Pensions: Gauging Risk, California's Prop 13 and Corporate Pensions

From Pensions and Investments we get some news on how states are hiring chief risk officers:

Connecticut is joining a growing number of major public pension funds that have appointed chief risk officers since last decade's financial crisis to evaluate volatility, liquidity, leverage, the impact of rock-bottom interest rates and new risks like global warming.

. . . BNY Mellon's Risk View allows clients like pensions and endowments to see how their current portfolio would have performed during periods like the Asian "flu" in 1997, the Russian debt crisis in 1998, the bursting of the dot-com bubble in the early 2000s and the 2008 financial crisis.

. . . Connecticut lowered the rate on the teachers' pension to 6.9% from 8% while extending the amortization period for its unfunded liabilities to 30 years.

Algeria: Elections Scheduled for December 12, 2019

What's the latest in Algeria? Via Reuters (Sept 13), we know that protests continue. We also know that the army is starting to crack down on the protestors:

The 30th consecutive Friday protest also included demands that the authorities release Karim Tabou, a prominent opposition leader who has been held since Wednesday and charged with “contributing to weakening army morale”.

Also, here is a couple pieces of interesting information

Algeria is a key gas supplier to Europe and it is a U.S. partner in its fight against militant Islamist groups in the Sahara and Sahel regions. 

Libya: Why is Turkey interested in Libya, living in fear in Benghazi

Before going into Turkey and Benghazi, what does Reuters have to say about the battle for Tripoli:

“Three fighters allied to GNA from Misrata were killed in the offensive in Tripoli this morning,” the witness from the coastal city, some 200 km (124 miles) east of Tripoli, told Reuters. 

Neither side claimed significant advances.

Basically, no movement has occurred between the GNA and the LNA.

Guyana: Oil Situation

Oil is expected to start flowing from Guyana starting in 2020.

Petroleum Economist has the following update:

Guyana is anticipating the announcement of another major oil find as early as next week, the country's chief investment official said at the SPE Offshore Europe conference.

"GDP is going to double in a matter of 17 months," says Verway. "I do not believe another country in the world has experienced that speed of growth in the last century." In 2018, the country's GDP grew by 3.4pc to $3.6bn, according to the World Bank.

Shale Oil: Budget Cuts and Reasons for Slowing Growth

The Wall Street Journal recently looked into the increase in bankruptcies amount shale producers. Reuters recently looked at what shale producers are doing to try and avoid bankruptcy:

Investment bank Cowen & Co . . . expects total spending this year to fall 11% over last year, based on proposed budgets.

The slowdown in drilling is spurring cost-cutting in oilfield services, including staff cuts and restructurings at top firms Schlumberger and Halliburton Co. Schlumberger plans a writedown yet to be determined this quarter, noting its results in North America have been “under significant pressure,” CEO Olivier Le Peuch said on Wednesday.

In Texas, the center of shale oil production, energy employment dipped 1.8 percent in the first six months of 2019, according to the Dallas Fed. New drilling permits in the state fell 21% in July compared with the same month last year, according to state data.

Shale Oil: Debt finally becoming an issue?

The Wall Street Journal has written various articles on shale. They've repeatedly written about how the shale industry over-promised on production targets.

Now the WSJ gets to take a victory lap of sorts as shale bankruptcies are increasing:

Twenty-six U.S. oil-and-gas producers including Sanchez Energy Corp. and Halcón Resources Corp. have filed for bankruptcy this year, according to an August report by the law firm Haynes & Boone LLP. That nearly matches the 28 producer bankruptcies in all of 2018, and the number is expected to rise as companies face mounting debt maturities.

Private companies and smaller public drillers have been hit hardest so far. Those producers collectively generate a large portion of U.S. oil, according to consulting firm RS Energy Group, and their distress reflects issues affecting all U.S. shale. 

As of July, about $9 billion was set to mature throughout the remainder of 2019, but about $137 billion will be due between 2020 and 2022, according to S&P . . . “A lot of companies are highly levered and facing maturities on their debt that I like to call a murderer’s row, maturities are coming year after year,” said Paul Harvey, credit analyst at S&P.

IMO 2020 Update: September 2019

IMO 2020 is a ruling via a U.N. organization called the International Maritime Organization (IMO) that regulates global shipping. The ruling will cut the sulfur content in maritime fuel from 3.5% to 0.5%. It was first announced in 2008 that this would be going into effect. The target date of 2020 was set in 2016. There is concern about the impact this ruling will have on the cost of shipping and the impact on oil prices.

Back in July, Indonesia backed out of the agreement. Per The Loadstar, they're back on board.

The Indonesian government appears to have made a complete u-turn on its announcement last month to allow its flag-state vessels to continue to consume fuel with a 3.5% sulphur content after the IMO’s 0.5% sulphur cap comes into force on 1 January.

According to Reuters, Indonesia’s ministry of transportation has confirmed that IMO 2020 requirements will apply to “all Indonesian-flagged vessels starting 1 January 2020, both for domestic and foreign shipping”.

Libya: Full Civil War?

I sort of thought that Libya was already in a full civil war, but maybe not. Al Jazeera has the following quote from United Nations Secretary-General Antonio Guterres:

"Unless action is taken in the near term, it is highly likely that the current conflict will escalate into full civil war," Guterres said on Thursday in his latest report on the UN Support Mission in Libya.

"I urge all parties to stop using explosive weapons, including by aerial bombardment or shelling, in populated areas because of their likely indiscriminate effects," the secretary-general said.

"A political solution to the Libyan conflict requires the full and united support of the international community," Guterres said.

"I am concerned by the presence of foreign fighters and mercenaries being employed by parties to the conflict in Libya, as well as by the influx of weapons to the country," he added, calling for strict adherence to an arms embargo in place since 2011.

Call me a little confused, but hasn't Libya been in a full civil war for a very long time. At a minimum, since April when the Libyan National Army (LNA) marched on Tripoli. If this isn't a full blown civil war, let's at least see how LNA's forces are doing across Libya.