmans said Wednesday                               Interim                        Minister Christine Lagarde, French           exchange before then might be an
    al prices.                                      “I feel commodities are overpriced           that Strauss-Kahn was entitled to pre-             US Treasury Secretary Tim Geithner           Finance Minister Christine Lagarde; the      option.
       The new exchange’s 15-hours trad-         by 5 to 10 percent right now, but a year        sumption of innocence but “if the top job       said Tuesday that Strauss-Kahn is “obvi-        former head of the German central bank,         “During the crisis, it was almost exclu-
    ing day will overlap with US and             from now they will be 10 to 20 percent          at the IMF does have to be filled at some       ously not in a position” to run the IMF and     Axel Weber; the head of Europe’s bailout     sively European taxpayers that ultimately
    European trading hours, which                higher than they are now.”                      point, then the government argues that          that the organization needs to find an inter-   fund, Klaus Regling; and Peer                bore the risk of investors’ decisions. That
    exchange officials say will encourage           The 19-commodity Reuters-                    there should again be a European at the         im managing director.                           Steinbrueck, a former German finance         is inadmissible,” German Finance
    cross-continent trading and boost liq-       Jefferies CRB index has tumbled 9               top of the IMF.”                                   The United States has a major say in         minister.                                    Minister Wolfgang Schaeuble said in a
    uidity.                                      percent since April 29 when hedge                  Strauss-Kahn remains jailed in New           determining who will head the IMF, in part         Candidates from elsewhere include         speech in Brussels.
       Japan’s Nikkei 225 index rose 1 per-      funds and other large financial                 York after his arrest for allegedly sexually    because it holds the largest number of          Turkey’s former finance minister, Kemal         “It was right to stop financial markets
    cent to close at 9,662.08, helped by         investors began cutting their exposure          assaulting a hotel maid, and his departure is   votes at the 187-nation international lend-     Dervis; Singapore’s finance chief Tharman    from disintegrating in the past but it
    reports of a recovery in factory pro-        to commodities.                                 expected to be only a matter of time.           ing agency. Changes to the IFM’s gover-         Shanmugaratnam; and Indian economist         would be wrong to cushion their losses in
                                                                                                    The IMF has contributed to bailout loans     nance in 2008 and last year will shift 5.3      Montek Singh Ahluwalia.                      the future,” he added.

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