Who is Nick Zenophon, biased, unwelcome,stupid and impractical?

Biased and unwelcome

Australian senator Nick Xenophon has been accused of tarnishing Malaysia’s image by questioning our electoral process and smearing the palm oil industry.

http://video.heraldsun.com.au/2335953528/Xenophon-awaits-deportation

A LOT of heat is being generated both here and in Australia following the Govern-ment’s decision to deport independent Australian senator Nick Xenophon who arrived at the LCCT in Sepang on Saturday.

He was detained as an undesirable person and deported on the first available flight back the next day.

There is considerable support as well as condemnation for Xenophon’s deportation, with many individuals and NGOs questioning his independence and accusing him of coming here to interfere in our election system.

Those who condemn the deportation say it is authoritarian and reflects the Government’s paranoia of foreign observers.

Just who is Xenophon and what is the Australian’s relationship with Malaysia?

The outspoken senator is a personal friend of Opposition Leader Datuk Seri Anwar Ibrahim and one of his many sympathisers in Australia.

He often speaks up on various Malaysian issues and has travelled here several times, the last in April, at Anwar’s invitation to ostensibly study the polling system.

But his critics charged that he is heavily involved in supporting the Opposition and had even participated in the Bersih 3.0 rally in April last year that ended in violence.

Xenophon’s latest trip here was as part of a four-member Australian delegation after the Australian government rejected Anwar’s request for independent observers for the upcoming general election.

Xenophon was deported, said our immigration authorities, because he had tarnished the image of the country. He had been classified as a “prohibited immigrant”.

The fact is immigration had blacklisted Xenophon because he had attended the Bersih protest last year and for allegedly making “baseless” allegations about Malaysia.

“He can’t pretend to be an independent observer as he is very biased,” said political analyst Dr Chandra Muzaffar.

“It does not make sense trying to be an independent observer when he is not. He is a very partial observer and was ready to denounce our electoral process,” Dr Chandra said.

Xenophon had given a press conference in Parliament last year in which he lambasted the Government’s “electoral shortcomings”.

Among the issues he raised was the short campaign period.

He also vocally objected to the fact that rural constituencies had a smaller number of voters compared with urban ones which had many more.

He compared Malaysia’s electoral system, which he faulted, with other countries including Australia’s which he painted favourably.

But it is through his virulent anti-palm oil campaign that Xenophon first came to the attention of our Government.

As Australia’s Green Party senator, Xenophon strongly supported and promoted legislation requiring labelling of palm oil in food products.

Labelling has threatened big plantations and thousands of smallholders equally.

Xenophon promoted the “Truth in Labelling – Palm Oil Bill” which was proposed by environmental NGOs and supported by Xenophon because oil palm plantations, it was said, contributed to deforestation and threatened the orang utan.

The palm oil industry earned the country RM80bil in 2012 and provided hundreds of thousands of Malaysians employment and income.

But Xenophon couldn’t care less.

Eventually the Bill was defeated by an extensive information campaign mounted by Malaysia.

Lately, Xenophon has emerged again on the Malaysian political landscape as a human rights advocate who is concerned with our election laws and practices.

He has allied himself with Anwar and with the Opposition who now decry the fact that he had been deported rather unceremoniously by an exasperated government that at one time had tolerated him and allowed Xenophon free access.

The reality is that many of these battles are actually trade wars waged in various shapes and forms and which are heavily financed by our economic rivals.

The economic stakes are indeed high.

In his own Australia, Xenophon is viewed as a maverick and attention grabber who is into self-promotion.

Australian commentator Greg Sheridan, writing in The Australian, has this to say about Xenophon – he only campaigns for one side of Malaysian politics, the Opposition.

Sheridan also wrote it was “stupid and impractical” for Australia to send election monitors, citing Vietnam and Cambodia, and Malaysia “on any measure is one of the most democratic and freewheeling nations in South-East Asia”.

Indeed, Xenophon has come here on a number of occasions, taken advantage of our openness and had even engaged in grandstanding – not just in Parliament but also on the streets.

He has lost our goodwill and made himself persona non grata.

COMMENT By BARADAN KUPPUSAMY, The Star/Asia News Network

Related Stories:

Xenophon's 'foolish' episode slammed

Guan Eng: Deportation disgraceful and unacceptable
Xenophon not on list of Aussie delegation 

Distinguishing research authorship and ownership rights

 

Distinguishing authorship

I REFER to the letter “Quality time supervising post-graduates” (The Star, Feb 16 - attached below) where the writer said: “The supervisor obtains grants for his research and allows you to use the money to do your research. There is no reason why he should not claim first authorship”.

