One of the most notable developments in the oil and gas industry in recent years has been its rebranding: what were once oil majors are now striving to be known as energy groups.
For Petrobras — for years Brazil’s largest company by revenue — such marketing ploys can wait. It says its focus is still on expanding oil production and exploration.
“We are not facing an identity crisis. We are an oil company,” says Rafael Chaves Santos, chief strategy officer of the state-controlled, Rio de Janeiro-based company.
“The demand will not disappear, and we don’t see other technology able to replace fossil fuels on a large scale [soon].”
It is a stance that puts Petrobras at odds with many of its global competitors, which are striving to diversify their production base amid predictions of an end to the dominance of oil as well growing environmental pressures.
Petrobras thinks that demand for oil will not decrease in the short and medium term, giving the company plenty of time to profit from its existing knowhow. While it has pledged to cut carbon emissions in its operations by 25 per cent by 2030, chief executive Roberto Castello Branco recently made clear that big investments in renewables are highly unlikely over the next five years.
But analysts believe that Petrobras’ approach owes a lot to domestic political and economic factors, and may ultimately work against it.
“There is a strategic myopia,” says Claudio Porto, founder of energy advisers Macroplan Consultancy. “The company seeks short-term profit but lacks medium- and long-term vision.”
Sharpening Petrobras’ profit motive is a large debt pile, racked up during years of subsidised oil prices under Brazil’s former leftwing Workers’ party administrations, together with heavy capital investments. It has one of the highest debt-to-equity ratios among energy companies — 1.81, compared with 0.38 for ExxonMobil and 0.69 for Shell.
Since 2016, the company’s focus has been on tackling its debt by cutting expenses and selling assets. It is in the process of ending its effective monopoly over refining in Brazil by selling half of its operations in the sector — a move that analysts say will increase competition.
However, the group has been hit hard this year by the coronavirus pandemic and the resulting drop in demand for oil. In the third quarter, its debt decreased less than expected, from US$91.2bn in the previous quarter to $79.5bn.
Debt is not the only problem that has preoccupied Petrobras’ management in recent years. Luiz Francisco Caetano, an analyst at investment firm Planner, points to the existential threat posed in the mid-2010s by Brazil’s Car Wash scandal, which implicated scores of politicians and businessmen — including Petrobras executives — in a contracts-for-kickbacks scheme. “Above all, it needed to survive,” Mr Caetano says.
Green champion — or laggard?
While the company has been battling these difficulties, political pressure to move towards green energy has abated.
Latin America’s largest country has one of the world’s greenest energy mixes, with renewables generating more than 80 per cent of electricity. In 2023, more than 45 per cent of Brazil’s total energy consumption, including fuel for transportation and domestic use, will come from green energy, according to the International Energy Agency — a significant contrast with the 12 per cent it forecasts for the US.
But though Brazil made great strides towards developing more low-carbon energy sources in the late 20th century, interest has ebbed lately, with few politicians actively championing it.
“We have serious concerns about Brazil’s energy transition,” says Drielli Peyerl, a professor at the University of São Paulo (USP). “What is being developed in other countries is a distant reality because we are a developing country. We still have a long way to go to reduce our dependence on fossil fuels.”
She points out that Brazil often resorts to fossil fuel energy when droughts affect the country’s hydroelectric power supply, and relies heavily on highly polluting lorries to transport goods. Meanwhile, regulatory barriers and a lack of political will hinder the search for solutions, she says.
Ildo Sauer, a USP professor and former Petrobras director, says the company was once a “pillar of action in the renewable field”, making significant investments in natural gas, biofuels and wind energy. In 2006, its performance earned it a place on the Dow Jones Sustainability Index, although it left in 2015 following the Car Wash scandal. Now, Prof Sauer warns, the company’s “wrong vision” could be disastrous in the long run.
Petrobras says, however, that its focus on oil does not mean it is ignoring climate change — hence its carbon pledge. “We are responsible from an environmental perspective,” says Mr Chaves, citing the company’s advances in carbon capture — where carbon dioxide is injected underground rather than released into the atmosphere — and in the production of renewable diesel and of biokerosene for airlines.
Macroplan’s Mr Porto acknowledges that there are profits to be made in the short term, particularly if the company focuses on lucrative “pre-salt” production — oil found offshore under a thick layer of salt. This increased 32 per cent in the first nine months of this year compared with the same period in 2019, and currently accounts for 70 per cent of Brazil’s oil output. But Mr Porto adds “the oil industry is at twilight and it is going to disappear”.
