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China's Biggest Move In Oil Markets To Date – OilPrice.com

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China is making an aggressive entrance into the world of energy exchanges, but will it help the markets like some analysts suggest, or will it spell doom for oil prices?

Persistent oversupply in the global oil and gas market has created a difficult situation for smaller oil and gas companies who must find ways to compete in a debt-laden, low-priced environment against state-run oil titans like Saudi Aramco and deep-pocketed oil giants such as Exxon.

But the small oil and gas players—those private companies that are facing an uncertain future despite sitting atop a literal wealth of oil and gas in prolific US shale plays—may have just been handed their ticket out of trouble by the largest oil importer in the world, China. 

Or have they?

China, in its quest to shore up its energy security, is launching a new energy exchange that will make it much easier for buyers and sellers of all things energy—including gas, oil, LNG, carbon credits, and even chemical products—to find each other and do business together in the robust Chinese market that might otherwise seem daunting to enter.

For smaller US energy businesses—which account for nearly 60-70% of all energy companies in the United States–the Greater Bay Area International Energy Transaction Center, as the exchange is called, could be just what the doctor ordered: easier access to a tricky but colossal market.  

For China, the exchange is designed to protect its energy security at a time when its voracious appetite for crude oil exceeds its domestic production. 

On the surface, it seems like a marriage made in oil heaven.

But concerns with the new energy exchange are widespread, and global–from the United States to the Middle East.

Small Independents

Today, there are approximately 9,000 independent oil and gas companies operating in the United States—this includes only those businesses that produced fewer than 75,000 bpd and have less than $5 million in oil and gas sales per year. This class of producers accounts for 83% of all oil produced in the U.S., and 90% of all natural gas.

It’s a booming business—and no doubt some of these smaller players will jump at the chance to engage with Chinese companies to sell their oil and gas products. There are concerns, however, that easier access to the huge Chinese energy market will erode prices further—a price situation that China is looking forward to. 

As for those independents, some of which are struggling in the already lower oil price environment, additional price erosion could mean death.

Middle East

And then there are the Middle East producers. There was a time when the United States imported almost 150 million barrels of oil monthly from OPEC member countries, according to the Energy Information Administration. But then just a few years ago, the United States lifted the export ban on crude oil, and everything changed. In January 2017, the United States imported 117.6 million barrels of oil from OPEC. In September 2019—the last month for which there is data—the United States imported just 48 million barrels. 

That’s less than half.

OPEC nations—mostly Saudi Arabia, Venezuela, and Iraq—had enjoyed hawking their wares on the US market. But as the U.S. slowed its oil imports, Middle East producers set their sites on another large market: Asia, including China.

Those same OPEC nations that were hurt by U.S. oil production will also be hurt by China’s courting of U.S. oil companies through this exchange.  For OPEC, who has come up against the United States oil industry time and time again as it tries to lift prices through production cuts, American oil producers keep turning up like a bad penny.

A Geopolitical Foothold

China is hoping that the new international exchange platform will rival the LSE and NYSE when it comes to online trading of crude oil and other energy-related products, including settling trade and delivering it. In addition to crude oil, chemical products, and LNG mentioned above, it will also deal with LPG, methane, ethane, and energy derivatives. And there’s more: it will also make available market information.

But the exchange will also increase—to the worry of many—China’s geopolitical foothold in new markets.

China is fast sinking money into developing oil and gas resources in foreign countries, despite lower oil prices. Its state-run oil companies, including CNOOC, have been throwing money at oil projects in Brazil, Mexico, Guyana, Nigeria, and Canada–and the US Gulf of Mexico, to name just a few. And while some see this as just a method of filling the oil void left by its own domestic production, others see this as China’s way of controlling oil resources across the globe for geopolitical gain. 

China has already sunk money into Iran and Venezuela in the form of loans in exchange for cheap crude–two countries that have found themselves on the receiving end of US sanctions that have crippled their respective oil industries. This move has upset the geopolitical apple cart as the U.S. struggles to bring oil exports for both to zero–without China’s backing, the U.S. might have been successful in doing so.

The growth of a massive new energy exchange not only improves China’s global positioning to influence oil prices, but also increases its geopolitical clout as its money gives it influence in state-run oil companies that carry political sway within their governments–particularly with Venezuela’s PDVSA and Angola’s Sonangol.  

There is no doubt that the exchange will increase the energy trade between smaller players. Whether this will have a positive result for small U.S. energy companies or whether this will crush prices and increase China’s political might remains to be seen. 

Byt Julianne Geiger for Oilprice.com

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TD Bank CFO Ahmed to head securities unit, move seen as CEO succession play

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TD Bank Group on Thursday named Chief Financial Officer Riaz Ahmed chief executive of its securities unit and head of wholesale banking, a move some investors interpreted as a sign he will succeed CEO Bharat Masrani.

For Ahmed, 58, the change marks a return to his TD roots. He began his career at the bank in 1996 as an investment banker in the securities division, following which he served as its CFO and chief administrative officer. He has been part of TD Bank‘s executive team for nine years, and CFO for over five.

“Cross-training in the capital markets role … increases the likelihood of (Ahmed) succeeding Masrani when he retires, but I doubt it would be soon, as that would create unnecessary turnover atop TD Securities,” said Brian Madden, portfolio manager at Goodreid Investment Counsel.

“Maybe Masrani announces his retirement next year (or the following) and leaves early in 2023” or 2024.