This was one of the responses to the letter “Stop practice of ‘free riders” (The Star, Feb 7- also attached below) which criticised the alleged practice of supervisors claiming authorship for students’ works.

It appears that there is a failure to appreciate the difference between authorship and ownership.

“Author”, as defined under section 3 of Malaysia’s Copyright Act 1987, means “the writer or the maker of the works”. It does not refer to a person who pays for the work.

In our present context, authorship can only be acquired through some scholarly input into the work. Money cannot buy authorship.

Authorship must not be confused with ownership.

The latter refers to one’s property right in the work, which includes the right to exploit it for profit.

For example, an author and a publisher may co-own a work. But the publisher is not the author.

Likewise, the supervisor who has provided the funding may acquire ownership, but not authorship.

Being an author attracts certain rights.

No person may, without his/her consent, present the work without identifying the author or under a name other than the author’s.

This is one of the author’s “moral rights” recognised by the law (section 25), which cannot be overridden without the author’s consent even if the work is subsequently sold.

Of course, where the supervisor constructs the framework for the research (more common for sciences than for social sciences) and divides its components to be researched by her students, the supervisor may appropriately be regarded as an author. There is scholarly input on his/her part.

What about the credit due for supervision given?

This will depend on the common understanding between the supervisor and the student.

In normal circumstances, the supervisor’s comments on a student’s work does not give him authorship since it is either given gratuitously or in pursuant to the supervisor’s obligation as a supervisor.

As the legal holder of moral rights, the student may as a matter of courtesy offer to include the supervisor’s name. But this is a matter of discretion rather than obligation.

Supervision is a selfless task. In my subject area, at least, supervisors conventionally disclaim authorship (or rather, they do not assert).

To acknowledge their generosity and sacrifice, it is common to explicitly express our gratitude to them in our work.

A close and personal relationship, which will last for many years (or decades) to come, arises from such mutual respect.

ALVIN SEE Assistant Professor of Law  Singapore Management University

• B.C.L., University of Oxford, 2010
• C.L.P., Malaysia, 2009
• LL.B. (First Class Honours), University of Leeds, 2008

Quality time supervising post-graduates

I REFER to the letter “Stop practice of free riders” (The Star, Feb 7 - attached below) by Pola Singh.

The writer has missed the point by many miles. He has called supervisors by many idioms! One of which is “lembu punya susu, sapi dapat nama”.

He has misunderstood the whole process of postgraduate education. I don’t think there are any supervisors who will force a student to work under him like a “slave”. It is the student who chooses to work with a particular supervisor.

The graduate student–supervisor relationship is very personal and close. Yes, the student has to do all the work under the close supervision of the supervisor. The supervisor obtains grants for his research and allows you to use the money to do your research. There is no reason why he should not claim first authorship.

Of course in any publication there is no need for the supervisor to put his name first, but the corresponding author must be your supervisor. You cannot be the corresponding author simply because you will not be able to answer the reviewers’ queries as well as he.

If you can, then you don’t need the postgraduate degree and you don’t need the supervisor.

Many professors and supervisors spend hours discussing, correcting and guiding many students to their postgraduate degrees.

PROF FAROOK ADAM School of Chemical Sciences 
Universiti Sains Malaysia Penang

B. Sc. (with Education) (USM) 1981) M.Sc. (USM) 1992 D.Phil. ( Sussex ) 1998   



Stop practice of ‘free riders’
 
I FEEL compelled to write after hearing the tales of graduate
students pursuing their doctorate degrees at local universities who are exasperated with their professors for making use of them for their own ends.

Graduate students, particularly those doing their doctorate degrees, are at the mercy of their professors who demand this and that.

Topping the list of unreasonable demands is the co-authorship of papers based on the research done by the student for his PhD dissertation.

It is the student who painstakingly prepares the literature review, formulates the hypothesis, collects and analyses the data, draws up conclusions and makes recommendations.

Yes, the conscientious professor guides the student all the way (which in any case is part and parcel of his work) but when it comes to the publication of a manuscript based on the research findings, guess who gets all the credit?

Professors take for granted that in an unequal relationship, they will get credit for the hard work put in by the student and this is manifested by putting their name as the first author of the research paper.

No straight-thinking student would challenge this. In the worst case scenario, the student’s name does not even appear on the manuscript.

It’s akin to the saying “Lembu punyi susu, sapi dapat nama”.