Mr Caetano echoes the sentiment, saying that now is the time for the
company to move away from fossil fuels and make significant green investments. “But the management is not investing or giving signs that it will.”
Hong Kong’s Olympic successes expose deep political fissures
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The Hong Kong Olympics team’s future as a separate entity from that of mainland China is secure, the territory’s Games chief Timothy Fok said, despite political tensions exposed by his squad’s historic achievements over the past week.
Siobhan Haughey, a Hong Kong swimmer, won a second silver medal in Tokyo on Friday, cementing the Games as the city’s most successful ever. Fencer Cheung Ka-long won the city’s first gold medal since its 1997 handover from the UK in the foil event.
But the euphoria over their victories quickly became politicised when crowds in the territory celebrating Cheung’s gold booed and shouted “We are Hong Kong” over the Chinese national anthem, which played as he accepted his medal on the podium in Tokyo this week.
Police have launched an investigation and said on Friday they had arrested a 40-year-old person, who also waved Hong Kong’s colonial-era flag at the scene, for insulting the national anthem.
The display of resistance was a stark reminder of a strong lingering undercurrent of discontent in the Asian financial centre, despite a crackdown on dissent by Beijing after anti-government protests in 2019.
China last year imposed a tough new security law last year on Hong Kong, with the first person to be convicted under the legislation, a former waiter who rode a motorbike into a police line last year, given a nine-year jail term on Friday.
But Fok, president of the national Olympic committee of Hong Kong, said he had urged athletes to ignore the controversies. There was an understanding in China that Hong Kong had “a separate identity” to the mainland and there were no plans to integrate the city’s team with that of its bigger neighbour, he said.
“They have [1bn] people, we only have 7m. I am very proud with this new encouragement and success. Sport will be a very important part of the development of Hong Kong.”
Hong Kong authorities are keen to demonstrate the crackdown has not had an impact on the city’s vibrancy. Carrie Lam, Hong Kong’s chief executive, said last week that arts and culture in the city were “booming” and there had been no weakening of people’s freedoms.
The city was promised a high degree of autonomy and freedom of expression after 1997. This autonomy was symbolised by Hong Kong’s right to have its own Olympics team, although it was also agreed that China’s national anthem would be played at medal ceremonies for the territory’s athletes.
Shushu Chen, a lecturer in sport policy at the University of Birmingham, said the mainland had shown significant support for elite sport development in Hong Kong
“I don’t think the Chinese government will advocate in future Olympics that Hong Kong athletes should be integrated under the main PRC flag,” she said. “That will lose the sense of identity of Hong Kong . . . I don’t think that is what the Chinese government is trying to do.”
Tam Yiu-chung, Hong Kong’s sole delegate to the National People’s Congress Standing Committee, the permanent body of China’s parliament, said that any change was unlikely under “one country, two systems”, the Chinese government policy governing Hong Kong’s autonomy from the mainland since the handover.
Hong Kong’s only other gold medallist, windsurfer Lee Lai-shan, accepted her medal at the 1996 Atlanta Games under the British Hong Kong colonial flag as “God Save The Queen” played.
Cheung, whose parents were both Chinese national league basketball players, is a cat lover who often posts pictures of his family’s American shorthair Zimba. “It means a lot to show to the world we can do it,” he said. “We are not only a city. We can fight for victory.”
While Cheung made no political comments after his win, pro-democracy groups were quick to seize on the victory. During the 2019 protests, anti-government demonstrators sang their own anthem “Glory to Hong Kong” in shopping malls. After Cheung’s ceremony, netizens substituted the Chinese anthem for the song in viral videos showing Cheung on the Tokyo podium.
Hong Kong’s pro-Beijing camp also generated controversy when a lawmaker Nicholas Muk criticised one of the territory’s top badminton players for wearing a black T-shirt — a colour favoured by the 2019 protesters — without displaying the Hong Kong flag.
After Muk accused him of supporting the pro-democracy movement, the player, Angus Ng Ka-Long, wore a different shirt to try to calm things down as he also came under attack from Chinese netizens.
Even though he was the eighth seed in the men’s singles competition, Ng was beaten by Guatemalan shuttler Kevin Cordon, who was ranked 59th, leaving many supporters blaming Muk for distracting Ng.
