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SpaceX to layoff 10 percent of workforce



(Reuters) – Elon Musk’s rocket company SpaceX will reduce its workforce by about 10 percent of the company’s more than 6,000 employees, it said on Friday.

FILE PHOTO: The SpaceX headquarters is shown in Hawthorne, California, U.S. September 19, 2018. REUTERS/Mike Blake

The company said it will “part ways” with some of its manpower, citing “extraordinarily difficult challenges ahead.”

“To continue delivering for our customers and to succeed in developing interplanetary spacecraft and a global space-based Internet, SpaceX must become a leaner company. Either of these developments, even when attempted separately, have bankrupted other organizations”, a spokesman said in an email.

In June, Elon Musk fired at least seven people in the senior management team leading a SpaceX satellite launch project, Reuters reported in November. The firings were related to disagreements over the pace at which the team was developing and testing its Starlink satellites.

SpaceX’s Starlink program is competing with OneWeb and Canada’s Telesat to be the first to market with a new satellite-based internet service.

The management shakeup involved Musk bringing in new managers from SpaceX headquarters in California to replace a number of the managers he fired in Seattle.

Last month, SpaceX launched its first U.S. national security space mission, when a SpaceX rocket carrying a U.S. military navigation satellite blasted off from Florida’s Cape Canaveral.

In December, the Wall Street Journal reported that SpaceX was raising $500 million, taking its valuation to $30.5 billion.

The Hawthorne, California-based company had earlier outlined plans for a trip to Mars in 2022, to be followed by a manned mission to the red planet by 2024.

Another Elon Musk company, electric car maker Tesla Inc, said in June it was cutting 9 percent of its workforce by removing several thousand jobs across the company in cost reduction measures.

Reporting by Kanishka Singh and Supriya Roy in Bengaluru; Editing by Rosalba O’Brien and Sandra Maler

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In Papua New Guinea, Exxon’s giant LNG project fuels frustration




PORT MORESBY (Reuters) – From her red-roofed home near Papua New Guinea’s capital of Port Moresby, Isabelle Dikana Iveiri overlooks a giant plant used by Exxon Mobil Corp to liquefy billions of dollars’ worth of natural gas before it is shipped to Asian buyers.

A man holding a machete walks with his son and wife as they collect firewood in front of two Liquefied Natural Gas (LNG) storage tanks at the ExxonMobil PNG Limited operated LNG plant at Caution Bay, located on the outskirts of Port Moresby, Papua New Guinea, November 19, 2018. Picture taken November 19, 2018. REUTERS/David Gray

Dikana Iveiri can also see swaths of muddy shoreline, where mangroves have been felled for firewood by locals who don’t have electricity, gas, or money to buy either.

The $19 billion Exxon-led PNG LNG project was supposed to be a game-changer for PNG, a vast South Pacific archipelago beset by poverty despite its wealth of natural resources.

But much of the promised riches, through taxes to the government, royalties to landowners and development levies to communities, have arrived well below Exxon’s own commissioned forecasts, if at all, according to landowners, the World Bank and the PNG government.

“My family has been here a long time,” said Dikana Iveiri, one of several landowners interviewed by Reuters near the PNG LNG plant. “Our royalties are not going well; they are using our land but not paying us properly,” she said referring to both Exxon, which pays the royalties and the government, which distributes them.

Since gas exports began more than four years ago, Dikana Iveiri said she had received just one royalty payment in 2017. She was expecting about 10,000 kina ($2,885) based on information given to her by the government and community leaders. She said she received 600 kina.

Exxon, community leaders and the government did not comment on Dikana Iveiri’s specific situation but in a statement to Reuters, Exxon said distribution of royalties and benefits to the LNG plant site landowners started in 2017. Cash payments to individual landowners would depend on how many landowners were in a precinct and were just one of the benefits communities received, Exxon said. 

The project employs nearly 2,600 workers, 82 percent of whom are Papua New Guinean and Exxon said it has invested $360 million to build infrastructure and pay for training and social programs.

“We could not be more pleased to see how the benefits are flowing to the communities at the LNG plant site, to see how investments are being made in important infrastructure such as schools and health that demonstrates the process is a good one and it works,” ExxonMobil PNG Managing Director Andrew Barry told a mining and energy conference in Sydney in December.

Barry said Exxon was hoping royalties would begin flowing in the pipeline and upstream areas “in the not too distant future”.

The government admits it has made mistakes.

PNG Prime Minister Peter O’Neill, who was part of the government but not the leader in 2009, said many of the disputes around PNG LNG stemmed from the way the government and Exxon proceeded with the project without first resolving landowner claims.

“It should have been done before, it wasn’t only for Exxon and the partners but even the government at the time did not do the proper clan vetting, proper identification of the land owners – they allowed this project to go on without that,” O’Neill told Reuters.

Treasury, the treasurer, and the Prime Minister’s spokesman declined to provide responses to Reuters’ questions about the project.

