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21. Managing Expectations About Tanzania’s Uncertain Gas Revenues

Author:
Thomas Scurfield and David Mihalyi
Publication Date:
09-2019
Content Type:
Policy Brief
Institution:
Natural Resource Governance Institute
Abstract:
With negotiations between the Tanzanian government and a consortium of companies for a game-changing liquefied natural gas (LNG) project continuing, a decision on whether the project will proceed is still some years away. In this brief, the authors update a previous analysis of the possible outcomes for the LNG project and its potential impact on public financial management. This update accounts for new information and changes in company planning.
Topic:
Sovereign Wealth Funds, Gas, Legislation, Commodities, and Revenue Management
Political Geography:
Africa and Tanzania

22. How Tanzania Can Secure a Good Deal for its Offshore Gas

Author:
Thomas Scurfield and David Manley
Publication Date:
09-2019
Content Type:
Policy Brief
Institution:
Natural Resource Governance Institute
Abstract:
The Tanzanian government and a consortium of companies are negotiating the regulatory terms for a game-changing liquefied natural gas (LNG) project. In this brief, the authors update a previous analysis of some of the key decisions that will be made in the negotiation and their potential impact on whether the LNG project proceeds and the levels of revenues that the project could generate for the government. This update accounts for new information and changes in company planning. There is a reasonable chance that foreign investment in the LNG project will not happen under current conditions. NRGI’s economic model and specific assumptions of the project suggest that a long-term LNG price of USD 11 per mmBtu is needed for investors to earn the return they usually require from LNG projects. Current forecasts by the IMF and World Bank are $7-8 per mmBtu. As the authors discuss in the brief, the chances of investment will shrink further if, during the negotiations, the government increases taxes and requires companies to share a greater portion of the gas with Tanzania’s home market. Government officials could wait and hope that conditions improve, and perhaps then impose stricter terms. However, this would delay the point at which the country would start generating benefits from the project. If officials want to accelerate development, without harming long-term gains for the country, they could: adopt a more progressive tax regime, avoid raising the share of gas to be sold to the home market, and establish a legal framework that both company managers and future generations of Tanzanians will trust.
Topic:
Gas, Regulation, Legislation, Tax Systems, Commodities, and State-Owned Enterprises
Political Geography:
Africa and Tanzania

23. Lessons for Generating Government Revenue for New and Prospective Liquefied Natural Gas Producers

Author:
Thomas Lassourd, Amir Shafaie, and Thomas Scurfield
Publication Date:
12-2019
Content Type:
Policy Brief
Institution:
Natural Resource Governance Institute
Abstract:
The market for liquefied natural gas (LNG) is changing fast, with increasing demand, new sources of supply, and a growing spot market. Over the last decade (2008 to 2018), LNG prices in the three main markets of North America, Western Europe and East Asia have diverged significantly at times, creating arbitrage opportunities for sellers. This briefing presents two case studies of developing countries that have faced challenges in securing public revenue from their natural gas industries. Trinidad and Tobago and Peru offer two examples of developing countries that faced challenges in maximizing government revenue from LNG sales during that time. Although LNG markets are evolving, these examples offer lessons for new and prospective LNG producers, especially in sub-Saharan Africa. A key area (and the focus of this briefing) is the valuation of LNG sales and the corresponding impact on government revenues. Governments should pay close attention to LNG project structure and the long-term LNG sale and purchase agreements between LNG producers and offtakers, especially when they are related companies. Governments should push for these agreements to maximize the price flowing back to the LNG plant and the upstream producer and should favor project structures that facilitate this. In particular, the practice of diverting LNG cargos to more lucrative export markets than the ones initially designated in offtake agreements should be regulated and monitored by governments to balance the financial incentives to LNG sellers with the interests of LNG-exporting countries. This will become increasingly important as the market becomes more liquid and sellers have more options.
Topic:
Government, Gas, Tax Systems, Commodities, and Revenue Management
Political Geography:
South America, Caribbean, Peru, and Trinidad and Tobago

