Boris Johnson to appeal to Saudi Arabia to increase oil production
Possible Middle East visit by UK prime minister to discuss energy market volatility comes in wake of mass execution
Boris Johnson, UK prime minister, is facing a daunting diplomatic mission this week to persuade a reluctant Saudi Arabia to pump more oil to ease market volatility following Russia’s invasion of Ukraine.
Downing Street said Johnson would be speaking to the Saudis on “a wide range of issues, not just energy supply”, but simultaneously criticised Riyadh over a mass execution at the weekend.
Britain denounced the Saudi execution of 81 individuals on terrorism and related charges on March 13. Foreign Office minister Amanda Milling said the UK was “shocked”.
“No aspect of our relationship with Saudi Arabia prevents us from speaking frankly about human rights,” Milling told the House of Commons, repeating Britain’s strong opposition to the death penalty.
Number 10 refused to confirm whether Johnson would travel to Saudi Arabia this week, but two officials familiar with his plan said Johnson would visit Riyadh to push for more production to offset the loss of Russian oil.
It was not immediately clear whether the trip had been finalised, however. The Saudi government did not immediately respond to a request for comment.
Saudi Arabia has rebuffed US pressure to increase production. The two traditional allies have had icy relations since US president Joe Biden came to office vowing to turn the kingdom into a pariah over human rights concerns. The UK has better relations with King Salman and his son, the crown prince and day-to-day ruler Mohammed bin Salman.
But Saudi officials have argued that their stance on production is unrelated to their dispute with Washington, and that it rests on market demands. They say there is no shortage of oil and raising production might not affect prices while it would reduce their spare capacity.
Since the invasion of Ukraine, Saudi Arabia has publicly repeated its commitment to the Opec+ agreement in which producers agreed a monthly increase of 400,000 barrels a day. Russia is part of Opec+ and Moscow and Riyadh have co-ordinated production levels since late 2016. Gulf states have shown no appetite to divert away from Opec+ since Russian troops invaded Ukraine.
Brent neared its all-time high after the invasion of Ukraine and has since climbed down to $105.
It is uncertain whether Johnson would be able to persuade Saudi Arabia, the world’s largest oil exporter, to change its stance. At a briefing on Monday, a spokesman for the UK prime minister acknowledged there were “no quick fixes”, but added: “We want to reduce volatility.”
Johnson had planned a visit to Riyadh earlier this year but that was called off because of the threat of Russia’s invasion of Ukraine, according to a British diplomat. Unlike Biden, Johnson has courted the crown prince, in part hoping to attract more Saudi investments in the UK and seal a trade agreement with the Gulf Cooperation Council.
If he visits Saudi Arabia this week, the timing will questioned by critics as it would come days after the mass execution.
The interior ministry said many of the 81 people executed had been involved in Isis and al-Qaeda attacks, or worked with the Shia Houthi rebels in Yemen. Anti-government activists claimed that half of the executed men were from Saudi Arabia’s Shia minority.
Last week Liz Truss, UK foreign secretary, said in a speech in Washington that the west needed to end its “strategic dependence on authoritarian regimes for our energy and for other vital resources”.
But Johnson’s expected visit to Saudi Arabia suggests she was referring primarily to Russia rather than Britain’s ally in the Middle East.
Germany to buy US F-35 jets in first big deal since defence budget boost
Move raises questions about future of Europe’s next-generation Franco-German fighter project
Germany will purchase American-made F-35 fighter jets capable of carrying nuclear weapons in its first major defence deal since Berlin’s landmark decision to inject €100bn into the country’s armed forces.
Christine Lambrecht, German defence minister, said the F-35s, made by America’s Lockheed Martin, would replace some of the country’s ageing Tornado aircraft that have been flying since the 1980s. Germany will also upgrade its Eurofighter Typhoon jets for electronic warfare, she said.
The decision to go with the F-35 comes two weeks after the country launched a €100bn military modernisation fund and announced plans to reach a target of 2 per cent of its gross domestic product going on military spending by 2024 in response to Russia’s invasion of Ukraine.
The Tornado is the only German jet capable of carrying US nuclear weapons, which are stationed at Büchel, in the west of the country, as part of Nato’s “nuclear sharing” arrangement.
