Articles in this series examine American diplomatic cables as a window on relations with the rest of the world in an age of war and terrorism.
Wednesday, December 29, 2010
Saturday, December 25, 2010
Thursday, December 23, 2010
Tuesday, December 21, 2010
Monday, December 20, 2010
Monday, December 13, 2010
China taps into Argentina’s oil prospects
By Leslie Hook and Jude Webber
Published: December 12 2010 20:44 | Last updated: December 12 2010 20:44
When China’s largest oil producer looked overseas 14 years ago for places to invest, it settled on the then-untapped riches of Sudan.
That investment, in 1996, kicked off a string of deals in Africa, as Chinese state-owned oil companies snapped up resources in countries often deemed untouchable by western companies.
But today the Chinese oil majors are sending their money in a different direction: Latin America, which has dominated headlines this year for upstream oil and gas deals. Chinese oil companies have spent more than $15bn in upstream deals there this year – and industry executives say there is more to come.
“There is not a single CEO of a major oil company in Latin America, not one, who has not been approached by the Chinese,” says an M&A banker at a western bank.
Last week’s decision by China Petrochemical Corp to buy Occidental Petroleum’s operations in Argentina for $2.45bn has underscored the trend. The deal came on the heels of Cnooc and Bridas’s agreement to pay $7bn for BP’s 60 per cent stake in Argentina’s Pan American Energy.
Earlier this year, Cnooc invested $3.1bn for a 50 per cent stake in Bridas, a private energy company, describing the deal as a “beachhead in Latin America”.
The shift towards the region is happening partly because China’s oil groups are increasingly confident of competing against their western peers in mergers and acquisitions. Some of China’s earliest overseas oil deals, such as in Sudan, were negotiated on a government-to-government basis, a far cry from a modern corporate boardroom setting.
“Five or 10 years ago the Chinese [oil] companies were buying assets by negotiating directly with a limited number of countries, and there’s a certain shifting perception now,” says Gavin Thompson, head of north-east Asia for consultancy Wood Mackenzie. “They are operating in the real world now, alongside all these other companies who have been doing this sort of thing for far longer in terms of international growth and deals.”
Argentina and Brazil have benefited from the trend. This year, when a share in the Peregrino oilfield off the coast of Brazil went up for sale, at least two Chinese oil companies joined the bidding fray. The state-owned chemicals group, Sinochem, emerged victorious with its $3.1bn offer, even though it had less than a decade of offshore drilling experience.
Argentina’s oil industry has seen the deal as a key sign of confidence at a time when many western oil groups are put off the country’s onerous tax regime and heavy state regulation, and are hoping that it will boost upstream investment. China’s oil majors can afford to take longer-term bets than some of their western peers, thanks to state support at home and access to cheap credit.
One senior Cnooc executive admits: “Argentina has a tough fiscal regime. But that even happens in Australia.” Cnooc is betting Argentina’s energy tax policies may change soon. “We see some encouraging signs that it is going in the right direction,” the executive adds.
The announcement by YPF, the former Argentine state monopoly controlled by Spain’s Repsol, of a huge 4,500bn cubic feet discovery of tight gas in the province of Neuquén – equivalent, if confirmed, to a third of Argentina’s current gas reserves – is only likely to intensify Chinese interest.
Argentina has potentially rich oil and gas reserves offshore, but investment in exploration overall has been constrained by price controls.
BP’s stake in Pan American Energy, while money-making, was seen as peripheral to the British company’s operations for this reason.
“China is probably the only country that would actually buy in [to Argentina], because of the political pricing system there,” says Laban Yu, oil and gas analyst at Macquarie in Hong Kong.
Mineral resources provide additional attraction
In 2004, China’s investments in Argentina added up to a mere $12.9m, according to Julián Peña, a lawyer who sits on the board of the Argentine-Chinese Chamber of Commerce, writes Jude Webber in Buenos Aires
By 2009 that had grown tenfold to $136.7m. This year has seen a series of energy deals, including last week’s decision by Sinochem to buy Occidental Petroleum Corp’s operations in Argentina for $2.45bn. And earlier this year, China promised to invest a further $10bn in Argentina’s rail network.
The bulk of China’s interest has been in energy, but the country is also hungry for other resources in which Argentina is rich, including minerals and fertilisers. It is investing some $600m in urea production in Tierra del Fuego in southern Argentina, and Shandong Gold has also reached a deal to explore for gold in the northern province of La Rioja.
“Argentina has huge mineral potential – there is a large percentage of the country which is unexplored,” said Damián Altgelt, head of mining executives’ chamber CAEM. He said the legal regime in the sector was “quite favourable” despite Argentina’s often unpredictable politics.
China is a big customer for Argentina’s agricultural commodities and is planning a $100m project in the southern province of Río Negro to grow soyabeans for domestic consumption. It has also invested in the Belgrano Cargas railway line which is vital for Argentine soyabean transport, and has fishing ventures.
“China has been sending committees and groups of Chinese officials constantly for the last few years. They are making a lot of effort to understand how things work here,” said Juan Duggan, a lawyer whose firm, Hope, Duggan & Silva is active in negotiations with China.
China is involved in bidding for port and dredging operations in the construction of a new port in the city of La Plata near Buenos Aires.
Sunday, December 12, 2010
Buried in Peru’s Desert, Fossils Draw Smugglers
Moises Saman for The New York Times
By SIMON ROMERO and ANDREA ZARATE
Published: December 11, 2010
OCUCAJE, Peru — Nestled between the Andes and the Pacific, the sparse desert surrounding this outpost in southern Peru looks like one of the world’s most desolate areas. Barren mountains rise from windswept valleys. Dust devils dance from one dune to the next.
