Will BRICS Implement A Gold Backed Currency In August?
por Tyler Durden

Zero Hedge / 2023-07-18 01:0864
Will BRICS Implement A Gold Backed Currency In August?
By Jan Nieuwenhuijs of Gainesville Coins

Aside from speculation there hasn't been official confirmation by any BRICS nations that they will either issue a new currency backed by gold or peg their currencies to gold anytime soon. Although it's likely discussions are going on among BRICS nations to create a new currency, no agreement has been reached and policy makers are denying the new currency is soon to be launched. Current talk about a new currency—suggesting a gold standard will be implemented in August at the next BRICS summit—should be treated with skepticism.

Image:
Attention for alliances such as the BRICS (Brazil, Russia, India, China, and South Africa) has increased since February 2022, when Russia invaded Ukraine, the West seized Russia's dollar assets, and global tensions reached a crescendo. The BRICS, among other countries, have an interest in de-dollarization and have become more vocal about it, though easier said than done.

No Confirmation for New BRICS Currency
Based on an item by Russian news agency RT, broadcasted July 7, 2023, several gold commentators became confident that the BRICS will announce a gold standard this August at their next summit in South Africa. In my view, there is a lack of proof for this conclusion.

Let us examine on which grounds RT communicated a gold backed currency is to be introduced by the BRICS—widely interpreted as a new gold standard. Unfortunately, there is not one official BRICS website to verify what is being stated on Russian news outlets, financial blogs, and Twitter. For every summit a new website is launched. On the BRICS 2023 site I can't find confirmation of a new currency so we will have to evaluate the source provided by RT.

RT is banned in the West but has several accounts on Twitter. RT India shared a tweet on July 7 that reads: "BRICS Plans to Introduce New Gold-Backed Currency." Primarily this tweet is what caused a stir about a BRICS gold standard.

#BRICS Plans to Introduce New Gold-Backed Currency

The proposed gold-backed currency will contrast with the credit-backed US dollar, with the decision coming a month ahead of the bloc's summit in Johannesburg.

The growing initiative has more and more nations lining up to join… pic.twitter.com/pCF6y9xvGY

— RT_India (@RT_India_news) July 7, 2023
In the video that accompanies the tweet, the source of RT India appears to be a tweet from July 3 by the Russian Embassy in Kenya. From scrolling through all tweets by the Russian Embassy in Kenya one would think this is an account of an activist, not an embassy. Furthermore, the screenshot of the tweet from the Russian Embassy shown by RT India in their video is edited! The actual tweet, which can be seen below, includes a link to an opinion editorial by US economist Joseph Sullivan for the website Foreign Policy, titled: "A BRICS Currency Could Shake the Dollar's Dominance." This article in Foreign Policy is the source of the Russian Embassy's tweet; the source is not the Russian Embassy itself, which RT India wants you to believe.

The BRICS countries are planning to introduce a new trading currency, which will be backed by gold.
More and more counties recently express desire to join BRICS.https://t.co/lMKTd4FlnT

— Russian Embassy in Kenya/Посольство России в Кении (@russembkenya) July 3, 2023
Sullivan provides two hyperlinks to sources regarding Alexander Babakov, deputy chairman of Russia's State Duma. According to Sullivan, Babakov has stated that Russia "is now spearheading the development of a new currency."

The first link from Sullivan brings us to an article on Coin Telegraph, which links to a piece on India TV, reporting on the Russia-India Business Forum 2023 that was held on March 29 and 30. From India TV (March 30):

Babakov stressed that both nations should work to obtain a new medium for payment and added digital payment could be the "most promising" and "most viable" option for both nations. "New Delhi, Moscow should institute a new economic association with a new shared currency, which could be a digital ruble or the Indian rupee," said Babakov.

"Our goal should be focused on writing new rules in the financial sphere in order to enable the use of an already common currency," he stressed.

"It doesn't matter whether it's a digital ruble, a digital rupee, a digital yuan, or some other currency. But this currency must follow the laws of our respective nations," added the top Russian official. 

There is not a word on gold in the article by India TV.

The second link from Sullivan brings us to the India Times that writes (April 4):

According to reports quoting Russian lawmaker Alexander Babakov, the BRICS nations are in the process of creating a new medium for payments—established on a strategy that "does not defend the dollar or euro." 

Babakov, who is the deputy Chairman of Russia's State Duma, reportedly indicated that the new currency would be secured by gold and other commodities such as rare-earth elements.

The India Times states that "reportedly" a new currency will be established secured by gold and other commodities, though there is no source provided. The RT trail ends there. Any news based on the tweet by RT India is overblown.