Masrani’s compensation arrangements anticipated his retirement in 2020, TD said in its 2019 shareholders meeting proxy circular. But he was granted stock options worth C$1.9 million ($1.5 million), vesting in five years, on the condition that he remain available to serve as CEO throughout that period.

Ahmed replaces Bob Dorrance, who will retire on Sept. 1 after about 16 years at the bank, Canada’s second-biggest lender by market value said in a statement.

When asked about TD’s succession plans, a spokesperson said: “Today we are celebrating Bob Dorrance’s incredible career and accomplishments, and the appointment of top executives to critical, leadership roles.”

At a time when diversity, particularly in executive and board ranks, has come under increased scrutiny, Ahmed’s appointment as CEO would mean TD, the only one of Canada’s six biggest lenders to have a non-Caucasian at its helm, would retain that aspect.

Ahmed’s appointment comes after TD’s wholesale banking unit recorded an 8% revenue decline in the second quarter from a year ago, contributing to the bank’s overall underperformance versus some rivals.

Kelvin Tran, currently executive vice president for enterprise finance, will replace Ahmed as finance chief.

Dorrance, who has headed TD Securities since 2005, will stay on as chairman of TD Securities and serve as special adviser to Masrani.

TD shares were flat at C$87.12 on Thursday afternoon, compared with a 0.2% gain in the Toronto stock index. The shares are up 21% this year, versus a 15% gain in the benchmark.

($1 = 1.2303 Canadian dollars)

(Reporting by Nichola Saminather in Toronto; Additional reporting by Noor Zainab Hussain in BengaluruEditing by Nick Zieminski and Matthew Lewis)

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AIB agrees to life and pensions joint-venture with Canada Life

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Allied Irish Banks on Wednesday said it would form a joint venture with Canada life as it seeks to plug gaps in its life, savings and wealth products.

The joint venture will be equally owned by Canada Life, a subsidiary of Great-West Lifeco Inc.

“The move to create this joint venture is aligned with AIB’s stated ambition to complete its customerproduct suite and diversify income,” AIB said in a statement.

“Through this strategic initiative AIB intends to offer customers a range of life protection, pensions, savings and investment options enhanced by integrated digital solutions withcontinued access to our qualified financial advisors.”

The Irish lender highlighted Canada Life’s “deep experience” of the Irish bancassurance market through Irish Life Assurance, which is also a subsidiary of Great-West Lifeco.

AIB currently operates under a tied agency distribution agreement with Irish Life, and will enter into a new distribution agreement with the new joint venture company.

Chief Executive Colin Hunt highlighted the need to plug gaps in AIB’s life, savings and wealth products when he set out the bank’s medium-term targets last December.

AIB expects its equity investment in the joint venture will be around 90 million euros ($107.51 million), equating to around 10bps of CET1.($1 = 0.8372 euros)

(Reporting by Graham Fahy;Editing by Elaine Hardcastle)

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Interac: Canada’s Latest Payment Solution Phenomenon

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Few can argue that digital payment methods aren’t central to modern-day society. In recent times, increasing numbers of payment solutions have come to the forefront, offering consumers more choice regarding their transaction preferences. Canada, in particular, has embraced a wide-ranging selection of secure, forward-thinking options. Of those available throughout the country, Interac has piqued the interests of local consumers the most. So, let’s look at why this payment solution is an especially popular option throughout Canada. 

Usable Across Various Markets 

It speaks volumes about Interac’s versatility in that it’s usable across a variety of different industries. Since being founded in 1984, the Canadian interbank network has become integral to numerous markets, including local air travel. Air Canada, which has been operating since 1937, has expanded their accepted payment methods, and now passengers can pay for their flights using Interac. According to the airline’s official website, the Interac Online service lets consumers pay for their tickets via the internet directly from their bank account. 

Not only that, but Interac is also available at Walmart. In November 2020, the two organizations partnered together to expand in-store and online payment options. Walmart has adapted well to the digital trend, with American Banker reporting that they’ve opened Interac Flash sale points throughout their stores. 


Source: Unsplash

Aside from the above, Interac has also taken the digital world by storm. Following its rapid rise to prominence, the solution has also altered the online casino industry, with platforms like Genesis Casino now accepting the transaction type. The provider, which features Interac Canadian casino options, uses the popular payment method to enhance transaction speeds of deposits and withdrawals, as well as security. Players can use Interac Online and Interac e-Transfer to make deposits or withdrawals from their desktops or mobiles as the platform is fully optimized. 

A Reflection of Modern-Day Society 

In recent times, Interac recorded a 55 percent increase in transactions between April and August 2020 compared to the same period the previous year, as per BNN Bloomberg. These figures somewhat reflect the current state of e-Commerce and modern consumerism. Following the rise of Interac and other payment methods, it’s now less troublesome for consumers to complete in-store and online purchases. 


Source: PxHere

There’s an ever-growing perception that land-based businesses need to adapt within the digital era and accept forward-thinking payment methods. According to Cision, Interac is of utmost importance to the Canadian economy, and a year-on-year increase in Interac Debit payments of 333 percent reflects that. Not only that, but Interac e-Transfer payments are growing at 52 percent each year. This Interac-oriented trend appears unlikely to fade over the coming years, with the network being selected as the country’s provider for a new real-time payment system, as per Lexology. 

Consumer Habits are Changing 

There can be no doubt that consumerism has changed drastically over the past decade. The popularity of Interac suggests that a cashless future may be on the horizon, with increasing numbers of shoppers enjoying the security of online payment methods. While it’s currently unclear if that will happen, Interac appears to be prevalent for the long run.

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