Tuesday 7 April 2020 ★ FINANCIAL TIMES 3
CO R O N AV I R U S
DAV I D S H E P PA R D— E N E R GY E D I TO R
G20 oil ministers are to hold an emer-
gency meeting this week following a
push by Saudi Arabia and the Interna-
tional Energy Agency as they try to sup-
port an industry shaken by the corona-
virus pandemic.
With millions of jobs and global eco-
nomic stability at risk, Fatih Birol, head
of the IEA, told the Financial Times that
Friday’s talks aimed to find a way to pro-
tect energy markets during the crisis.
The meeting would mark the first
time the G20 has specifically convened
to address energy issues, showing the
depth of concern about the oil crash.
“There is a huge structural overhang
of supply in oil markets caused by the
coronavirus crisis,” Mr Birol said.
“It is coming to a level where it will
have significant implications for the sta-
bility of the global economy and mil-
lions of workers employed in the oil and
gas industry. The main task [of the G20]
is to provide and maintain the financial
and economic stability of global mar-
kets so it is perfectly in line with their
remit.”
Global oil demand has fallen by more
than a quarter as countries have
grounded flights and brought in lock-
downs in an effort to combat the virus.
This has led to a crash in prices thatthreatens to cripple a global industry.
Brent crude hit an 18-year low of $
last week, before rising to above $30 on
hopes producers would reach a deal.
US president Donald Trump has
called on Saudi Arabia and Russia to
find a way to cut oil production by at
least 10m barrels a day, asking them to
pull back from a price war that began
last month after they fell out over how to
respond to the drop in demand. The two
countries, which had previously collab-
orated through the so-called Opec+
group, are due to meet on Thursday, but
remain at loggerheads.
Both have insisted that other coun-
tries including the US — the world’s topoil producer — must also cut output.
Saudi Arabia, Opec’s largest producer
and the holder of the rotating G20 presi-
dency, has come under pressure from
Washington in recent days. The drop in
crude prices threatens the future of the
US shale industry and Mr Trump has
threatened tariffs on Riyadh’s oil sales if
it does not reduce production.
A statement from US energy secretary
Dan Brouillette said the US would join
the G20 meeting, and that he had spo-
ken to Saudi energy minister Prince
Abdulaziz bin Salman “about ongoing
challenges and instability in global oil
markets”.
It added: “The secretary reiteratedthat what began as a dispute between
Saudi Arabia and Russia has major
implications for the United States and
the world. To that end, the two energy
ministers agreed to continue this dia-
logue through a G20 energy ministers
meeting in the near future.”
The US has given no indication it will
cut output, but it is forecast to fall
because prices have dropped. Analysts
have suggested this could be offered as a
token commitment to a broader deal.
Mr Birol said he expected large oil
producers within the G20 group to con-
sider reducing production to tackle a
supply glut that is at least 25m b/d in
size. That threatens to overwhelmstorage capacity within weeks and could
lead to forced shutdowns of oilfields.
Large oil consumers without their
own substantial domestic production,
Mr Birol said, could consider buying
surplus oil to fill strategic stocks in an
effort to help stabilise the market.
Mr Birol said the problem was too big
for Saudi Arabia and Russia to handle
alone, arguing that even if they cut by
10m b/d a day — about 10 per cent of
pre-crisis demand — the market would
still be so oversupplied that prices
would continue to crash.
“Even if there was 10m b/d of cuts in
our view we could still see a building of
stocks of 15m b/d,” Mr Birol said.S O N G J U N G - A— DA E J E O N
E DWA R D W H I T E— W E L L I N GTO N
J U N E YO O N— S E O U L
For the past month, Noh Hyun-jung has
worked 12 hour days deep inside a sci-
ence park in Daejeon, South Korea,
spending most of her time gluing labels
on to plastic containers for chemical
reagents used in testing for Covid-19.
It is not what the 35-year-old trained
for. She is a highly educated specialist in
systems management, but one of many
technical experts at biotech group Sol-
gent redeployed to jobs on the assembly
line as virus test kit makers struggle to
satisfy a torrent of orders from abroad.
“This isn’t my job,” said Ms Noh, “but
labour is in such short supply so I’ve
been helping out production workers all
day long.”
South Korea has rapidly become one
of the world’s biggest producers of test
kits for coronavirus after its testing of
nearly half a million people helped
bring under control what was for a time
the worst outbreak outside China.
Five Korean biotech groups have won
government approval for the domestic
sale of kits that detect infection with
Covid-19, known as PCR tests. They are
already producing enough kits to test
about 135,000 people a day, according
to the presidential office.
In total, South Korea has 22 compa-
nies producing commercialised
Covid-19 test kits, a number exceeded
only by the US and China, according
to the Foundation for Innovative New
Diagnostics (Find), a non-profit group
that tracks product development.
However, despite planning for rapid
growth and the esprit de corps among
workers, there are signs of strain at the
heart of the test kit supply chain.
Global demand for tests was esti-
mated to be about 700,000 a day in late
March, according to analysts in Seoul.