Call this a form of exploitation but it is taking place all the time.

This imbalance of power leads some to label the students as “slaves”.

No matter how friendly and accommodating professors are, they still hold considerable power in deciding when the student will graduate.

Some nasty professors demand that the thesis be rewritten again and again and this frustrates the student who will do everything and anything to complete his doctoral degree as soon as possible.

We can understand why students are so afraid to bring such matters up to the higher authorities. In the process, they suffer in silence and the problem remains buried deep in the ground.

And it’s hard to say “no” to a professor’s unreasonable demands because grad students need the support of faculty members, who may happen to be members of their dissertation committee, to pass and approve their thesis.

Many of the department heads are so busy and sometimes overburdened with their administrative duties that they have hardly any time to do serious substantive research.

But as they aspire to go higher they need to beef up their resume by coming up with more publications. This will also increase their prospect of promotion and getting the elusive JUSA (super scale) post.

Guess who does all the “donkey work” for them? And yet some of these selfish professors do not even acknowledge the contribution of the student, although their contribution in the preparation of the paper has been minimal.

It’s easy to know who the culprits are.

Just ask the academicians to submit a list of their publications and notice the number of times the name of the professor is listed as the first author followed by the students.

Sometimes, the subject matter or topic of a paper is the same but the student’s name is left out entirely.
This practice of “free riders” in the academic circle has to stop.

Graduate students cannot be forever exploited. Vice-chancellors should not condone such practices which are regarded as a norm not only in Malaysia but also in developed countries.

A system has to developed by the Higher Education Ministry to ensure students get due credit for the work they have done.

What can be immediately done is to send a circular that a professor cannot take ownership of an article or paper that has been prepared entirely by the graduate student based on his dissertation work.

If it is warranted, the professor’s name can be listed not as the first author but as co-author.

POLA SINGH  Kuala Lumpur

Malaysia's MOL (Money Online) going big globally, aims for US$1bil revenue

GANESH Kumar Bangah turned 23 in true techpreneur style. He listed a company, entered the Malaysian Book of Records as the youngest chief executive officer of a public-listed company, and pocketed his first RM1mil.

That was in 2002. Just a few years earlier, he had merely been an ambitious engineering undergraduate. He had been managing cybercafs and peddling a proprietary cybercaf management system, having developed it with a business partner.

“We started out selling the software but decided during the dotcom bubble to give it away for free in return for control of the first screen that people viewed so we could offer eyeballs,” Bangah recounts. Their plan was to sell advertising space on that prime landing page.

Call it guts or luck, he even got Vincent Tan, founder of the Berjaya Corp conglomerate and one of Malaysia's richest men, to bankroll his little start-up called Money Online or MOL. “Tan was one of the early movers who recognised the potential of the Internet and was investing in businesses in the industry, ” says Bangah.

With a financial backer onboard, Bangah dropped out of university to focus on the business. Within a year, he had signed up 15,000 cybercafs from around the world. It should have been a shoo-in success, but monetising the Internet in Asia in the early 2000s was not easy.

Internet penetration in Malaysia at the time was just 15% of the total population, a mere 3.7 million. And in pre-Google AdWords days, online advertising was a tough idea to sell.

So Bangah switched his focus to the online payment business instead. Rather than give the software away for free, the cybercafs were asked to pre-buy a certain amount of MOLPoints, which they could resell to their customers. These points could be used to transact safely online.

Unfortunately, e-commerce was just catching on, and consumers still preferred the comfort and certainty of shopping the bricks-and-mortar way. Bangah decided if there wasn't a market for his points, he would create a demand for them by selling prepaid airtime reload coupons online and making it a currency of choice for online gaming.

“There was a game from (South) Korea that was very popular with gamers at the cybercafs. It was free to play but I had a hunch they would soon start charging,” he recalls. “So I went to the game publisher and secured the exclusive rights for the game in South-East Asia.”

It was an astute call that gave Bangah his much-needed break and set MOL on course to being one of Asia's largest end-to-end content, distribution, e-commerce and payment networks today. His MOL Global group comprises MOLPoints, an Internet wallet for purchasing game credits, content and services; MOLReload, which facilitates the distribution of prepaid airtime; and MOLPay, an e-commerce payment solution gateway.

Online gaming remains his sweet spot with sale of MOLPoints, predominantly for gaming credits, accounting for more than 80% of profits. “We control about 70% of the market in Malaysia and about 40% of the region,” says Bangah. He estimates that MOL is also among the top five leaders in the game payment industry globally.