Other websites, such as Al Mayadeen and TeleSUR, offer more information about what Babakov has said on the Russia-India Business Forum. From Al Mayadeen (March 30):

"The transition to settlements in national currencies is the first step. The next one is to provide the circulation of digital or any other form of a fundamentally new currency in the nearest future. I think that at the BRICS [leaders' summit], the readiness to realize this project will be announced, such works are underway," Babakov said on the sidelines of the Russian-Indian … Forum.

Babakov further did not dismiss the possibility of the formation of a single BRICS currency. According to him, the currency would be secured not just by gold, but also by other groups of products, including rare-earth elements of the soil.

What Babakov said on the sidelines of the forum doesn't sound like the BRICS will implement a gold standard at the next summit in August. The first step is to trade in national currencies, then a new currency could be created, for which the "readiness to realize [it] … will be announced" at the next summit, Babakov thinks.

Implementing this currency could be years away. One, thinking of announcing to start cooperating doesn't mean much. Second, how Babakov describes the currency is vague and no other BRICS nation has supported his idea publicly. Babakov's currency backed by gold and other commodities is impractical and will need readjustments. Third, a BRICS initiative for "strengthening … economic partnership" "to reduce dependence on the US dollar" was already discussed in 2012 and developments take time.

Russian news agencies RIA Novosti and TASS also reported on Babakov's remarks at the forum on March 30, 2023. From Ria Novosti (Google Translate):

The BRICS countries are working on a new form of currency and can present ideas for its development at the summit of leaders of the association this year in South Africa, said Deputy Chairman of the State Duma Alexander Babakov.

Presenting ideas is not the same as implementing a gold standard. Besides, we don't know how much of this is propaganda. We need official sources from other BRICS members to jump conclusions.

Conclusion
Logically, the Russians advocate any alternative to the dollar as they are restricted from using the Western based international financial infrastructure. On the website of the Kremlin there is a statement from President Putin from June 22, 2022:

We are exploring the possibility of creating an international reserve currency based on the basket of BRICS currencies.

Russia's Finance Minister Anton Siluanov said in May 2023:

The idea of creating a common currency … is floating around and is being discussed. We also have proposals about using digital financial assets supported by real assets, for example gold – stablecoins.

But what's it going to be? A currency backed by commodities, a gold stable coin, or a reserve currency based on a basket of BRICS currencies? According to a video shared by the Hindustan Times, India's External Affairs Minister Subrahmanyam Jaishankar said, on July 3, 2023, none of the above:

There is no idea for a BRICS currency. … Currencies to my mind will remain very much a national issue for a long time to come.

Bloomberg reported on July 5:

The New Development Bank, a financial institution created by the BRICS bloc of emerging markets, doesn't have any immediate plans for the group to create a common currency, its vice president and chief financial officer said. 

"The development of anything alternative is more a medium to long term ambition," he said. "There is no suggestion right now to creates a BRICS currency."

I think it should be clear that neither the Russians nor the BRICS as a whole has a plan worked out for a new currency soon to be introduced, as opposed to what's hyped in the media. Mr. Market didn't believe the RT India item as the gold price didn't budge when it was broadcasted.

As per CFO of the New Development Bank, the BRICS are discussing a common currency for the long term, but I will believe it when its design is finished.

The central banks of Brazil, South Africa, Russia, and India declined to comment on a common BRICS currency over email.

Tyler Durden Mon, 07/17/2023 - 17:40

Enviado do meu Galaxy

Why TotalEnergies' $27 Billion Deal With Iraq Is A Gamechanger
por Simon Watkins

Oilprice.com / 2023-07-18 01:105


The four-pronged megadeal between TotalEnergies and Iraq has received the greenlight after many delays.
The US$27 billion megadeal is set to move into action within four weeks and, if it does, then it will be a game-changer for Iraq.
Most important of the four projects is the completion of the Common Seawater Supply Project.
The long-delayed US$27 billion four-pronged megadeal between France's TotalEnergies and the Federal Government of Iraq has received the final go-ahead from both sides and is due to start within the next four weeks. The huge deal is crucial in enabling Iraq to increase its oil production from around 4.5 million barrels per day (bpd) to perhaps 13 million bpd within five years. It is also critical to Iraq's ability to end its dependence on Iran for gas imports and electricity for its power grid. For the West, the deal is crucial is securing access to Iraq's huge, underdeveloped oil and gas reserves as part of its strategy to find new sources of each to compensate for lost supplies from Russia. It is also vital in reasserting a stake in the central Middle East to counteract the increasing influence of China and Russia there, as analysed in my new book on the new global oil market order. In short, this four-pronged deal with TotalEnergies is a very big thing indeed, which is why all parties involved have pulled out all the stops to either get it across the line or stop it in its tracks, depending on which side they are on.