“It is probably not true that there was no impact. I have been trying hard to calm down and I want to focus on the competition,” Ng said after losing. “But how can I forget it completely.”
Ben Okri: rediscovering a 4,000-year-old poem
When the world began to close down 17 months ago, I was filled with a sense of foreboding about what would befall the life of the spirit, and wrote a heartfelt appeal in this paper urging the world not to forget the arts. I maintained that art at its best reveals to us the fullness of what it means to be human.
At the time I feared the lights would go out all over the world and all forms of culture would sink under the assault of the pandemic. But it soon turned out that we could not live without art and culture after all. It was just that art had to find new ways to reach us, new ways to exist, and artists had to find new ways of making art. For many artists, their homes became their studios. Zoom replaced travel, and virtuality replaced intimacy.
But there is something matchless about live theatre. Nothing quite comes close to the mysterious vitality of living actors and an audience throbbing with anticipation and immersed in the entanglements of a story. And so this weekend something remarkable will happen. After a year and a half of not practising their art in person, a group of actors will be staging at the Young Vic my new play, Changing Destiny. It is set in ancient Egypt and is based on a nearly 4,000-year-old poem called “The Tale of Sinuhe”.
The play began its life before lockdown, but the writing of it and the intricacies of production took place during it. Most of the process happened on Zoom. Staff had to work from home and the theatre struggled for funding. A curious early obstacle was the shortage of black male actors, who were unprecedentedly in such high demand. Fortunately, we found the excellent Ashley Zhangazha, who had played Ike Turner in Tina: The Tina Turner Musical. He plays alongside the wonderful Joan Iyiola, a veteran of the Young Vic.
The play began as a classic three-act play in the Greek tradition, then was compressed into a two-hander. We wanted this play, based on one of the most popular poems in the ancient world, to be as close as possible to the oldest form of storytelling on the stage, where the play is made up as much from the imagination of the audience as from the suggestive performance of the actors. We wanted an ancient form of theatre, the campfire theatre, alongside the most modern of technological innovations.
But producing a play during lockdown proved quite a challenge. And it took nerves of steel from the intrepid artistic director of the Young Vic, Kwame Kwei-Armah, to manage all the contingencies and devise the most Covid-free environment for the actors to rehearse and the theatre to function. Going into rehearsal required a rigorous daily health check. The rehearsal area was completely sealed off.
The pressure on the actors was enormous. There are only two of them, one male, the other female, playing 100 roles. They rotate the playing of the central role of Sinuhe. This makes it a gender-transcendent performance. To experience the play fully, you have to see it twice, to see what happens when Sinuhe is a man and then a woman.
I first became interested in “The Tale of Sinuhe” as part of my abiding curiosity about the ancient Egyptian civilisation and its relationship to Africa. It seems people have managed to mentally separate Egypt from the rest of the continent. Now, perhaps, is the time for Egypt to be dealt with as part of the broken history of the continent.
But my interest in ancient Egypt is also mythical and spiritual. The poem of Sinuhe is a literary text but also belongs to the mural tradition of Egyptian art. The scribe who copied it had it painted in his tomb. It is a visual poem, a performance to death and immortality.
A casual encounter with Kwei-Armah, who is himself a fastidious playwright, at an event celebrating Nelson Mandela through his prison letters, gave the second impetus for the writing of the play. We were surprised at our mutual fascination for this now little-known Egyptian poem.
After the final draft was accepted, Kwame decided early that he wanted Changing Destiny to be the first play the Young Vic performs as it comes out of lockdown, a play that matches the strangeness of emerging from the long period of isolation with the magic and strangeness of an ancient world. But it has proved as difficult coming out of lockdown as going into it. The production suffered cancellations and postponements and has been a lesson in bringing back theatre in historic times.
From the beginning, though, we were not interested in theatricalising the poem, but in finding an authentic political and ritual drama from it. No play about ancient times can be written that is not a play about today. We can only understand the past through the present. It is the only portal we have. Conversely, we can only understand the present through the past.
The Sinuhe poem reveals profound political tensions in ancient Egypt. It is an indirect account of the assassination of Pharaoh Amenemhat I; and of Sinuhe, implicated in the plot, who had to flee to foreign lands. Contained in the poem are archetypes that have haunted the human imagination.
Prefigured within it are preoccupations with home and exile, with identity, the unknowability of human motives, and those eternal issues of freedom. Right at the heart of the poem is the problem of power, of what to do when an autocratic regime is destroying the fabric of society. Hard as this is to believe, those pyramid-makers had their fingers on the pulse of things that would consume us 4,000 years later.