The news marks an about-turn from the position of Germany’s previous government, which in 2019 had ruled out the aircraft in favour of either more Eurofighters from Airbus, the European group, or Boeing-made F-18s.
Ingo Gerhartz, Germany’s air force commander, said on Monday that it was clear that there could only be “one answer” to Russian president Vladimir Putin’s aggression against Ukraine. “Unity in Nato and a credible deterrent. This in particular means there is no alternative but to choose the F-35,” he said, adding that it was the “most modern fighter in the world”.
The decision, however, raises questions about the future of Europe’s next-generation Franco-German “Future Combat Air System” or FCAS. Paris has previously voiced fears that a German order to buy the F-35 could have made the FCAS project — due to form the backbone of both countries’ air forces after 2040 — redundant.
The programme has been hampered by divisions between the two main industrial partners, France’s Dassault and the pan-European Airbus. Eric Trappier, chief executive of Dassault, said recently that he had taken his engineers off the programme until his company was able to agree a way forward with Airbus and Spain’s Indra on the next steps.
Lambrecht insisted the programme was not in danger, noting that the Eurofighter would be replaced from 2040 with the FCAS. She added that she had reconfirmed Berlin’s commitment to the project to her French counterpart only last week.
Apple Supplier Foxconn in Talks to Build $9 Billion Factory in Saudi Arabia
The kingdom is trying to establish an industrial sector but has struggled to attract foreign investment
Foxconn 2317 -0.97% Technology Group, the biggest assembler of Apple Inc. iPhones, is in talks with Saudi Arabia about jointly building a $9 billion multipurpose facility that could make microchips, electric-vehicle components and other electronics like displays, according to people familiar with the matter.
The Saudi government is reviewing an offer from the company, formally known as Hon Hai Precision Industry Co. , to build a dual-line foundry for surface-mount technology and wafer fabrication in Neom, a tech-focused city-state the kingdom is developing in the desert, the people said. Discussions over the project started last year, they said.
The Saudis are conducting due diligence and benchmarking the offer against others that Foxconn has made for similar projects globally, one of the people said.
Besides Saudi Arabia, Foxconn is also talking with the United Arab Emirates about potentially siting the project there, one of the people said.
The Taiwan-based company has looked to diversify its manufacturing sites amid rising tensions between China and the U.S. that put it in a potentially vulnerable spot.
Riyadh wants the company to guarantee that it would direct at least two-thirds of the foundry’s production into Foxconn’s existing supply chain, one of the people said, to ensure there are buyers for its products and the project is ultimately profitable.
Foxconn is seeking large incentives including financing, tax holidays and subsidies for power and water in exchange for helping set up a high-tech manufacturing sector in the kingdom, the people said, as Saudi Arabia seeks to diversify its economy away from oil.
The Saudis could offer direct equity co-investment, industrial development loans, low-interest debt from local banks and export credits to compete with other jurisdictions that Foxconn might consider, said another person familiar with the talks.
Saudi authorities and Foxconn didn’t respond to requests for comment.
Foxconn has looked to diversify its business beyond Apple products in recent years, including by expanding its activities in EVs. It has joined with auto makers such as Jeep and Chrysler maker Stellantis NV and Los Angeles-based electric-vehicle startup Fisker.
Foxconn has also purchased semiconductor facilities, including one owned by Taiwan-based Macronix International, seeking to become a contract manufacturer of EVs for global brands. Last year it scaled back plans for a liquid-crystal-display project in Wisconsin after agreeing to invest $10 billion and hire 13,000 people to qualify for $2.85 billion in incentives.
The company said last year that it is planning to build an EV project in the Middle East, focusing on software and cloud infrastructure for passenger cars.
Saudi Arabia is trying to establish an industrial sector as part of Crown Prince Mohammed bin Salman’s plans to reshape the economy by establishing new industries to complement oil income as the world transitions to renewable energy.
The kingdom has used its $500 billion sovereign-wealth fund to drive that effort. In 2019, it took a majority investment in Lucid Motors Inc., which recently signed a deal to open its first manufacturing plant outside the U.S. in Saudi Arabia.
As Western companies pulled back from the kingdom after the 2018 killing of journalist Jamal Khashoggi, Saudi Arabia has struggled to reform its business climate to attract foreign investment. It wants to relocate international supply chains to the kingdom and acquire a market share in supply-chain components. But that effort has been complicated by the kingdom’s small domestic market, high labor costs and unpredictable operating environment.
