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The China Signal - July 28
Chinese co. wins contract to monitor Bolivia telco network, Nicaragua concludes FTA
G’day, and welcome to The China Signal. This week, Chinese satellite service provider Piesat wins contract to monitor Bolivia’s telecoms network, Nicaragua concludes free trade negotiations, Argentina mulls using yuan swap line to pay down IMF debt, Brazilian arm of China Three Gorges pulls out of Brazilian IPO, plus more. Read on.
Chinese satellite service provider Piesat won a contract to develop and customize an electromagnetic spectrum monitoring system for Bolivia's telecoms and transportation watchdog, ATT.
Piesat will provide ATT with land resource monitoring services through its Nuva-backed constellation. It is expected to combine 44 radar satellites and 10 optical satellites in its first phase to provide communications, navigation and remote sensing, including monitoring of geological, marine, flood and surface subsidence disasters.
The deadline for delivery of the project is August 29, 2024.
The Regulatory Authority for Telecommunications and Transportation (ATT), is a governmental authority responsible for inspecting, controlling, supervising and regulating the activities and services of the telecommunications and transport industries in Bolivia.
Expanding further on the management and oversight of the project, Executive Director of the Regulator, Néstor Ríos explained that the project:
…is managed entirely by ATT. The acquisition includes the installation of equipment, infrastructure, and the provision of specialized equipment and systems to improve spectrum control and management capabilities.
…ATT has the power to regulate, authorize, control, monitor and coordinate the efficient use of the spectrum, as well as carry out the technical verification of electromagnetic emissions throughout the country.
Upon announcement of Piesat’s US$22.4 million winning bid, the stock closed up 7.6%. The winning bid marks the first time Piesat has been awarded a project to develop a big international monitoring system for the electromagnetic spectrum, according to the firm, as well as the first international remote sensing application order Nuva Constellation system has won. (VV)
~ Prensa Latina is a Cuban state-sponsored media outlet. This article is translated from Spanish ~
Nicaragua's Minister of Development, Industry and Commerce, Jesús Bermúdez, and his Chinese counterpart, Wang Wentao, announced on July 24 the substantial conclusion of the Free Trade Agreement (FTA) negotiations between the two countries.
…The FTA’s signing is expected to take place in August before entering into force in January 2024.
Time is running out for Argentina to secure the next tranche of a $44 billion loan with the International Monetary Fund, which it could use to repay the fund older debt due in coming days.
With both sides saying an agreement on policy steps required to release $4 billion from the IMF loan was close, but not quite there yet, and no liquid currency reserves to tap, Buenos Aires may need to use a swap line with Beijing, again, to make a $3.4 billion payment.
In June, for the first time, Argentina used $1.1 billion in yuan to pay part of its debt to the IMF, for further background, read TCS July 14, 2023. (NRM)
The Brazilian unit of power company China Three Gorges Corp, China Three Gorges Brasil Energia Ltda. (“CTG Brasil”), withdrew from an initial public offering (IPO) in the Brazilian stock exchange, a filing from the securities regulator CVM (Comissão de Valores Mobiliários) showed.
The withdrawal took place at the beginning of May, but the information was only updated in its systems on July 21.
The firm filed for an IPO last November and intended to use its proceeds to pay dividends to shareholders and invest in new renewable energy projects.
CTG Brasil, which hoped to raise $1 billion to invest in local renewable energy projects and pay investor dividends, declined to provide information about the withdrawal.
Founded in 2013, CTG Brasil operates in various regions throughout Brazil and specializes in the generation of electrical power. CTG Brasil has made significant investments in 17 hydroelectric plants and 11 wind farms, resulting in a total installed capacity of 8.28 GW.
Bolivia is now using the yuan to pay for imports and exports, becoming the latest country in South America to regularly use the Chinese currency.
Between May and July of this year, Bolivia conducted financial operations amounting to 278 million Chinese yuan ($38.7 million), which accounts for 10% of its foreign trade during that period.
Banana, zinc, and wood manufacturing exporters are conducting transactions in yuan, as well as importers of vehicles and capital goods, said Economy Minister Marcelo Montenegro. These electronic transactions are carried out through the state-owned Banco Unión.
This news comes just two months after TCS reported that Bolivia's President Luis Arce expressed interest in making the currency change (see TCS June 16). (VV)
Chinese oil refineries, led by heavyweight Sinopec, are set to boost Brazilian crude imports in the third quarter to replace some of the Saudi Arabian supply it cut after the kingdom hiked prices, industry sources said.
China, the world's top crude importer, has booked nearly 1 million barrels per day of Brazilian crude for August and September delivery, several traders said, of which 20 million barrels were purchased by Unipec, an arm of Sinopec, the top Asian refiner.
Also known as China Petrochemical Corporation (“CNPC”), Sinopec is China's largest oil and gas producer and supplier (for further background read TCS April 23, 2022). In 2010, it founded Repsol Sinopec, its Brazilian joint venture with the Spanish company Repsol, where Sinopec holds a 40% minority stake. Repsol Sinopec rose to being one of the largest energy companies in Latin America, with an estimated value of US$17 billion.