“MOLPay is our fastest growing business even though it accounts for only 20% of revenue now,” he says.

MOL handles over 60 million transactions annually with a payment volume of over US$500mil (RM1.55bil). This strength comes from having a complete payment universe: Content and distribution channels plus online and offline payment options.

“In the case of online gaming and content, it is a chicken-and-egg situation. Content partners will sign up with you only if you have channels, and channel partners will do so if you have content. So our success comes from having both,” Bangah explains.

It is a position he continues to strengthen by continually signing up new content publishers, which at last count, stand at over 500.

This is complemented by MOL's links with more than 1,000 payment partners worldwide. These comprise over 680,000 physical retail payment channels across 80 countries, 88 online banks in nine countries, and major international payment systems.

In 2009, Bangah scored another coup when MOL acquired Friendster for an undisclosed amount. While the pioneer social networking site may have lost much of its luster with the entry of Facebook, MySpace and other similar sites, it still had a huge Asian following of over 100 million members.

Bangah is quick to clarify that buying Friendster was not about mounting a challenge against Facebook. “Friendster is a global brand while MOL was then primarily a Malaysian brand. Owning it has helped the MOL branding and opened doors for us to big players,” he says.

“We also bought it for its community. We thought that if we could convert 1% to 2% of Friendster's members into MOL members, it would be quite substantial. And we have done that our membership now stands at two million.”

Then, of course, there were the patents Friendster owned, which MOL subsequently sold to Facebook in a cash-plus-stocks deal, reportedly valued at US$40mil. Bangah declines to comment on this citing a non-disclosure agreement.

Bangah has since turned Friendster into an online social gaming and discovery portal, a move that hopes to build up MOL's revenue from online gaming.

Since the acquisition of Friendster, that revenue has already tripled.

Now his plan is to go global with MOL. Having built strong footholds in Malaysia, Singapore, Thailand, Indonesia, and the Philippines, the group is expanding into Vietnam, Turkey, the United States, Brazil and Australia.

The last two years saw the group buying several online content distributors and payment service providers to realise this ambition: Zest Interactive in Thailand; LoadCentral in the Philippines; Ocash in Australia; and Rixty in the United States.

As far as Bangah is concerned, he has barely skimmed the surface. His target is to become a company with US$1bil in revenue.

“As long as online gaming grows, we in the platform business will grow.” - China Daily  By ELAINE TAN

Big Malaysian banks with diversified defensive qualities seen upside

IN view of the weaker loan growth this year, which banking stocks will prove to be winners?

From the softer loan growth reported in December 2012, moderating at 10.4%, analysts expect loan growth will continue to weaken this year.

The 10.4% loan growth in December compares with a growth of 13.6% and 12.8% in 2011 and 2010 respectively.

Most analysts estimate loan growth this year to be within the 9%-11% range. “Together with the ongoing interest margins headwind, there are limited opportunities to drive earnings growth for banks materially beyond our current expectation of a high single-digit to low-teen growth,” says a Kenanga Research analyst.

However, Alliance Research banking analyst Cheah King Yoong sees loan growth falling within 7%-9%.

“I suppose our 7%-9% forecast is lower than other analysts’ 10%-11% forecasts due to our assumption that the Economic Transformation Programme (ETP) related loans may not be a key loan driver this year, given that significant amount being disbursed in 2012 could be repaid this year, which could drag the business loan growth momentum for 2013,” he says.

However, Cheah expects housing loans to resume its reign as key loan drivers this year, on the support of the continued robustness in property loans and recovery in hire-purchase loans.

Lending indicators turned negative in December with loan applications falling flat with a 14.6% year-on-year drop at RM53.6mil while approvals and disbursement activities dropped by 21.1% and 7.9% on a year-to-year basis respectively.

“The fall in lending indicators support our investment case that both lenders and borrowers are turning cautious with the impending 13th general election, which has to be called by the first half of 2013, and is now widely expected to be held in March,” says Cheah.

As at end-2012, business loans outstanding expanded by 9% year-on-year due to slower disbursements and base effect. Meanwhile, household loans continued to expand by 11.5% from a year ago.

“Drilling deeper into the business segment, the slowdown in year-on-year loan growth was mainly caused by transport, storage and communications as well as other sectors, with loans to these sectors contracting by 8.2% and 17.4% year-on-year respectively,” RHB Research analyst David Chong says.

He adds that it is possibly a reflection of lumpy repayments or refinancing via debt capital markets.