(GRAPHIC: ExxonMobil’s LNG facilitie –


PNG LNG was completed ahead of schedule and exported 8.3 million metric tonnes in 2017, compared to its anticipated design capacity of 6.9 million tonnes, according to the project’s website.

Exxon does not disclose the project’s revenue or profits but research house Morningstar estimates it has generated $18.8 billion in revenue for Exxon and its partners since production started in 2014.

The project’s break-even price of around $7.40 per million British Thermal Units (mBTU) compares favorably to an average over $10/mBTU for eight recent gas projects in the region, according to analysis by consultancy Wood Mackenzie and Credit Suisse.

“The plant capacity has performed phenomenally,” Credit Suisse analyst Saul Kavonic told Reuters. “On cost, it’s much lower than peers … it’s got an ample resource base and it’s got a well-disciplined operator in the form of Exxon.”

The project’s contribution to Papua New Guinea’s economy and government finances is less clear.

PNG’s Treasury does not report project income figures, but government budget papers show tax revenue flowing from PNG LNG has been well below expectations.

In its 2012 budget, the PNG government estimated it would receive $22 billion in revenue over the project’s life to 2040.

In November, the government slashed its revenue forecast in half to $11 billion over the life of the project.

It identified 11 tax concessions, which along with a drop in gas prices, amounted to hundreds of millions in kina in annual revenue forgone.

A 2017 World Bank analysis found the project partners had negotiated favorable methods of calculating royalties to the government that allowed them to take various deductions. 

Combined with tax concessions, the project created “a complex web of exemptions and allowances that effectively mean that little revenue is received by government and landowners,” the World Bank said.

Exxon did not respond to questions regarding the World Bank findings and the World Bank declined to provide further comment.

Exxon’s partners, which include Australian-listed Oil Search Ltd and Santos Ltd, and a subsidiary of Japan’s JXTG Holdings Inc, referred Reuters’ questions to Exxon.

Exxon said in a statement to Reuters the project has generated 5 billion kina in revenue for the government and landowners via taxes, royalty and benefit payments. The figure includes revenue to the PNG state-owned stakeholders.


A second LNG project, Papua LNG, led by France’s Total with Exxon and Oil Search as minority partners, is scheduled to finalize an agreement with the PNG government in early 2019.

Papua LNG, a new gasfield using the same but expanded processing plant, could commence production as soon as 2024, according to Total. Analysts estimate it will cost around $13 billion.

“The experience of the first project developed by Exxon and Oil Search, there was some criticism, some mistakes,” Total CEO Patrick Pouyanne told Reuters in an interview in Port Moresby, referring to relations with landowners.

“Some lessons (are) being taken out … around the management of landowners and trying to engage at an early stage with them.”

Total has agreed to an undisclosed annual minimum payment to the government and to reserve some gas for local industry, he said.

Exxon did not respond to requests for comment on Pouyanne’s statements.

In its statement, Exxon acknowledged that “distribution of royalties and benefits in some project areas were delayed since the start of production due to court action by a small number of landowners which prevented the relevant government departments from completing their administrative processes.”

Exxon said it was committed to assisting the government ensure landowners receive royalty and equity dividends as soon as practicable.

Disputes have broken out within communities near PNG LNG facilities as landowners fight to have their claims recognized.

Some clashes have been fatal, said Highlands clan leader Johnson Tape, one of 16 clan leaders with a claim over the Komo Air Field, used by the Exxon project.

“Our clans fought each other, but now there is peace; we are one team fighting Exxon,” said Tape.

Christopher Havieta, the governor of Gulf Province, where gas fields for the new project are located, said locals wanted to avoid the experiences of Exxon’s PNG LNG.

“It was a foundation project and so a lot of exemptions were made and the end result is we have a lot of social problems that have risen up.”

Reporting by Jonathan Barrett and Tom Westbrook in PORT MORESBY; Editing by Lincoln Feast.

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Brexit WARNING: Mark Carney says markets think EU exit could be DELAYED | City & Business | Finance




The pound clawed back losses immediately after it was revealed the Prime Minister’s divorce deal had been rejected by a record-breaking 432 votes to 202 in the Commons. Sterling had steadily weakened during the run-up to the vote by this morning had soared through the €1.130-mark. As of just before 11am, the pound has edged down slightly to €1.1278. Against the US dollar, Sterling is trading at $1.2861.

Mr Carney spoke out about the pound making a remarkable recovery today as he addressed a hearing with MPs on the Treasury Select Committee.

He suggested Sterling was reflecting expectations from investors over Brexit being delayed by extending Article 50 or falling possibility of Britain leaving with no deal at all.

He said: “There was a sharp rebound in Sterling following the vote and public market commentary, consistent with our market intelligence.

“That rebound would appear to reflect some expectation that the process of resolution would be extended and that the prospect of no deal may have been diminished.”

Mr Carney stressed he was not giving his opinion, but the “market’s initial take”.