24. The Hudson's Bay Company: Royal Charters, Rivalries and Luxury Hats in the North American Fur Trade

Author:
Jason Saldanha, James Haworth, and Christopher McKenna
Publication Date:
03-2019
Content Type:
Case Study
Institution:
Oxford Centre for Global History
Abstract:
French fur traders Médard Chouart des Groseilliers and Pierre-Esprit Radisson sensed an opportunity in the mid-1650s. During their travels within a North American trade network stretching from Montreal to the Great Lakes, the pair had heard rumours from indigenous Cree communities of a “frozen sea”: a region rich in beaver furs further to the north. The resourceful traders, aware of the European demand for luxury felt hats made from these furs, set out to explore. The two traders were not disappointed upon their arrival at the vast inland sea of Hudson Bay, discovering an abundance of high-quality furs. They quickly identified numerous rivers running from the basin that offered valuable access to the continent’s interior: if a shipping route could be forged from these locations, across the Atlantic and finally to European markets, the Hudson Bay region could re-centre the entire North American fur trade. After failing to obtain French support to establish a trading post in the area – and getting arrested upon their return to Montreal for trading without a licence – Des Groseilliers and Radisson found themselves courting English favour for their venture.
Topic:
International Trade and Finance, History, Capitalism, Commodities, and Trade Liberalization
Political Geography:
United States, New York, Canada, Quebec City, and Global Focus

25. Approaches to Price Formation in Financialised Commodity Markets

Author:
Sophie van Huellen
Publication Date:
04-2019
Content Type:
Working Paper
Institution:
School of Oriental and African Studies - University of London
Abstract:
A recent debate over the financialisation of commodity markets has stimulated the development of approaches to price formation which incorporate index traders as a new trader category in commodity futures markets. I survey these new approaches by retracing their emergence to traditional price formation models and show that these new models arise from a synthesis between commodity arbitrage pricing and asset pricing theories in the tradition of Keynesian inspired hedging pressure models. Based on these insights, I derive testable hypotheses to provide guidance for a growing literature that seeks to empirically evaluate the effects of index traders on price discovery and risk management in commodity futures markets.
Topic:
Markets, Finance, Investment, Commodities, and Price
Political Geography:
Global Focus

26. The Significance of the Tobacco Product Manufacturing to Poland’s Economy

Author:
Grzegorz Poniatowski and Krzysztof Głowacki
Publication Date:
01-2018
Content Type:
Special Report
Institution:
Center for Social and Economic Research - CASE
Abstract:
This report, The Significance of the Tobacco Product Manufacturing to Poland’s Economy, presents the results of the first comprehensive analysis of the impact of tobacco product manufacturing on the Polish economy. The comprehensiveness of the study results from the subject range, covering the sector’s entire value chain: from tobacco cultivation, through processing of raw tobacco and manufacturing of tobacco products, to the distribution and sale of ready products. The report includes an in-depth analysis of current conditions, discusses the challenges facing the sector and attempts to estimate the development of the branches of the economy related to manufacturing of tobacco products in the future. The main purpose of this research was to analyze the economic significance of manufacturing of tobacco products. The economic effect of consumption of tobacco products was only a peripheral element of the research. Conducting such complex research was made possible by advanced methodology. The analytical work was built on three pillars: analysis of existing data, expert interviews and a computable general equilibrium (CGE) model expanded to include production and consumption of tobacco products.
Topic:
Economics, Commodities, Fiscal Policy, Manufacturing, and Tobacco
Political Geography:
Europe and Poland

27. From India to Europe: The Production of the Kashmir Shawl and the Spread of the Paisley Motif

Author:
Ben Skarratt, Scarlett Mansfield, and Christopher McKenna
Publication Date:
08-2018
Content Type:
Case Study
Institution:
Oxford Centre for Global History
Abstract:
In the second half of the eighteenth century, a new garment entered European fashion. Noted for being exceptionally soft, warm, and light, it bore intricate patterns unlike anything Europeans had encountered before or had produced domestically. This product, a woollen shawl, originated in a region that would become so famous for its textiles that its name would pass into Western lexicons as a toponym for its woollen produce: Kashmir. The principal motif found on these shawls, known in India as the Buta, or kairi, would come to be called, in its altered form, Paisley in the West. Not only was the garment practical and aesthetically pleasing, its oriental origins, clear status as a luxury item, texture, and patterning enabled it to permeate European high fashion. Patronage by Empress Josephine of France, and later Queen Victoria, solidified this popularity. By the turn of the nineteenth century, Kashmir and the West regularly traded these textiles. A European industry, aimed at copying Indian originals, also thrived. The next six decades witnessed fervent European consumption of the shawl. This rapid consumption resulted in a host of changes to the production and designs of the garments. While the history of the shawl and its relationship to the West has been subject to distortion, hyperbole, and fiction, recent scholarship has made considerable headway in demystifying information about these products. It is now possible to relate how the Kashmir shawl first came into production, its emergence onto the world stage as a luxury textile, and its status as the principal medium by which the Buta/ Paisley motif entered into the pantheon of historic fashion designs.
Topic:
Economics, Globalization, International Trade and Finance, Capitalism, and Commodities
Political Geography:
Europe and India