Iraq's input into proceedings, which caused the main delays from the original signing of the megadeal in 2021 to now, was not part of a brilliantly interwoven geopolitical strategy aimed at world domination (that was China, with a little help from Russia – more of that in a moment). Instead, it was down to its standard attempts to gouge out as much as possible in the way of commissions – delivered in the form of 'cash compensation payments' made to various front companies - for some senior government people. Suffice it to say here that at one stage Iraq was in the process of re-establishing the omni-toxic Iraqi National Oil Company (INOC), an organisation widely regarded within the oil industry as one of the most corrupt organisations ever created. It quickly became clear that one does not get to become a senior figure in France's leading oil and gas company by being as stupid as seems to be the minimum requirement to secure a senior position in Iraq's Oil Ministry, with TotalEnergies refusing to partner with INOC 'due to the lack of clarity on the legal status of the company'. In layman's terms, the French oil and gas behemoth did not trust INOC as far as it could throw it. In October 2022, then, Iraq's Federal Supreme Court invalidated the decision to re-establish the Iraqi National Oil Company on the basis that several of its founding clauses were in breach of the constitution, and the deal with TotalEnergies was again a realistic prospect. There have been further shenanigans from Iraq aimed at increasing the possibilities for personal enrichment of some key government people involved – the main one being an increase in the government's stake in the projects to varying degrees – but all have been rebuffed by the French firm. As it stands, the agreement is now for the Iraq government (through the Basrah Oil Company) to hold a 30 percent stake in the megadeal. TotalEnergies will hold 45 percent of it, with QatarEnergy holding the remaining 25 percent stake.

According to sources in the U.S.'s and European Union's energy security complexes spoken to exclusively by OilPrice.com on this megadeal, Iraq was emboldened to make such demands of TotalEnergies by elements from China and Russia. Following the recent landmark resumption of relations between Iran - which retains enormous influence over Iraq through political, military and economic proxies - and Saudi Arabia, brokered by China (and Russia to a lesser degree), it was made clear to Iran it should do all it could to stop Western companies doing deals in Iraq. Specifically, the European Union's energy security source exclusively told OilPrice.com, Iran was told by a very high-ranking official from the Kremlin that: "By keeping the West out of energy deals in Iraq – and closer to the new Iran-Saudi axis - the end of Western hegemony in the Middle East will become the decisive chapter in the West's final demise". 

This would also play into what China wants from the Middle East in its grand scheme of things, as delineated in its multi-generational power-grab project, 'One Belt, One Road'. What it wants is to turn the region into a large oil and gas station by which it can fuel its economic growth to overtake the U.S. as the number one economic and political superpower by 2030. The three biggest oil and gas reserves in the region belong to Iran, Iraq, and Saudi Arabia, so it wants to control those to begin with, as examined in detail in my new book. For Russia, which already has lots of oil and gas – over which China already has significant control – the objectives in the Middle East are more varied. One objective is to continue to exert influence in several countries that it regards as being key to maintaining some of its hold over the Former Soviet Union states. Another, more recent one, is to use this influence to bolster its position as a partner of note to China. As for the other countries in this soap opera – Iran, and Iraq, and now also more clearly, Saudi Arabia – they are in this new global alliance partly for the economic and political support from China (and to a lesser degree, Russia) and because their political systems are naturally much closer to the authoritarian regimes of China and Russia than they are to the democratic ones of the U.S. and its allies.

Nonetheless, as it stands, the US$27 billion megadeal is set to move into action within four weeks and, if it does, then it will be a game-changer for Iraq. Most important of the four projects is the completion of the Common Seawater Supply Project (CSSP). This is crucial to enabling Iraq to reach its longer-term crude oil production targets of 7 million bpd, and then 9 million bpd and then perhaps 13 million bpd, as also analysed in depth in my latest book on the global oil markets. The project involves taking and treating seawater from the Persian Gulf and then transporting it via pipelines to oil production facilities to maintain pressure in oil reservoirs to optimise the longevity and output of fields. The long-delayed plan for the CSSP is that it initially supplies around 6 million bpd of water to at least five southern Basra fields and one in Maysan Province and is then expanded for use in other fields. 

The second of the projects is also a matter of urgent necessity: to collect and refine associated Natural Gas that is currently burned off at the five southern Iraq oilfields of West Qurna 2, Majnoon, Tuba, Luhais, and Artawi. Initial comments from Iraq's Oil Ministry last year highlighted that the plant involved in this process is expected to produce 300 million cubic feet of gas per day (mcf/d) and double that after a second phase of development. Former Iraqi Oil Minister, Ihsan Abdul Jabbar, also stated last year that the gas produced from this second TotalEnergies project in the south would help Iraq to cut its gas imports from Iran. Successfully capturing associated gas rather than flaring it will also allow Iraq to revive the also long-stalled US$11-billion Nebras petrochemicals project with Shell, which could be completed within five years and would generate estimated profits of up to US$100 billion for Iraq within its 35-year initial contract period.

