TOTAL Becomes the World's Second Natural Gas Producer

ArticleEnergyJune 26, 2018 - 6:08:55 AM

TOTAL becomes the world's second largest producer of Natural Gas; Beijing devalues the yuan to protect its exports from U.S. sanctions; The trade war could cause the dollar’s fall.

TOTAL becomes the World's Second Natural Gas Producer

Total purchases natural gas assets from Engie SA for $1.5 billion, making the French group the world's second largest gas producer after Royal Dutch Shell Plc.

"Natural gas consumption will increase at a rate of 2% per year, compared to 1% or 1.5% for oil," said Mr Pouyanne, Chief Executive Officer of Total.

China threatened to impose 25% duties on US oil imports in response to US tariffs on Chinese products, but did not mention LNG in its list.

Total also invested $83.4 million to purchase 25% of Clean Energy Fuels Corp, a natural gas and LNG distributor dedicated to transportation, according to REUTERS.

Beijing Devalues Yuan to Protect Exports from US Sanctions

Chinese authorities have called on the country's central bank to resist commercial pressure from Washington. Almost 85% of China's sales to the United States were hit by export duties.

China has announced its first monetary policy easing measures, pledging to stimulate demand for its national currency. The regulator said it would reduce some banks' liquidity reserves by 0.5 points and release 700 billion yuan ($108 billion) to accelerate the pace of debt-for-equity swaps and support small businesses.

The Chinese government's objective is to make Chinese goods taxed by the United States cheaper and therefore more attractive.

"This will help support the country's economy and stabilize financial markets. We have seen an increase in debt defaults and pressures on small business financing," said Wang Jun, chief economist of Beijing-based Zhongyuan Bank, according to REUTERS.

Trade War Could Lead to the Fall of the Dollar

According to renowned investor Peter Schiff, it is likely that the trade war will lead to a fall in the US dollar.

"The idea that a trade war between the United States and China is a good thing for the dollar is completely absurd," the investor said.

According to Schiff, it makes no sense to think that a U.S. trade war or budget deficits will result from a dollar deficit beneficial to the greenback. In reality, the world will be flooded with American currencies.

The investor explains that a surplus of dollars will be caused by the US Treasury bills. "When you hold a treasury bill, you hold dollars. Other than liquidity, there is no real difference between a 30-day Treasury bill and a dollar. Thus, even if in theory the Federal Reserve will reduce its balance sheet, but the truth is that American government will expand its balance sheet. »

According to Mr. Schiff, if the situation continues the supply of dollars will continue to grow, so demand for the U.S. currency will fall and the Fed will not be able to stop this overabundance of the dollar. As a result, it will lead to massive inflation, according to RT.


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