Coming to you live from NYC where we have the UN General Assembly in session. Today is the official first day of debate. According to UN rules, the debate is to last 9 days, although in recent years, they’ve managed to wrap things up usually in about 7 days.
It’s a crazy time to be in NYC. There is intense security everywhere. Traffic is gridlocked. There are private security firms guarding entire floors in the hotels that are housing visiting delegations. Hotels are incredibly expensive. Restaurants need to be booked well in advance.
There are lots of stories catching headlines, everything from protection of our environment to sustainable development.
This year brings new challenges overshadowing the international dialog. We read stories in the news, we see images on television. They’re a world away and it’s hard sometimes to connect the dots.
The central part of any economic development involves energy. Overshadowing the talks this year is the nuclear negotiation with Iran, and the bombing of Saudi oil production facilities that both UK and the US intelligence have connected directly with Iran. Earlier this year, President Trump seemed ready to try a negotiated approach to dialog with Iran. These drone strikes have cut Saudi Arabia’s oil production in half, representing about 5% of the global production of oil overnight. Iran has also re-started enriching weapons grade materials in contravention of their nuclear treaty. These signs of aggression from Iran are attracting widespread condemnation in the West.
As India’s economy has grown, so too has their appetite for energy. There is a clear and direct linkage between economic activity and energy consumption. For every unit of economic output, there is consumption of an equivalent unit of energy. India traditionally has been a major buyer of Oil from Iran.
If you want to see what is happening in the world economy, have a look at what is happening in the energy sector. That’s where the real stuff is happening.
Prime Minister Modi of India was in Houston this past weekend. This is not a traditional place for an Indian Prime Minister to visit while he is in the US for the UN General Assembly. In fact, Houston is really the center piece of his visit. In addition to a rally that he held for a packed house of 50,000 attendees, he visited with Houston based oil and gas companies. One of those companies is Houston based Tellurian. Tellurian just signed a $7.5B pact with India’s Petronet. The agreement was signed in the presence of Prime Minister Modi. Under this agreement, Petronet will initially spend $2.5 billion for an 18% equity stake in the $28 billion Driftwood LNG terminal. India will have the right to purchase 5 million tons of gas per year under this agreement. To put this in perspective, the US exported 22 million tons of LNG last year. So the deal with India is a big deal.
This is a real estate podcast. Why on earth would I be talking about natural gas? It turns out that I have 4 real estate projects within a 20 minute drive of the future site of the Driftwood LNG facility. When there is economic development on this scale, the people who work there need housing, they need retail, they need hospitals, they need storage, they need workforce housing. They need everything.
As a real estate investor, choosing where to invest is influenced by a number of factors. Some people like to invest close to where they live. If you happen to live in an area where the numbers are compelling for now. But the second you step outside that tiny radius around where you live, why would you go anywhere less than excellent? Why would you choose just good, or decent?
When we look to see what is happening at the UN General Assembly, we want to see what deals are being struck outside the UN headquarters.