TotalEnergies already has ongoing experience of working across Iraq, holding a 22.5 percent stake in the Halfaya oil field in Missan province in the south and an 18 percent stake in the Sarsang exploration block in the semi-autonomous region of Kurdistan in the north. This gives it very specific operational experience of working on the ground in Iraq, which would also enable it to increase crude oil output from the Artawi oil field – and this is the third of the four projects to which it is committed. According to earlier comments from Iraq's Oil Ministry, TotalEnergies would help to boost output from the Artawi oilfield to 210,000 bpd of crude oil, up from the current circa-85,000 bpd. The last of the four projects that were to have been undertaken by the French company would be the construction and operation of a 1,000-megawatt solar energy plant in Iraq.

By Simon Watkins for Oilprice.com

More Top Reads From Oilprice.com:

Enviado do meu Galaxy

Big LNG buyers and producers to tighten methane monitoring
Financial Times: Markets / 2023-07-18 01:335
Receive free Climate change updates

We'll send you a myFT Daily Digest email rounding up the latest Climate change news every morning.

Japan, the US, the EU, Australia and South Korea are in final talks on the creation of a mechanism for monitoring methane emissions that will bring together some of the world's largest buyers and producers of liquefied natural gas to combat global warming.

People directly involved in the discussions said the public-private initiative would involve setting up a database of real-time methane pollution data on individual LNG projects, a move backers hope will accelerate the reduction of emissions of the potent global warming gas. 

The initiative comes after global fossil fuel industry emissions of methane increased to a near-record in 2022.

This was despite the so-called global methane pledge signed by more than 100 countries at a UN climate summit in 2021. Big emitters including China, Russia and India did not sign the agreement, which was spearheaded by the US and EU. US climate envoy John Kerry, who is in China for climate talks this week, has long pressed Beijing to strengthen its commitment to reducing methane emissions.

The team behind the UN COP28 climate summit in the UAE this year is also making a push for "near-zero" methane emissions in the oil and gas industry by 2030. 

Methane is the main component of natural gas and accounts for about 30 per cent of the global temperature rise since the industrial revolution, with the energy industry making up about a third of human-induced methane emissions, second only to agriculture. The emissions result mainly from flaring — the burning of excess gas — and leakage.

Cutting methane emissions is regarded by scientists as among the cheapest and quickest ways to tackle global climate change, as the gas generates more warming than carbon dioxide but is shorter-lived.

The methane database was proposed by Japan, chair of this year's G7 summit and one of the world's largest importers of LNG. Tokyo has previously been criticised by climate activists for opposing a global agreement for the phaseout of fossil fuels and for continued funding of new overseas gas projects. 

The new initiative — called the "coalition for LNG emission abatement towards net zero" — is set to be announced on Tuesday at an LNG conference in Tokyo co-hosted by the International Energy Agency, the people involved in the discussions said.

Japan's Jera and South Korea's Kogas, two of the world's largest LNG buyers, will ask major producers to provide basic data on emissions such as volume and intensity as well as reduction targets and measures being taken. Participation will be voluntary and the results will be disclosed by the government-backed Japan Organization for Metals and Energy Security, known as Jogmec. 

Recommended

There is already a reporting framework for methane pollution led by the UN Environment Programme's Oil and Gas Methane Partnership 2.0. 

But Japanese officials said the existing database does not provide project-based methane emissions and only company-level total emissions. They said there is also not enough data specific to LNG production and measuring and disclosure methods are too inconsistent.

Tokyo's effort was backed by the European Commission and the US, where Joe Biden's administration has proposed fines on methane leaks as a key part of its battle to cut greenhouse gas emissions. The oil and gas industry has objected to the proposed US rules, which would allow private groups to monitor and report leaks.

Japanese officials are counting on pressure from Jera and Kogas to incentivise LNG suppliers to act. Jogmec also hopes to bring companies on board by promoting projects with the lowest methane emission intensity on its website, while selling Japanese technology to detect or reduce methane leaks.

"We need to use LNG for the foreseeable future so the question is how we can use it cleanly," said an official at Japan's ministry of economy, trade and industry.



Where climate change meets business, markets and politics. Explore the FT's coverage here.

Are you curious about the FT's environmental sustainability commitments? Find out more about our science-based targets here

Enviado do meu Galaxy