Pakistan Seeks Another IMF Bailout

The price for European energy survival continues to be paid by Pakistan, which is now seeking yet another IMF loan to weather its worst fiscal crisis in decades. Though not all of Pakistan’s problems can be pinned on the energy crisis.

“The South Asian state is seeking a bailout from the International Monetary Fund again — something it’s done more than 20 times. But its predicament is far graver this time around, after deadly floods devastated millions last year, Russia’s invasion of Ukraine pushed up energy prices and dark clouds gathered over the world economy,” reports Bloomberg.

The poor are taking it the hardest. Baby formula is up 15% in a month and thousands of food shipments are log jammed at Pakistan’s ports as the government tries to curb imports and preserve $3 billion in foreign currency. Other government interventions have made matters worse. Imran Khan, the former prime minister, froze and cut diesel and gasoline prices, encouraging supply depletion during a global energy crunch.

“For years, Pakistan’s economic problems have followed a familiar pattern. A dependence on imports and a low inflow of dollars has triggered repeated balance of payment crises,” reports Bloomberg. ‘The country has also taken on piles of debt that didn’t generate foreign exchange, using Chinese financing, in particular, to build things like power plants that have failed to boost sluggish export numbers.”

To break out of its debt-to-crisis cycle, Pakistan will likely need to restructure.

9 Countries Join French Nuclear Alliance

Nine EU countries, including Czechia, Bulgaria, Croatia, Finland, Hungary, Poland, Romania, Slovakia and Slovenia, have signed a joint statement with France advocating for the future use of nuclear energy to combat climate change.

The signatories argue that nuclear energy is a reliable, clean, safe, and competitive low-carbon source of energy that can help Europe achieve strategic autonomy and energy self-sufficiency, create skilled jobs, and strengthen Europe’s environmental leadership.

“We have similar interests as France. Both our countries are geared towards nuclear energy, which is why we have agreed on joint steps. We want Brussels to recognise nuclear energy and gas as sustainable activities. This will open a path towards cheaper funding and construction of new nuclear sources,” said Czechia’s Industry and Trade Minister Karel Havlíček.

“Czechia’s signature is important, considering that it will take over the EU rotating EU Presidency after France in the second half of 2022,” reports Euractiv. “According to Štěpánka Havlíček, Czech Industry and Trade Ministry spokesperson, the two countries have a great opportunity to push through the nuclear agenda. Czechia is currently preparing a tender to construct new blocks of the nuclear power plant in Dukovany. French firm EDF is among the possible winners after Czechia blocked Russian and Chinese companies from seeking the tender due to security concerns.”

Meanwhile, Croatia and France are exploring stronger economic cooperation, notably in energy, transport, and environmental protection. The alliance signals deepening support for nuclear in Europe.

Frackers Spend More, Get Less

Frackers are poised to drop some major coin on production this year compared to last, but it won’t resemble anything like the drill, baby, drill days of yore.

“EOG Resources Inc. said it would spend about $1.4 billion more than last year, but that its oil production would rise by only about 3% in 2023. Pioneer Natural Resources Co. said it would augment its budget by nearly $1 billion, but its production would increase by less than 7% from 2022,” reports the Wall Street Journal. “And Marathon Oil Corp. said that although its expenses would jump by up to 35%, its production would remain flat.”

Producers expect a challenging 2023 due to the disconnect between spending and production gains. While many enjoyed record profits last year due to high oil prices, their ability to grow is limited. The industry is struggling with inflation, which has hiked equipment, labor and materials costs.

Drillers anticipate having to spend more to extract the same volumes of hydrocarbons. Many shale fields in the US are maturing, and there are fewer sweet spots to drill (though some within the industry new opportunities on the New Mexico side of the Permian). In response, shale companies are expected to turn to M&A to boost their reserves. Yet analysts warn that shale returns have probably peaked since American oil prices dropped 40% from mid-2022, not to mention inflation and new taxes.

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Conversation Starters

1. Ford is in hot water over its “green” F-150. “Aluminum used to frame the truck’s passenger compartment can be traced back from Ford Motor Co.’s historic Rouge assembly complex in Dearborn, Michigan, to a parts manufacturer in Pennsylvania, to a smelter in Canada and, ultimately, to Brazil. There, in the heart of the Amazon, rust-colored bauxite is being clawed from a mine that has long faced allegations of pollution and land appropriation. And, near where the Amazon River empties into the Atlantic, a refinery that processes the ore stands accused of sickening thousands of people,” reports Bloomberg. “A class-action lawsuit on behalf of 11,000 residents of neighborhoods surrounding that refinery, Hydro Alunorte, names owner Norsk Hydro ASA of Norway as responsible for polluting their rivers and streams. The suit cites toxic mud containing elevated levels of aluminum and other heavy metals, which are byproducts of refining bauxite into alumina, the white powder that becomes aluminum. Alunorte’s actions, it alleges, have caused health problems such as cancer, hair loss, neurological dysfunction, birth defects and increased mortality.”

2. Kazakhstan could halt gas exports next winter to stave off a domestic supply crisis, according to QazaqGaz deputy chief executive Arman Kasenov. “Kazakhstan, the biggest oil producer in Central Asia, exports natural gas to Russia and China. QazaqGaz manages Kazakhstan’s natural gas transportation infrastructure, provides international transit, and sells gas on the domestic and foreign markets,” reports Oilprice.com. “There will be no deficit of gas in Kazakhstan next winter, but only if there are no exports, QazaqGaz’s Kasenov said.”

3. Hackers are getting bolder according to the North American Electric Reliability Corp. “The threat landscape continues to demonstrate adversaries’ potential capability to disrupt critical infrastructure in North America,” NERC said. “As a result of sector interdependencies, grid evolution, and an expanding supply chain, the threat surface as well as the potential magnitude of impacts has increased.”

Crom’s Blessing