Key loan growth drivers came from real estate, construction, wholesale and retail trade, hotels and restaurants, and primary agriculture sectors.

CIMB Research banking analysts Winson Ng says the weak lending loan indicators do not point to a strong rebound in loan growth in the coming months. “On the other hand, we think that the erosion of net interest margin will be less drastic this year as banks will be more rational in their pricing of loans after the stiff rate competition in the past two to three years,” he says.

Ng reiterates his “neutral” rating on Malaysian banks. He adds that asset quality is expected to remain intact, which alleviates fears of a spike in credit costs for new impaired loans. “There are still some positives for Malaysian banks including financing opportunities from ETP projects, undemanding calendar year 2013 price-earnings of 11.5 times, and an attractive net dividend yield of 4.5%,” he says.

The banking sector could face two potential de-rating catalysts, which could pose further downside risks to analysts’ loan growth forecasts for 2013.

“Lending activities could decelerate in the first quarter of 2013 with slowing corporate loan disbursements and consumers turning cautious pending the upcoming general election,” Cheah says.

Another catalyst would be if the Government were to implement the goods and services tax (GST) and resume the subsidy rationalisation programme and raise the electricity tariff to close its budget deficit. “This fiscal tightening policy could have an adverse impact on consumer spending and consumer loans in the later part of the year,” says Cheah.

CIMB notes its preference for big banks that have better defensive qualities. “Maybank’s diversified business portfolio with top-three ranking in all business segments will enable it to reap the greatest benefits from the implementation of the broad-based ETP,” Ng says.

He adds that Maybank’s key earnings catalyst will be its rapid expansion in Indonesia which will enable the group to gain market share in the region and fuel its fee income growth.

Fundamentals

Meanwhile, Public Bank Bhd’s fundamentals remain unrivalled, with a return on equity in the mid-20 percentage point range, the best asset quality with an impaired loan ratio of below 1% and a cost-to-income ratio of 30%.

“We expect the group to keep its credit cost low in 2013 to 2014, thanks to its superior asset quality, especially with the full adoption of FRS (Financial Reporting Standard) 139. Loan growth is projected to be a decent 11%-12%. The push for fee income growth, primarily from wealth management and bancassurance, will provide a further fillip to topline growth,” Ng says.

However, Alliance Research believes that Public Bank’s future risk-reward dynamics are less appealing.

“With the election uncertainties expected to be cleared by the first half of 2013, we believe that Public Bank may underperform its higher beta banking peers post-elections,” Cheah says. This is coupled with its rich 2013 price-to-book valuation of 2.8 times and declining asset growth trajectory.

Cheah expects high beta banks that underperformed in 2012 to outperform its competitors in 2013.

“RHB Capital Bhd serves as our top pick of the banking sector since we believe that its current low valuation is no longer justified,” he says.

In the mid-cap section, Cheah has cast his eye on the often-overlooked Affin Holdings Bhd due to its turnaround story and good proxy to the merger and acquisition theme.

For investors looking for a direct and pure exposure to the fast-growing Islamic banking sector, BIMB Holdings Bhd is the way to go, says CIMB’s Ng.

“Re-rating catalysts include the best loan growth among the Malaysian banks under our coverage, the potential to venture into the under penetrated and fast-growing Indonesian financial market, brisk fee income growth, primarily from its takaful operations, and expected expansion of its net interest margin by optimising its loan-to-deposit ratio which is currently only 50% plus,” he says.

RHB Research and Kenanga Research remain “overweight” on the banking sector, while Alliance Research and CIMB Research maintain their “neutral” stance.

By WONG WEI-SHEN weishen.wong@thestar.com.my

Singapore Home Sales Rise 43% and stocks up

Singapore home sales rose 43 percent in January from the previous month as buyers rushed to purchase homes right after the government announced cooling measures to ease residential prices.

Home sales increased to 2,013 units in January from 1,410 units in December, according to data released by the Urban Redevelopment Authority today. Sales reached 22,699 units in 2012, according to calculation by Bloomberg News based on the government data, which dates back to 1996.

