Live from Singapore: Energy Hit by Renewed Geopolitical Pressures
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Live from Singapore: Energy Hit by Renewed Geopolitical Pressures

by | published November 27th, 2018

Often, being this far away from the US provides a certain vantage point not often available at home. But it also has its drawbacks.

I continue to do the daily math of determining what local time here in Singapore means to my staff back in Baltimore. It is 13 hours later I keep reminding myself. But that hardly makes it easier.

Yesterday (for my body at least) as we were making our way to the studios of CNBC Asia here in Singapore for an interview I was doing, my taxi driver summarized the local climate this way. “We have three seasons in Singapore,” he said. “Hot, very hot, and very sticky hot.”

I smiled. Because, these days, he could well be describing matters other than the weather.

As our sessions here at the most important annual Asian oil and gas conference kick off, geopolitics is once again looming large in the energy conversation.

And once again, the feeling is one just bordering on foreboding…

In The Heat of The South China Sea Crisis, Trade War Tensions Rise

One loses the context of such matters unless in a physical location abutting a conflict zone. Here in the small city state recently judged as having the highest per capita income in the world, you could ignore what is happening elsewhere while fixating on a picture like this of skyscrapers and wealth. This is the view from our high club floor room in the Marina Bay Sands, Singapore.

That is, of course, until you realize this setting is only a few miles up the straits from a prime global hot spot…the contest over the South China Sea.

I spent a good portion of the morning surveying that waterway with folks I knew from the US Embassy here, as well as contacts in some of the largest shipping companies who frequent trade using these waters.

For this part of the world, the South China Sea crisis is not an abstract problem. It is very real. And for the subject matter of my major presentation to the assembly set for tomorrow morning, it is also something else. It also just happens to be a main venue used by liquefied natural gas (LNG) shipments to a thirsty Asian market. This is a slide from my presentation dealing with the security problems inherent in LNG and the South China Sea problem.

In addition to the national disagreements over who controls what parts of the offshore crude oil and natural gas development consignments, there are the very real concerns over whether transit on the water surface can remain open to all.

And that has a very real impact on pricing for LNG and crude oil shipments crossing the Sea.

This is an issue that provides what markets hate. The least desirable element is one of uncertainty. Not knowing what is likely to be the case in access to energy transit means that prices for both transfer and availability will be increasing. It is simply the cost of doing business in a fluid environment.

The situation is hardly made easier by the ongoing, and if the folks I am talking to here are correct, intensifying tariff war between the US and China.

I must be reserved in what I say about anything attending this developing trade war. There are several representatives in attendance, both form Chinese national energy companies and from those penumbral organizations associated with both public and private entities beholden or answering to Beijing.

Singapore is, in a very real sense, right in their back yard.

There is a very real view I am hearing from several quarters that these two geopolitical dimensions (the South China Sea conflict and the US-Chinese trade tiff) are moving in tandem. That one will have an effect on the other.

 

Breaking: China’s Deadly Battle Plan Set into Motion

Shocking satellite images prove the Chinese are now more hostile than ever. A fatal battle plan is unfolding in the South China Sea that could be deadlier than Pearl Harbor and 9/11 COMBINED. At the center is a deadly superweapon so powerful, it’s like the equivalent of firing a missile from New York City and hitting a target in Miami in less than 12 minutes. Their battle plan is already set into motion… so this isn’t a “what if” scenario – it’s a “right now” emergency. You owe it to yourself and your family to see this immediately – before it’s too late.

 

But these are hardly the only geopolitical issues shadowing our conversations…

Welcome to The New Reality – Whether You Like It or Not

The major other existing situation involves the intentions of the White House back home and whether there is any genuine consistency (and reliability) remaining in US foreign policy.

“Make America Great Again” does not wear well in most other parts of the globe. I have some genuine sympathy for the US State and Commerce Department reps walking the halls of the conference. They have an impossible sale job.

Following the machinations surrounding last-minute sanctions reprieves for major importers of Iranian oil, few people I am talking to now believe Washington can distinguish between domestic politics back home and any consistent policy posture abroad.

I have criticized the eleventh-hour moves as directed only to domestic political objectives back in the US.  But understand that I do not make such arguments in international venues such as this conference. I see no advantage in bad-mouthing the US abroad, even when the decision making has been this short-sighted.

On the other hand, I also will not defend policy I think is inconsistent or flat out wrong. All of which makes it very difficult to navigate the thin road in between.

 

America’s BIGGEST Danger Could Be Eliminated in 20 Minutes

Most Americans have no idea this threat even exists – or how devastating an attack could be. And with tensions escalating overseas, this weak spot to our national security could now be more critical than ever. But thanks to a technology developed by one tiny defense contractor, our national security could be restored in 20 minutes. That’s just one reason why we’re predicting this company could see a 38,901% revenue spike. Find all the details here.

 

And then an additional wrinkle was added, attesting to the simple fact that geopolitics has a way of coloring a conversation wherever you happen to be. I received a reaction from events less than 24 hours old. The reaction was Russian, coming from conference attendees representing Gazprom (Russia’s national gas giant) and Gazprom Neft (the gas company’s crude oil production subsidiary).

Our ongoing several-day sidebar conversation was suddenly taken over by the naval conflict erupting between Russians and Ukrainians in the Black Sea. Normally, this would have been the subject of a curt statement. But not this time.

This has all the earmarks of a serious escalation in a simmering disagreement. It may not have anything to do directly with energy. Yet in the current environment that makes little difference. Any developing crisis these days has the irritating habit of spilling into other areas.

Once again, uncertainty taints discussions on energy. Welcome to the new reality. Regardless of which region is its initial focus, geopolitics now permeates how energy operates. In some cases, that extends to how it is even perceived.

Unless there is some other shoe to fall, next time in Oil and Energy Investor I’ll discuss what my formal presentation told conference delegates on how energy finance is being transformed.

There are really no national boundaries here either.

Sincerely,

Kent

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