Repsol Sinopec announced a $9 billion investment with the Brazilian state oil company Petrobras and the Norwegian Equinor to produce natural gas off the coast of Rio de Janeiro earlier this year (see TCS June 16). (NRM)
The Guyanese government extended the deadline to September 12 for companies to submit bids for its first competitive auction of oil blocks, the government said in a statement on July 26. Reuters reports that:
The South American nation has delayed the offer of 14 offshore blocks four times before. The round is intended to recruit new explorers and lessen the grip over the country's output by a group led by Exxon Mobil.
The consortium also includes Hess Corporation and China National Offshore Oil Corporation (CNOOC). We delved into the consortium's US$12.7 billion investment proposal to develop a new offshore oil field in TCS May 5.
The consortium was also subject to litigation brought by residents ,who accused it of breaching insurance obligations in their Liza-One project. A Guyanese Appellate Court judge temporarily stayed this lower court's order requiring the consortium to provide an unlimited guarantee to cover potential oil spills on June 8. In detail:
The stay lifts a cloud over oil production at the nation's first offshore oil platform. Exxon had said that if the stay was not granted it could halt output at the facility, costing the partners on the project US$350 million per month in lost revenue.
The judge said the group must provide a US$2 billion guarantee in 10 days, or else his stay would be lifted.
Exxon recently agreed to provide the US$2 billion in affiliate guarantees for the offshore operation that goes beyond the original environmental liability coverage, it told the court. (RP)
European Union 🇪🇺
On 17 and 18 July, the European Union (UE) and the Community of Latin American and the Caribbean states (CELAC) held their 3rd Summit in Brussels. The meeting gathered Heads of State and Government of the EU Member States and of the 33 CELAC states for the first time in eight years.
…On this occasion, President of the European Commission, Ursula von der Leyen, announced that Team Europe committed over €45 billion (≈ US$50 billion) to support the reinforced partnership with Latin America and the Caribbean until 2027 under the EU’s new Global Gateway Investment Agenda.
In her opening speech, Von Der Leyen cited “reeling from the heavy toll of the COVID-19 pandemic (...), the Russian aggression against Ukraine, and (...) China's growing assertiveness abroad” amongst the reasons for stepping up the two regions’ collaboration, and the launch of Global Gateway.
At this stage, Global Getaway’s LAC appendix includes over 135 projects “from clean hydrogen to critical raw materials, from expanding the high-performance data cable network to even producing the most advanced mRNA vaccines” that are “already in the pipeline”. More details can be found under the Caribbean area and Latin American countries sections.
The European Commission also signed six Memoranda of Understanding (MoU) with a handful of Latin American partners: Argentina and Uruguay (energy, notably renewables), Chile (sustainable critical raw materials supply chains), and Ecuador, El Salvador and Honduras (cooperation). (RP)
Guyana’s President Mohammed Irfaan Ali arrived in China on July 26 for a one-week official visit to the Asian country.
A statement issued by the [Guyanese] Department of Public Information (DPI), said that Ali would meet with President Xi Jinping and other government officials.
Minister of Foreign Affairs and International Cooperation, Hugh Hilton Todd, Guyana’s Ambassador to China, Anyin Choo, as well as the presidential advisor on investment and business development, Anthony Whyte, are accompanying Ali and the business delegation on the trip.
The Argentine government has inaugurated a new consulate in Chengdu, China. President Alberto Fernández secured approval from Chinese authorities during his visit to China in November last year.
Argentina will have a diplomatic presence in five locations in China: the Embassy in Beijing, the Consulate General and Promotion Center in Shanghai, and three consulates in Guangzhou, Hong Kong, and Chengdu. (NRM)
Taiwan Diplomacy 🇹🇼 🕊️
Taiwan is to continue to deepen ties with Guatemala no matter which candidate wins the second round of its presidential election, the Ministry of Foreign Affairs said yesterday amid tumult following the first round of the Central American ally’s election last month.
Former Guatemalan first lady, Sandra Torres, and Bernardo Arevalo of the Movimiento Semilla [opposition party] received the most votes in the first round of the election held on June 25 and advanced to a second round, which is scheduled for August 20.
Movimiento Semilla has been targeted by the Attorney General’s Office actions in the last weeks, and received a temporary suspension ahead of the second round before the Guatemalan Constitutional court granted it a preliminary injunction blocking that.
Space Exploration 🚀🌕
On July 17, Venezuela became the first country to formally join the China-led International Lunar Research Station (“ILRS”) project. In a joint declaration signed by Zhang Kejian, administrator of the China National Space Administration (CNSA), and Gabriela Jimenez, Venezuela’s Vice President and Minister of Science and Technology, the two countries outlined their commitment to in-depth cooperation on the project.
The two parties' plans to cooperate includes engineering implementation, operations, developing scientific goals, design, scientific and technological experiments, data sharing and analysis, education and training, and more. Under this joint declaration, Venezuela has granted China access to its ground-based stations for space control.
For our background on the IRLS project, see TCS April 24. (VV)