Enlarge image

People walk dogs past a house in Telok Kurau district in Singapore. Singapore has been attempting to rein in prices since 2009, when the government barred interest-only loans for some housing projects and stopped allowing developers to absorb interest payments for apartments still being built. Photographer: Sam Kang Li/Bloomberg

Enlarge image

Traffic travels along the Benjamin Sheares Bridge past a condominium development in Singapore. Photographer: Munshi Ahmed/Bloomberg

Enlarge image

A jogger runs past people with dogs in Telok Kurau district in Singapore. Photographer: Sam Kang Li/Bloomberg

“This is a bit of an abnormality and the increase was a bit of a surprise,” said Nicholas Mak, the executive director at SLP International Property Consultants, who said developers extended the hours of their sales office on the eve of the curbs. “February will be lower than January because this is when the effects of the cooling measures will be felt.”

Singapore home prices reached a record high in the fourth quarter amid low interest rates, raising concerns of a housing bubble and prompting the government to introduce its seventh round of cooling measures on Jan. 11.

Singapore has been attempting to rein in prices since 2009, when the government barred interest-only loans for some housing projects and stopped allowing developers to absorb interest payments for apartments still being built.

Mak said the curbs were also partly offset by price cuts by developers, some offered through rebates. He expects prices for so-called mass-market homes to increase between 1 percent and 5 percent this year. For high-end homes, or those in prime districts, prices may rise 2 percent or decline as much as 8 percent depending on buyers’ reactions to the measures, he said.

Shares Rebound

Singapore’s property index rose 0.3 percent at the close to the highest in almost five years. The measure has climbed 2 percent since the curbs were announced last month, recovering from a 1.6 percent decline on the first trading day after the measures.

Knight Frank Pte cut its estimates for new home sales for 2013 by 20 percent after the measures and expects sales to range between 12,000 and 14,000 units this year.

“Despite the strong sales volume in January, there could be a potential decline in demand for private homes for the next two months in first quarter this year by about 10 to 15 percent, as the private residential market fully absorbs the impact of the seventh round of property cooling measures,” property broker, Knight Frank, said in an e-mailed statement today.

The latest measures include an increase in the stamp duty for homebuyers by between 5 percentage points and 7 percentage points, with permanent residents paying taxes when they buy their first home. Singaporeans will also have the levy starting with their second purchase.

The government also tightened loan-to-value limits for buyers seeking a second mortgage, referring to the amount they are allowed to borrow relative to the value of their properties. The cash down payment will also rise to 25 percent from 10 percent starting from the second loan, it said. -- Bloomberg

Singapore property stocks up after Jan sales data



SINGAPORE - Singapore property stocks rose, bucking the decline in the broader stock market, after data showed private home sales soared in January.

According to the Urban Redevelopment Authority (URA), developers in Singapore sold 2,013 new private homes in January, up 43 per cent from December's 1,410 units. The jump came about despite new cooling measures announced by the government on Jan 11.

Around 0715 GMT, shares of Southeast Asia's biggest developer CapitaLand were up 0.8 per cent at S$3.93, while City Developments rose 0.3 per cent to S$11.45.

The benchmark Straits Times Index was 0.2 per cent lower.

"The number of transactions indicates clearly that demand for private properties is still there, especially when you take into consideration the advent of the January cooling measures,"said PropNex Realty CEO Mohamed Ismail.

Mohamed Ismail said many home buyers rushed to make purchases on the evening before the new measures kicked in, and most developers extended their opening hours to facilitate last-minute purchases.

By Kevin Lim  Reuters

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Malaysian property market remains resilient: housing ...

China has ways to tap shale gas riches

CHINA'S aspiration for a US-style gas bonanza that will reduce its dependence on imported energy must confront three key scarcities -- water, shale gas expertise and pipelines -- before it can become a reality. 
 
As well, Chinese authorities must manage the social and environmental frictions likely to arise when drilling companies seek access to farm land and use hydraulic fracturing, or fracking -- the technique that is an integral part of shale gas exploitation.



Fracking involves injecting a mix of sand, water and chemicals into rocks deep beneath the surface to crack them open and get access to the shale.

In the US, large-scale shale gas extraction in the past five years has revolutionised its energy, transport and manufacturing landscape to the point where the US is likely to become an exporter of liquefied national gas by 2015.

Last year, for example, the US produced 220 billion cubic metres of shale gas, or more than a third of total natural gas output. Over the next two decades, shale's share is likely to rise to 50 per cent. The US Energy Information Administration estimates the country's recoverable shale gas reserves at about 14 trillion cubic metres.

Now China, with potential shale gas reserves of 25 trillion cubic metres in areas such as Sichuan province and the Tarim Basin in Xinjiang, wants to emulate the US experience, setting a goal in its latest State Council energy white paper of extracting 6.5 billion cubic metres of gas a year by 2015, and as much as 100 billion cubic metres a year by 2020.