Ancient Egypt has been marginalised in the story of literature. That ought to change. The tendency in the west has been to begin with the Greeks as if nothing much had been written before. But the writing of Herodotus and Plutarch bears witness to the Egyptian roots of Greek culture, to the notion that the Greeks got some of their gods from Egypt. There is even a fruitful tradition that contends that the ancient Egyptian mystery plays were the real progenitors of Greek theatre.
There are hints in the Greek myths of importations from other cultures. Dionysus has an Asiatic tinge. Many cultures inform the pantheon of Greek gods. In order to overcome enduring Eurocentric tendencies, we need to go back to the ancients to see how myths and mysteries spread from one centre to another. It should cure us of the notion that the roots of western civilisation come from only one place.
The migration of gods and cults and peoples is hard-wired into the story of civilisation itself. “The Tale of Sinuhe”, for this reason, ought to induce in us cultural humility and a sense of wonder. It ought to be widely taught in schools and be as well known as Homer’s Odyssey or The Arabian Nights.
Writing Changing Destiny, I wanted to bathe the audience in this eternal stream. I wanted to divert some of its waters into these divisive times. Whether it be the cruel treatment of migrants at American borders, or the European seas alive with the ghosts of migrants who tried to make it across, or the new immigration bill recently published by the British government, this ancient Egyptian poem, now made into a play, hints that the issue of immigration demands a new way to look at the human story and the human spirit. Not one that demonises out of fear, but one whose understanding comes from the long perspective about the mystery of the human estate.
To August 21, youngvic.org
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China reaffirms plans to beef up oversight of foreign listings
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Beijing reiterated its intention to strengthen oversight of overseas listings on Friday, capping a volatile week during which contradictory policy signals rocked the share prices of Chinese companies.
At its mid-year meeting, the Chinese Communist party’s politburo stated its determination to “improve” the regulatory framework for companies listing shares overseas. It was the first time the politburo, comprised of the party’s top 25 officials, had specifically addressed the issue.
Chinese regulators have been angered by Didi Chuxing’s decision to press ahead with a $4.4bn initial public offering in New York last month, despite their concerns about the ride-hailing group’s data security practices.
Senior party and government officials have subsequently vowed stricter oversight of overseas listings, which will now require clearance from the country’s internet regulator. Didi’s shares have plunged as other Chinese companies cancelled or delayed plans to list outside of the country.
Investor confidence in Chinese tech companies was further dented on Monday when Beijing revealed draconian new rules for the country’s booming private education sector. The share prices of New York-listed tutoring companies collapsed, after which a senior securities regulator sought to reassure financial executives that Beijing was not seeking to ‘“decouple” Chinese companies from US and other overseas markets.
The comments by Fang Xinghai, vice-chair of the China Securities Regulatory Commission, on Wednesday helped stop a broader sell-off of Chinese shares. But they were not enough to prevent a more than 20 per cent monthly decline in US-listed Chinese tech companies.
Chinese officials have shown no sign of reining in their crackdown of the country’s largest tech groups for alleged violations of monopoly and data security laws.
Separately, China’s transportation ministry on Friday signalled an intensification of the measures against Didi and other ride-hailing groups. It said in a statement that companies in the sector must improve compliance over network and data security management to better protect customers’ personal data. Stronger supervision of antitrust practices, as well as improved rights of workers in the sector, was also needed, it said.
The statement did not name specific companies but noted that the government’s transport sector oversight is being directed by President Xi Jinping.
The Chinese government is conscious that the campaigns against tech and education companies could dent already fragile private sector confidence as the government tries to boost slowing economic growth.
Liu He, a Chinese vice-premier and the country’s top economic and financial official, sought to reassure representatives of small and medium-sized enterprises on July 27, acknowledging that they were the “main source” of employment. “The Chinese economy will do well only if SMEs do well,” he added.
While China has rebounded strongly from the Covid-19 pandemic, officials have been concerned by slowing infrastructure investment — an essential driver of the world’s second-largest economy. The politburo suggested it would encourage more fiscal spending and local government debt issuance to accelerate economic growth.
The Chinese government has also struggled to contain a new outbreak of Covid-19’s Delta variant, which has spread across the country from an airport in eastern China.
Additional reporting by Edward White in Seoul
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