The Game: Gas frenemies
Within the portfolio of fossil fuels, liquefied natural gas (LNG) is the least contentious form, so there’s a soaring demand for it.
That’s good for Egypt and its former foe, Israel.
Earlier this year, Egypt agreed to buy gas from Israel. It made sense because Egypt has liquefaction facilities, Israel does not. It was also contentious, given their decades of bitter rivalry; not to mention, Egypt has its own reserves of gas.
But it was a smart move.
Egypt wants to become a Mediterranean “gas hub”. For that to happen it not only needs to produce, consume, and export gas, but import it too, and from multiple suppliers.
This allows it to negotiate best prices. But there are challenges.
Firstly, to make it work, Egypt needs to invest in the necessary infrastructure, and that’s risky given the volatility of gas prices. Secondly, it also needs to aggregate gas not only from rival companies but also countries continually fighting over borders and ideologies.
Israel was a good start.
The Player: Netflix – big money, big problems
According to The Economist, this year Netflix will spend $12bn-$13bn on content. That’s about $3bn-$4bn more than last year. Minds boggle when you start talking billions, so let’s put things into context: that increase alone is more than what the BBC will pay this year for content.
Not so long ago, media giants were using Netflix – a former DVD rental-by-mail company – as a dumping ground for any content past its sell-by date. This year those same media giants are scrambling to make deals with telecommunications companies just to stay in business.
Netflix delivered its first original content – the drama series House of Cards – in 2013. By 2016 it was producing 126 original series or films, more than any other US-based network or cable channel. This year Netflix had more Emmy nominations than any other platform, and won its first Oscar.
The trouble with spending money, is that it costs you. Netflix may be hoovering up subscribers and winning awards, but it has amassed $8.3bn in debt, and admits it will continue borrowing billions “for many years”.
Is Netflix perhaps its own house of cards?
The Move: China’s Chequebook
Of all the heads of nations invited to Johannesburg for this year’s annual BRICS (Brazil, Russia, India, China, South Africa) summit, few would have been more welcomed than China’s Xi Jinping – he wields a hefty chequebook.
Sure enough, the week of Xi’s visit there were announcements of a raft of Chinese investments. What really stole the news though was a $2.4bn (R33.4bn) China Development Bank loan to Eskom, South Africa’s cash-strapped state energy company.
The loan won’t get Eskom out of trouble. According to Bloomberg data, Eskom had R399bn of debt at the end of March. Eskom itself projects that debt may increase to R600bn within four years.
However, $2.4bn is still a lot of money; and Eskom announced gleefully they’re not expected to pay anything back for 15 years.
That sounds awfully generous.
Eskom is rather quiet about other details of the loan, such as interest, and what happens if they can’t repay. South African Deputy minister of international relations and cooperation Reginah Mhaule said, “I don’t think there are strings attached”.
[These articles originally appeared in Issue 10 of Fox Bytes (you can view it here) in the week of 30 July 2018. Growing Foxes is a school strategic intelligence programme designed by mindofafox. It is being piloted in a number of leading schools in the UK and South Africa. Fox Bytes is published weekly to support those students currently engaging with the programme. Click on the logo to find out more]