Chart of the day
>> the saudi prince is partnering with hsbc holdings to invest as much as $400 million in africa that. is amid talks by world leaders on rescuing the continent’s economies. hsbc kingdom africa investment will focus on sub-saharan africa though it will invest throughout the continent. it is a sign of mounting investment in africa by financial companies. governments of the world’s biggest economies are meeting to cut debt owed by african nations and lift trade restrictions that hamper growth in the world’s poorest continents. the prince has a fortune of $24 billion that. according to “forbes” magazine. let’s get more on this. the head of the g-8 summit in scotland and economists at the bank of scotland are taking an active growth. they’re calling for debt relief and aid in the short term. this is the subject of our “chart of the day.” here with details is editor-at-large tom keene. a lot of focus this week on africa. tell us specifically what you those to focus on in the chart.
>> there’s been focus for the past couple of years and it’s been building, building. the u.s. not as enthusiastic. a brill janet eight-page report that looks at bigger picture of the african economy and what his main message is things are not as bad as you think. he says doom and bloom isn’t justified. if we go to the chart, it’s a five-year rate of change. i smoothed it out to a bigger, broader picture. back 40 years. 1960 to 2003. here’s the success of the african economic experiment. then we come down and it really gets grim in the 1980’s and early 1990’s. minimal, minimal growth. we rebounded up.
>> that’s what this is right here?
>> things are tough. we need debt relief, we need aid says one african economist. the 30 year ago message is not the same as the last five to 10 years.
>> can you quantify how much improvement? when you look back long term, this tail end improvement looksed dwarfed. is that the right time frame?
>> the time frame they’re use something a shorter term time frame. they think the doom and gloom of what we had in the 1960’s and 1970’s isn’t applicable now given the real challenges within sub-saharan africa. they make no bones about it. debt relief is needed and aid is desperately needed.
>> some issues have to do with the african nations’ ability to absorb the aid. tell us about this.
>> the jar gone is absorbing capacity. that means throwing billions of aid at any set of nations that can only take so much of that. this is something we have learned with other i.m.f. and world bank experiments through the years. the message is we have to be persistent about our aid, planned about it and not just throwing it all to them in 2006 and 2007.
>> tie it into moral has e hazardss. that’s one issue and controversy that has come up.
>> they bring up moral hazard. that’s an economic phrase from insurance economics which is if you allow somebody a solution to a risk, they’ll take advantage of it. what standard charter is saying is if you have a real moral hazard of debt relief, those nations knowing that it will be solved for them will continue with processes that are not that productive to their social well-being. they’ll continue to do things -- corruption one idea that would not be good. so that moral hazard is a key issue and something every economist is thinking about, whether they’re for lots of aid going there now. i think of jeff sax of columbia saying give the money now or bill easterly saying we need to build up interior incentives to make that aid used better or more efficiently.
>> ok. certainly we’ll watch for headlines outs of the g-8. thank you for giving us that template as we head into that meeting and see what needs to come out of thrfplt we take a quick break. when we come back, the world’s biggest mover. also the latest on world and national news. “after the bell” continues straight ahead.
点击播报
Listen Interview: Synthetic Petroleum
>> as we have been talking about crude oil climbing near $60 a barrel. prices now up 55% from a year ago. syntroleum may stand to benefit. it makes a technology to convert natural gas into synthetic petroleum products such as jet fuel as well as gasoline. even though the company is not profitable, share vs. jumped 35% so far this year. here to tell us more is the chief executive officer, jack holmes. he joins us from tul sarbgs oklahoma. we welcome you to the show.
>> ellen, thank you. it’s a real pleasure to be with you today.
>> lay the groundwork for us. how much is the synthetic hydrocarbon are you already producing?
>> actually very little, ellen. our company is 20 years old. we have been developing this technology, this patented technology that we have. we are currently running a demonstration plant in tulsa, oklahoma, making approximately 70 barrels a day of ultra clean diesel fuel. as of yet we do not have a commercial plant operating.
>> what is the potential? how much can you eventually produce?
>> well, ellen, the sky is the limit for our process. we have identified over 2,500 trillion cubic feet of stranded natural gas around the world. this is gas that has been discovered but doesn’t have a market because of its remote location. if all that gas were converted into our product, into this product, ultra clean diesel fuel it would be over 250 billion barrels or approximately reserves of saudi arabia.
>> let’s make it a little more manageable and touchable for our viewers which is what kind of timeline are you talking about and how much realistically?
>> well, let’s talk about the industry first. in the nation of qatar there are several very large projects underway now that should be able to produce somewhere between 800,000 and one million barrels per day probably over the next five to six years. one of our allies, marathon oil, is active in qatar and negotiating to build one of those plants.
>> kerr-mcgee an marathon license your technology. how much interest are you seeing from the large companies?
>> well, ellen, the very large companies such as exxon, shell and others have their own technology. but the companies we tend to work with are the very large independents and some of the international companies who do not have access to that technology. we are getting quite a bit of interest.
>> give us more sense of that. certainly the context here, we have been talking today and have been talking for weeks about these record high prices for crude. what companies are approaching you now?
>> well, repsol, the spanish company, is a licensee. we’re in contact with some companies in the far east also. one point i’d like to make that people may not realize is one of the problems with high prices today is the lack of refining capacity. our process turns thet aeupb gas into finished diesel fuel or jet fuel, whichever, at the gas field and we’ll not impact the shortage of refining capacity of the world. in other words, we make the finished product right at the field and don’t need refining capacity.
>> let’s switch and talk about your company as an investment. now your company is not profitable, has not been profitable. what kind of timeline are you looking at, are you forecasting in terms of when you may become profitable?
>> we have a very exciting project in nigeria that we’re involved in that includes upstream as well as downstream investment. we’ll have a well drilled this summer there and if it confirms the reserves that we believe are there, we can expect to have positive cash flow as early as 2007 and significant revenue by 2008, 2009. that’s not our only project. we have a number of other projects around the world that we’re working on. that would be the first.
>> what do you mean by significant? what is significant?
>> well, our cash flow could be over $50 million a year by 2007 from our interest in this one project alone. that would come from the early production of crude oil while we’re building and designing and installing our gas and liquids plant that we expect to come online sometime in 2009, 2010.
>> you recently sold shares to legg mason opportunity trust. will you do ordeals like this?
>> ellen, we think we have enough cash in the bank right now to get us through the year 2007 given our current rate of expenditures. once our revenue comes in from the nigeria project we should be in good shape cash-wise. if opportunities come up where we need other capital, we might do that. we’re not actively looking to do that right now. >> thank you for joining us. very interesting.
>> thank you.
>> jack holmes of syntroleum. some economists think conditions have improved in africa over the past decade. that is the subject of “chart of the day.” joining taos discuss this will be bloomberg editor-at-large tom keene.