Final Saudi approval for the Foxconn deal rests with Prince Mohammed. He has been pushing for several years for the company to establish a presence in Neom but has faced skepticism over the site’s limited logistics and access to power and water.
Consortium Including Elliott in Advanced Talks to Buy Nielsen Holdings
Deal could value TV-ratings company at around $15 billion including debt
A consortium of private-equity firms including Elliott Management Corp. is in advanced talks to buy TV-ratings company Nielsen Holdings NLSN +40.89% PLC for about $15 billion including debt, according to people familiar with the matter.
Financing talks with a number of banks are progressing and a takeover deal could be completed within weeks, the people said. There is no guarantee there will be a deal, as the talks could still fall apart.
Should there be one, it would be substantial. Nielsen had a market value of $6.2 billion Monday morning and a so-called enterprise value of more than $11 billion, given its hefty debt load of over $5 billion.
Other details, including potential price per share, couldn’t be learned.
For years, Nielsen has been synonymous with measuring U.S. TV ratings, which provide audience estimates that networks use to sell commercial time and reassure advertisers they got what they paid for. But its hold has been loosening as streaming gains steam and traditional broadcast and cable TV lose viewers. While the New York-based company has introduced metrics for streaming in recent years, it is one of many players in that field.
As a result, its shares haven’t performed well. Closing Friday at $17.51, they are down from a high of more than $55 in 2016. They had already been on a downward trend for several years when the pandemic’s arrival in early 2020 caused them to plummet. Though they have regained some ground, they are still trading just below where they were before Covid.
Elliott has owned a stake in Nielsen since 2018, when it called for the company to explore a sale. The following year, Nielsen said it would spin off part of its business to create two separate public companies: Global Connect, a market-analytics operation that measures retail and consumer behavior, and the core media business.
In April 2020, Elliott entered into a settlement agreement with Nielsen in which the company agreed to add a director and form a finance committee on the board that would oversee strategic plans including the separation. Elliott had a roughly 13% economic interest in Nielsen at the time.
Elliott has been increasingly active in private equity, with its private-equity arm, Evergreen Coast Capital Corp., in January agreeing along with a partner to buy cloud-computing company Citrix Systems Inc. for $16.5 billion including debt.
It was the latest in a recent string of big leveraged buyouts as private-equity firms look to deploy mountains of cash they have accumulated.
Should a deal be finalized, it would come as merger volume overall has slowed as a result of market volatility and Russia’s invasion of Ukraine. Global merger activity is down roughly 30% this year compared with the same period in 2021, with roughly $776 billion worth of deals announced, according to Dealogic.
UK looking to extend life of nuclear plant by 20 years amid energy crisis
Sizewell B in Suffolk was due to be decommissioned in 2035 and can meet about 3% of Britain’s electricity demand
The UK is looking at a 20-year extension of the Sizewell B nuclear power plant on England’s east coast to 2055 as Boris Johnson aims to bolster domestic energy supplies following Russia’s invasion of Ukraine.
The extension is one of several options under consideration as the prime minister draws up a new “energy supply strategy”, which will be published next week against the backdrop of highly volatile international gas prices and an escalating cost-of-living crisis.
Johnson’s new approach will not see him cut Britain’s carbon targets, including the plan to reach net zero by 2050, and will see an increase in targets for various renewable energy sources, according to officials.
However, it will also seek to improve security of supply of hydrocarbons by increasing North Sea oil and gas production and potentially keeping some of Britain’s few remaining coal-fired power plants open slightly longer than expected — rather than relying on imports.
Johnson held a meeting with executives from the oil and gas industry on Monday morning where he urged them to increase production. “We have been clear with energy companies and suppliers they have a vital role to play,” Downing Street said.
Britain is set to experience a significant loss in nuclear capacity by the end of the decade as EDF of France and the UK’s Centrica, which own all of the current fleet of reactors, have been forced to close several earlier than planned.
EDF’s 1.2 gigawatt Sizewell B plant in Suffolk, which started operating in 1995 and can meet about 3 per cent of the UK’s electricity demand, is the only one of Britain’s six remaining atomic power plants that will continue generating beyond the end of the decade. Only one new station, the 3.2GW Hinkley Point C in Somerset, is currently under construction. It is due to come on stream in 2026.