But the US shale bonanza has been more than three decades in the making, and draws on the experience and infrastructure of a well-established oil and gas industry.

North America has thousands of kilometres of gas pipelines and receiving points, its geological survey records are extensive, its exploration companies have pioneered the key techniques of horizontal drilling and fracking, its rig crews are the best in the business and have good access to water for fracking, and there is a strong service sector covering finance, distribution, processing and marketing to support the industry. Even so, the industry has had to contend with vigorous opposition from environmental and farming groups concerned over water and land usage.

For China to achieve anything like the US success over the next decade, it will have to address these key issues. Much of its northern half is water-stressed already, while in the south, shale exploration will have to compete for water now used to grow food.

Certainly, China has the scale to be a big shale player, and state-controlled entities such as CNPC (whose listed arm is PetroChina), CNOOC, China Petrochemical Corporation (Sinopec) and Sinochem are keen to deploy domestically the shale skills that they hope to pick up from recent investments in North American shale plays and in joint ventures with oil majors ExxonMobil, Shell, ConocoPhillips, BP and Total within China.

While these technological skills are crucial, each shale gas field is unique, meaning there is no "one size fits all". That is why many of the North American fields were developed initially by smaller, independent oil and gas companies such as Devon Energy, Anadarko Petroleum and Chesapeake Energy.

When China held its first round of bidding for shale gas blocks in 2010, only six state-owned energy companies were invited to take part, and the blocks were limited to southern China, where water is more easily available than in the arid north and northwest of the country.

The second round of bidding on October 25 last year drew a much bigger field and was open to non-state players. A total of 152 bids from 83 companies were received for the 20 blocks, covering about 20,000sq km in Chongqing municipality and the provinces of Guizhou, Hubei, Hunan, Jiangxi, Zhejiang, Ahui and Henan.

Sinopec, one of the first-round invitees, began drilling China's first shale gas production wells in Sichuan province near Chongqing in June last year. Sichuan is one of China's biggest grain growing areas, and some farmers there are wary of the impact shale exploration will have on their land and water.

China is already the world's biggest energy consumer and uses a prodigious amount of domestic and imported coal and oil to run many of its power stations. It also has massive capabilities in wind, solar, hydro and nuclear power.

But it is natural gas that offers the potential to really change China's energy equation, particularly in the form of its domestic shale resources, coal-seam gas and coal-to-gas conversion. For now, much of China's gas is imported via pipeline from Central Asia or as LNG from the Middle East, Southeast Asia and Australia.

In its latest World Energy Outlook released last month, the International Energy Agency says it expects unconventional gas -- which covers shale and CSG -- to account for nearly half of the increase in global gas production out to 2035, with most of the increase coming from China, the US and Australia.

But the IEA also warns that the unconventional gas business is "still in its formative years" and that there is uncertainty in many countries about the extent and quality of the resource base, and about the environmental impact of producing this gas.

The IEA's outlook supports the view of British industry analyst Wood Mackenzie that China's shale gas development, while potentially substantial, will be a long-term story. At the World Gas Conference in Kuala Lumpur, Wood Mackenzie's head of Asia-Pacific gas research, Gavin Thompson, said the focus should be on China's gas import options to meet rapidly increasing demand. This, he said, presented opportunities for pipe suppliers in Central Asia and Russia, along with LNG suppliers.

"We remain positive that China's domestic shale gas will be a major boost to supply growth, producing approximately 150 billion cubic metres (bcm) per annum by 2030, largely accounted for by the Sichuan and Tarim basin production.

"However, shale gas growth will only accelerate after 2020, staying under 30bcm before then. Meanwhile, China's gas demand will increase from just over 150bcm to more than 600bcm from now to 2030."

Wood Mackenzie believed that both coal-to-gas projects and coal-bed methane (CBM) would each deliver more output to the Chinese gas market than shale right up to 2024.

"By 2020, we see CTG and CBM producing 27bcm and 17bcm respectively against only approximately 11bcm of shale production. These sectors are therefore far more significant through the medium-term, but are not receiving the appropriate level of attention outside of China."

Thompson said there was a need for a much deeper geological understanding of China's shale potential and the know-how to exploit it. As well, land access issues, environmental challenges, a lack of supply chain services and infrastructure, and decisions on the best allocation of capital all cloud China shale gas outlook.

China's energy white paper says the government will "actively promote" the development and use of unconventional oil and gas resources by speeding up the exploration of coal-bed gas and selecting favourable exploration target areas for shale.