28. The Chicago Merchandise Mart: How the World’s Largest Commercial Building Fueled an American Political Dynasty

Author:
Kevin M. Higgins, Oenone Kubie, Courtney Bruno, and Christopher McKenna
Publication Date:
09-2018
Content Type:
Case Study
Institution:
Oxford Centre for Global History
Abstract:
Spanning 4.2 million square feet, two city blocks, and rising twenty-five stories high, the Merchandise Mart – the largest commercial building in the world – stands on the northern bank of the Chicago River. From the merchandising Hall of Fame in front of the Mart, one can watch passing architectural tours admiring the impressive Art Deco exterior of the building. These days, the Mart is home to high-end designers, advertising firms, and, increasingly, tech companies and start-up incubators. Within its vast interior, the industries of the Third Industrial Revolution have taken hold. Yet, when the Mart opened on 5 May 1930, no economic revolution was already established. By the early 1900s, the Second Industrial Revolution had brought assembly lines to factories, and the disassembly line to Chicago’s slaughterhouses, and it had seen electrification, telegraphs, and the railroads span the North American continent. But the revolution was already slowing by the third decade of the twentieth century. What had revolutionised industry in the nineteenth century now served as commonplace and not until well after the Second World War would Americans feel the first stirrings of another revolution as computation, telecommunications, and genetics again transformed the economy.
Topic:
International Trade and Finance, Capitalism, Commodities, Manufacturing, and Economic Development
Political Geography:
United States and Chicago

29. Too Big to Fail U.S. Banks’ Regulatory Alchemy: Converting an Obscure Agency Footnote into an “At Will” Nullification of Dodd-Frank’s Regulation of the Multi-Trillion Dollar Financial Swaps Market

Author:
Michael Greenberger
Publication Date:
06-2018
Content Type:
Working Paper
Institution:
Institute for New Economic Thinking (INET)
Abstract:
The multi-trillion dollar market for, what was at that time wholly unregulated, over-thecounter derivatives (“swaps”) is widely viewed as a principal cause of the 2008 worldwide financial meltdown. The Dodd-Frank Act, signed into law on July 21, 2010, was expressly considered by Congress as a remedy for the deregulatory problems, in that market, that led to the crash. The legislation required the swaps market, subject to U.S. regulation, to comply with a host of business conduct and anti-competitive protections, including that the swaps market be fully transparent to U.S. financial regulators, collateralized, and capitalized. The statute also expressly provides that it would cover foreign subsidiaries of big U.S. financial institutions if their swaps trading could adversely impact the U.S. economy or represent an attempt to “evade” Dodd-Frank.
Topic:
Regulation, Finance, Banks, Commodities, and Derivatives
Political Geography:
North America and United States of America

30. When states meet vegetables: Governing perishable goods in eastern Ethiopia

Author:
Fana Gebresenbet
Publication Date:
05-2018
Content Type:
Working Paper
Institution:
Danish Institute for International Studies (DIIS)
Abstract:
How does the materiality of a particular good impact the way that states govern its trade? In this working paper Fana Gebresenbet, assistant professor at Addis Ababa University, analyses the trading of vegetables – a quintessentially perishable commodity – in Ethiopia’s Somali region state. Based on fieldwork in the region the author proposes a theoretical explaining the relationship between states and commodities in function of the value and relative durability of the latter. Zooming in on the vegetable market in the regional capital Jigjiga, the paper highlights how actors involved in vegetable trading, in particular retailers, govern vegetable trading on the basis of practical norms that have evolved over the year. Trading and accumulation patterns are, however, marked by ethnic entitlements that reflect Ethiopia’s ethnic federalism. This DIIS Working Paper is part of the GOVSEA PAPER SERIES (Governing Economic Hubs and Flows in Somali East Africa) edited by Tobias Hagmann and Finn Stepputat.
Topic:
Economy, State, Commodities, Trade, and Vegetables
Political Geography:
Africa and Ethiopia