But to the bone hunters who stalk the Ocucaje Desert each day, the punishing winds here have exposed a medley of life and evolution: a prehistoric graveyard where sea monsters came to rest 40 million years ago. These parched lands, once washed over by the sea, guard one of the most coveted troves of marine fossils known to paleontology.
Discoveries here include gigantic fossilized teeth from the legendary 50-foot shark called the megalodon, the bones of a huge penguin with surprisingly colorful feathers and the fossils of the Leviathan Melvillei, a whale with teeth longer than those of the Tyrannosaurus rex, making it a contender for the largest predator ever to prowl the oceans.
“This is perhaps the best area in the world for marine mammals,” said Christian de Muizon, 58, a paleontologist at the Natural History Museum in Paris who led an expedition here in November. He ranks the Ocucaje (pronounced oh-coo-CAH-heh) and adjacent sections of desert with top fossil areas like Liaoning Province in China,where ashfall famously preserved plumed dinosaurs.
But beyond the boon to science, the discoveries here have attracted the attentions of another class of fossil hunters as well: smugglers. Officials in the capital, Lima, say seizures of illegally collected fossils are climbing.
Peru is astonishingly rich in archaeological and paleontological sites, so much so that the issue is part of a delicate political debate here. The loss of national treasures to collectors from abroad has set off concerns about sovereignty, perhaps best exemplified by the feud between Peru and Yale University over Inca artifacts taken by Hiram Bingham, the American explorer typically credited with revealing the lost city of Machu Picchu to the outside world a century ago.
For now, the Ocucaje remains open to just about anyone who wants to search for fossils here. Peruvian law, while vague, classifies fossils as national patrimony and requires fossils found in the country to remain in Peru, unless special permission is granted.
But enforcement and preservation here seems like a distant dream. The government controls the desert but leases parts to mining companies, which could damage or destroy fossils. Looters have already ravaged archaeological burial sites on the desert’s fringes. The police rarely even enter the area.
Almost the only four-wheeled vehicles one sees traversing the desert are trucks carrying workers who spend weeks on the coast collecting seaweed. They sell to dealers, who then export it to Asia.
“This desert is horrible,” said Yolanda Gutiérrez, 35, a seaweed harvester. “The only things a person sees are dirt and rocks and bones.”
An assortment of fossil hunters have their own visions of how the Ocucaje should be managed. One prominent view comes from Roberto Penny Cabrera, 54, a former naval officer who says he is a descendant of Jerónimo Luis de Cabrera, the conquistador who founded the nearby city of Ica in 1563.
Mr. Penny Cabrera, who guides both backpackers and paleontologists into the Ocucaje, lives in his aristocratic family’s crumbling yellow mansion on Ica’s square.
“I am a patriot, a Peruvian, and where my foot steps that is patrimony,” he said, contending that some of the Ocucaje’s fossils should be left in the ground. Another option, he said, would be to create a museum — not in Lima, much less Berlin or Paris — but in Ica.
On the streets of Ica and nearby towns, visitors can already see such fossils — and buy them. Merchants sell fossilized shark teeth, about the size of a man’s hand, at prices from $60 to $100 apiece. They say other fossils are available, at higher prices. “Ocucaje yields many bones,” said one merchant, Marcos Conde, 35.
Meanwhile, seizures of illegally obtained fossils are increasing, surpassing 2,200 this year, compared with about 800 last year, largely at Lima’s international airport, said José Apolín of the Ministry of Culture’s office of recovery. Sometimes officials stumble upon large fossils by chance; in 2008 the police found a jawbone thought to be that of a mastodon in the cargo hold of a bus.
Recent discoveries elsewhere in Peru are raising interest in the country’s fossils and the potential for more trafficking. Almost 14,000 feet high in the Andes, for instance, a mining company controlled by Australian and Swiss investors announced a startlingdiscovery last year: more than 100 dinosaur footprints embedded in walls of stone.
Rodolfo Salas, paleontology curator at Lima’s Natural History Museum, said evidence that his institution obtained, including photos of fossils for sale by private dealers, showed that the Ocucaje was especially vulnerable. He said the trade was supported by huaqueros, or looters of archaeological sites, who turned to fossil hunting.
Paleontologists working here fear the robbery of their discoveries. After finding a fossil thought to be a 35-million-year-old whale cranium, the team led by Mr. de Muizon camouflaged the find with burlap before it could be removed to hide it from looters.
The fossil hunters sometimes turn on one another, too. In 2008, Mr. Penny Cabrera, who roams the Ocucaje in a battered four-wheel-drive Nissan, pushed for the authorities to arrest Mario Urbina-Schmitt, 48, a well-known researcher for Peru’s Natural History Museum, while he was working with a French paleontologist, Gilles Cuny.
Mr. Urbina-Schmitt, who faces time in prison if convicted on charges of illegally removing fossils, said the case against him was absurd, revealing disarray in properly regulating fossil collection. He also said the focus on his case had shifted attention away from other episodes, like a 40-million-year-old whale fossil spirited out of the desert. “My crime is that I do good work,” he said.
The debate over trafficking aside, paleontologists say the prized fossils of the Ocucaje remain vulnerable to yet another factor: erosion. “If we leave them in the desert,” Mr. de Muizon said of the Ocucaje fossils, “they will be dead for the second time.”
This article has been revised to reflect the following correction:
Correction: December 11, 2010
An earlier version of a headline with this article misspelled the name of a desert in Peru. It is the Ocucaje Desert, not Ocugaje.