By Geoff Hiscock is the author of Earth Wars: The Battle for Global Resources, published by John Wiley & Sons

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Euro zone economy shrinks, worst since 2009

The euro-area recession deepened more than economists forecast with the worst performance in almost four years as the region’s three biggest economies suffered slumping output.

 The recession in the 17-nation euro zone deepened sharply in the fourth quarter of 2012 as the debt crisis continued to sap growth and confidence as jobs are lost. Photo: AFP

Gross domestic product fell 0.6 percent in the fourth quarter from the previous three months, the European Union’s statistics office in Luxembourg said today. That’s the most since the first quarter of 2009 in the aftermath of the collapse of Lehman Brothers Holdings Inc. and exceeded the 0.4 percent median forecast of economists in a Bloomberg survey.

The data capped a morning of releases showing that the economies of Germany, France and Italy all shrank more than forecast in the fourth quarter.

European Central Bank President Mario Draghi said last week that confidence in the 17-nation bloc has stabilized and the ECB sees a gradual recovery beginning later this year, though the situation is “fragile.”

“The outlook for 2013 remains subdued,” said Peter Vanden Houte, an economist at ING Group NV in Brussels. “While a gradual improvement of the world economy is likely to support European exports, domestic demand is bound to remain very weak as fiscal tightening and rising unemployment will take their toll on household consumption.”

The euro extended its decline against the dollar after the data were released. It fell 0.9 percent to $1.3328 as of 10:34 a.m. London time. The single currency also weakened versus the pound and the yen. European stocks erased gains, U.S. equity- index futures fell, and German bunds advanced.

Japanese Surprise

The European data chimed with statistics in Japan, where the economy unexpectedly shrank last quarter as falling exports and a business investment slump outweighed improved consumption. GDP fell an annualized 0.4 percent, following a 3.8 percent fall in the previous quarter. That bolsters Prime Minister Shinzo Abe’s case for more monetary stimulus to end deflation.

The euro-area economy shrank 0.9 percent in the fourth quarter from a year earlier, the statistics office said. In 2012, it contracted 0.5 percent.

Data earlier today showed the German economy, Europe’s largest, shrank 0.6 percent in the fourth quarter, while French GDP fell 0.3 percent. Both contractions exceeded the median forecasts of economists. Italy’s economy shrank 0.9 percent, also more than expected and a sixth straight contraction.

Ninth Contraction

Other releases today showed that Portugal’s GDP fell by 1.8 percent in the ninth successive quarter of contraction, while in Austria and the Netherlands, it dropped 0.2 percent. In Greece, which doesn’t publish quarter-on-quarter data, GDP fell 6 percent in the fourth quarter from a year earlier.

Measures by the ECB to stem the debt turmoil have eased the worst strains and helped to reduce sovereign bond yields. The yield on Spain’s 10-year debt is about 5.2 percent, down from more than 7.5 percent in July.

Some reports have also pointed to an easing in the recession in the euro area since the start of this year. While industrial production fell 2.4 percent in the fourth quarter, it rose 0.7 percent in December, more than economists forecast. Surveys of manufacturing and services improved in January.

Downside Risks

Still, the ECB has predicted that the euro zone’s economy will shrink 0.3 percent this year. The appreciation of the euro, which gained 8.2 percent in the past six months, is also threatening to hurt exports.

The ECB said today that professional forecasters cut their growth and inflation estimates. They predict inflation of 1.8 percent in 2013 and 2014, down from the 1.9 percent estimated for both years three months ago, the central bank said, citing a quarterly survey. Forecasters foresee zero growth this year and expansion of 1.1 percent next year.

Heineken NV, the world’s third-biggest brewer, said yesterday it sees volume weakness this year in European markets “affected by continued economic uncertainty and government-led austerity measures.” ThyssenKrupp AG, Germany’s biggest steelmaker, said on Feb. 8 that it intends to make savings in its European steel business by cutting more than 2,000 jobs.

In the 27-nation European Union, GDP fell 0.5 percent in the fourth quarter from the previous three months and 0.6 percent on the year. The statistics office is scheduled to publish a breakdown of fourth-quarter GDP next month.

“While sentiment towards the region has improved, the hard news on the economy remains distinctly weak,” said Jonathan Loynes, chief European economist at Capital Economics in London. Surveys have pointed to an “improvement in sentiment and activity in the early part of 2013. But for now at least, they are not strong enough to suggest that the euro zone has pulled out of recession.” - Bloomberg

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