Ministers are encouraging investors to build another new plant on a site adjacent to Sizewell B but are also keen for EDF to invest the estimated £500mn-£700mn that would be needed to extend the lifetime of the existing station to 2055.
Kwasi Kwarteng, business secretary, visited Sizewell in January, where he met EDF directors and some of the workforce.
Government officials said Kwarteng was supportive towards EDF, which is “actively exploring” a 20-year extension for Sizewell B and is aiming to take a final decision on the project in 2024, for which UK government approval would be required. “It probably will be extended,” said one official.
Paul Morton, chief nuclear officer at EDF Energy, the UK arm of the French utility, said: “Sizewell B power station is an important national asset that helps deliver clean, independent energy supplies.”
Britain started the decade with just over 9GW of nuclear capacity, which provided about a fifth of the country’s electricity, but that has already dropped by 2GW after EDF was forced to close the 1.1GW Dungeness plant in Kent last summer, seven years ahead of schedule.
Hunterston B in North Ayrshire, which had a capacity of 965 megawatts, closed in January. The 965MW Hinkley Point B plant in Somerset is due to enter decommissioning from July this year.
Energy leaders are also urging the prime minister to fast-track planning processes for clean energy projects and necessary extensions of the electricity grid as part of his strategy.
Keith Anderson, chief executive of ScottishPower, said: “Doubling down on decarbonisation is in the national interest — renewables are already blunting the blow of soaring global gas prices and paying into the UK pot — we now need to turbo charge it.”
US tells allies China signalled openness to provide Russia with military support
State department informs diplomats in Europe and Asia that Beijing reacted positively to request
The US has told allies that China signalled its willingness to provide military assistance to Russia to support its invasion of Ukraine, according to officials familiar with American diplomatic cables on the exchange.
The cables, which were sent by the US state department to allies in Europe and Asia, did not say whether China had signalled that it would help Russia in the future or if it had already started providing military support. Nor did they say at which point in the conflict Beijing appeared open to offering the help.
The Financial Times reported on Sunday that Russia had made the request for assistance at some point after the start of the now three-week invasion.
The Russian offer and Chinese response have sounded alarm bells in the White House. US officials believe China is trying to help Russia while its top officials publicly call for a diplomatic solution to the war.
The Chinese embassy in the US on Sunday said it had no knowledge of any Russian request or positive Chinese response to Moscow. Russia on Monday also denied making any request to China.
A senior US defence official declined to say if China had provided military support after the Russian request, but said the Pentagon was watching the situation “very, very closely”.
“If China does choose to materially support Russia in this war, there will likely be consequences for China,” the defence official said.
The official added: “We have seen China basically give tacit approval to what Russia is doing by refusing to join sanctions, by blaming the west and the United States for assistance that we’re giving Ukraine [and] by claiming they wanted to see a peaceful outcome but essentially doing nothing to achieve it.”
Jake Sullivan, US national security adviser, is expected to raise the issue in Rome today in a meeting with Yang Jiechi, China’s top foreign policy official. Before departing Washington on Sunday, Sullivan said he would warn the Chinese not to attempt to “bail out” Russia, including helping it survive the tough sanctions from the west.
“We will ensure that neither China, nor anyone else, can compensate Russia for these losses,” Sullivan told NBC television on Sunday. “In terms of the specific means of doing that, again, I’m not going to lay all of that out in public, but we will communicate that privately to China.”
Ahead of the meeting between Sullivan and Yang, the Biden administration last week asked European allies to amplify their message to China that Beijing should not help Russia circumvent sanctions, according to one European official.
China has portrayed itself as a neutral actor despite its increasingly close ties to Moscow. But Chinese media and diplomats have offered support for Russia’s justification for the invasion and blamed the US and Nato for the conflict.
Chinese media have also repeated unsubstantiated Russian claims that the US helped Ukraine build biological weapons labs.
Beijing and Moscow have grown closer in recent years, largely due to their shared distain for the US and western military alliances such as Nato. Last month, Chinese president Xi Jinping and Russian president Vladimir Putin signed a joint statement in Beijing that described their increasingly close partnership as having “no limits”.