He added: “The markets, like the country, is looking to Parliament for direction and one could expect continued volatility.”

This evening will see Mrs May battle to save her status as Prime Minister as she braces for a vote of no confidence launched by Labour leader Jeremy Corbyn.

But his hopes of toppling the Government could be short-lived as the DUP Westminster leader Nigel Dodds said his party, who currently prop up the Conservative minority, would back Mrs May.

Meanwhile, UK inflation was revealed today to have fallen to the lowest level in almost two years, according to the Office for National Statistics (ONS).

The rate of Consumer Price Index inflation was 2.1 percent in December, down from 2.3 percent in November.

December inflation came within touching distance of the Bank of England’s target of two percent.

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British companies warn that Brexit uncertainty is taking an economic toll




Furious companies facing weeks more uncertainty over an ever closer Brexit lashed out at politicians on Wednesday, and warned of chaos at ports and catastrophic job losses if Britain failed to secure a withdrawal deal with the European Union.

British lawmakers rejected on Tuesday a Brexit agreement that would have secured tariff-free trade and safeguarded the just-in-time cross-border supply chains on which many manufacturers and retailers depend, risking the country’s disorderly departure from the bloc on March 29.

Companies ranging from Channel Tunnel operator Eurotunnel to Scotch whisky distillers were unanimous in calling for urgent and decisive action by the British government and warning of the consequences of a no-deal Brexit.

Two-year recession possible

“The distortions would be too great for trade, financing conditions and investor confidence,” said Deutsche Bank CEO Christian Sewing at an event in Berlin, predicting a disorderly Brexit would plunge Britain into recession for at least two years and lop a half percentage point off economic output for the remainder of the EU.

The imposition of customs checks on every truck crossing the English Channel could lead to tailbacks stretching 130 kilometres from London to the port of Dover, Jens Bjorn Andersen, the head of Danish freight company DSV warned.

The port handles 17 per cent of the United Kingdom’s goods trade. Up to 10,000 trucks a day pass through with everything from perishable food to medicines.

In case of problems at Dover, logistics giant Deutsche Post said it had opened an office in the English port of Southampton and had 450 customs specialists advising clients.

It has spent 12 months planning for a no-deal Brexit, but without any clarity on Britain’s next steps cannot put any of those plans in place, it said.

“We are relying on a decision by the United Kingdom,” said Deutsche Post, which employs 54,000 people in Britain.

Germany’s chemical and pharmaceutical industry association (VCI) called for interim solutions to avoid a chaotic Brexit, in particular measures to ensure the supply of medicines.

“A disorderly Brexit would create such a complex situation that it is impossible for companies to prepare for all eventualities,” said VCI Managing Director Utz Tillmann.

Belgium’s finance minister warned Belgian companies on Wednesday to step up their plans for Brexit, with figures showing only one in five are ready for the customs arrangements that could apply for trade with Britain.

LTO Nederland, which represents Dutch farmers and agricultural producers who export goods worth more than$12 billion Cdn. annually, said unhindered trade was crucial.

Britain voted to leave the EU more than two years ago but the details of how that’s going to happen have yet to be worked out. (Henry Nicholls/Reuters)

Its members were discussing with customers and partners how best to prepare and “spread the pain over the chain.” It urged the Dutch government to offer practical solutions.

“Whether it be manufacturing, agriculture or services, across the piste we rely on trade. We don’t have a massive domestic economy. The reason a no-deal Brexit is so scary is because tariffs on everything are highly punitive under WTO (World Trade Organization) rules,” said Andrew Jackson, head of fixed income at fund manager Hermes Investment Management.

John Allan, president of the Confederation of British Industry and chairman of supermarket group Tesco, told BBC Radio that those thinking they could ditch the free trade agreements Britain has with the EU and renegotiate from scratch were living in “cloud cuckoo land.”

Looking at the wider British economy, Swiss ground services and cargo handling business Swissport Group warned a disorderly Brexit could further tighten the British job market. The pressure has ramped up since the 2016 referendum, with fewer EU candidates seeking to work in the UK.

Executive vice-president EMEA Luzius Wirth said some airports were already experiencing a workforce shortage, driving up labour costs by as much as 10 percent in parts of the country, with workers able to negotiate higher salaries.

British Prime Minister Theresa May must now speak to senior parliamentarians to find a compromise that would avoid a no-deal Brexit or consider another referendum on EU membership.

The opposition Labour party’s finance minister-in-waiting, John McDonnell, said May could eventually get a deal through parliament if she negotiated a compromise with his party.

Share prices were spared heavy losses on Wednesday as analysts said the risks of further deadlock were already priced in. Some UK bank stocks even gained slightly, suggesting optimism for a parliamentary compromise over Brexit, according to some investors including David Roberts, co-manager on the Liontrust Strategic Bond fund.

“Global investors now believe the chances of a ‘hard’ economically damaging Brexit have receded … There is still a long way to go, but hopes of a mutually beneficial solution are growing,” he said.

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