But it is forecast to rise as much as
seven-fold as the outbreak spreads and
countries including the UK see the wis-
dom of South Korea’s strategy of extend-
ing testing from just patients with
severe respiratory problems to people
who have mild symptoms or none at all.
Seegene, a molecular diagnostics
company in Seoul, has cut back produc-
tion of kits for 60 other diseases to focus
on Covid-19 and is hiring 100 part-time
workers to ease the pressure on its
employees. It is building a new factory
to make the kits, but for now has con-
verted meeting rooms and office space
into production lines.
“Demand from all over the world is
far outstripping our supply,” said Noh
Si-won, Seegene’s strategy direc-
tor. Executives expect the company’s
annual sales will increase nearly ten-
fold to Won1tn ($809m) this year.
So far, more than 110 countries have
sought South Korean testing kits.
Inquiries have come from all quarters:
governments, foreign health authori-
ties, hospitals, laboratories, as well as
multinational companies seeking kits
for employees. Donald Trump, US presi-
dent, last month made a direct appeal to
his counterpart in Seoul, President
Moon Jae-in.Pandemic-sensitive regulations are a
key reason why South Korea has been
able to boost domestic capacity. After
the Middle East respiratory syndrome
epidemic of 2015, Seoul changed the law
to expedite regulatory approvals during
infectious disease outbreaks, enabling
its biotech sector to switch focus quickly
on Covid-19 after reports of the first out-
break in Wuhan in January.
Highlighting the speed at which the
Korean groups moved, Kogene Biotech
began to develop coronavirus test kits
before the country had its first con-
firmed infection in January, using the
genetic test code released by China.
In February, the company won
approval for sale of its test kits within a
week of applying and it produces 10,
test kits a week, each used to test 25 peo-
ple. It plans to triple its output.
But tight supplies of chemicals
required in testing kits is a growing con-
cern at the companies, with problems
emerging in sourcing vital ingredients,
including from the US, according to sev-
eral of the Korean groups and an indus-
try association.
“We are running low on raw materials
due to temporary delay of imports from
abroad,” said Kim Kwang-chul, an offi-
cial at BioSewoom, a group exporting
kits to Indonesia and the Philippines.
Solgent — which saw 12 months’
worth of sales in March alone — is using
an intermediary to export its kits to
other parts of Asia, Europe and the US,
but many would-be buyers from around
the world are also contacting the com-
pany directly with desperate pleas.
“We are getting more than 200 calls a
day asking about kits... it is hard to
handle,” said Park Sang-jin, a director at
Solgent.
On the company’s production line,
where she is packing kits into boxes, Lee
Mi-hyun, 30, said: “We are working
overtime for three hours almost every
day and coming to work on weekends
because we have to produce more... It
is tiring, but I am happy that our exports
are growing so much.”C O U RT N E Y W E AV E R— WA S H I N GTO N
The slide image was stark — a chart of a
tall blue mountain that showed the US
facing a potential 2.2m deaths from
coronavirus, unless certain measures
not taken. Yet the voice delivering the
messagewascalm.
“I know it’s a lot to ask because you’ve
done it for 15 days,” Deborah Birx said,
as she urged Americans to stay at home.
“There’s no magic bullet. There’s no
magic vaccine or therapy. It’s just
behaviours.”
Dr Birx, co-ordinator of the White
House coronavirus task force, is an
immunologist and army colonel,
becoming a near-daily presence on US
television. She has appeared alongside
Donald Trump in the US president’s
daily briefings, standing poker-faced as
he attacks his usual targets, ranging
from certain US governors to the media.
As the crisis intensified, she has bec-
ome a household name, along with
Anthony Fauci, director of the National
Institute of Allergy and Infectious Dis-
eases, who has worked with Dr Birx
since he was her mentor in the 1980s.
Yet they have differing public profiles.
Dr Fauci has been cheered by leftwing
commentators for his gentle corrections
of Mr Trump’s public statements. This
has made him an object of suspicion in
parts of the conspiracy-minded right.
Dr Birx, though, has been criticised by
the left for her praise of the president.
It is an illustration of how views on
coronavirus, like much else in the US,
have become divided on partisan lines.
But it also points to the contrasting roles
Dr Fauci and Dr Birx play in the crisis.
Dr Birx is a political appointee of
Barack Obama who has held on to her
role and serves at Mr Trump’s pleasure.
Dr Fauci, by contrast, is a civil servant.
“Debbi is the human side,” said José
Esparza, a Venezuelan-American epid-
emiologist for HIV-Aids, who worked at
the World Health Organization. “She is
compassionate. She connects with peo-
ple. Tony is used to scientists. Debbie is
on the ground.”
Paul Zeitz, an epidemiologist who
worked with Dr Birx at the state depart-
ment, said she was skilled at navigating
rival partisan groups and inter-agency
bureaucracy and p rocurement systems.
“She knows how to walk that tight-
rope,” he said. “Having her have a seat at
the table and influence what is happen-
ing is much better than the counterfac-
tual of having her not be there.”
Known for her trademark silk scar-
ves, Dr Birx, 64, was a leading HIV
researcher, appointed by Mr Obama tohead the $85bn President’s Emergency
Plan for Aids Relief, or Pepfar, one of the
top public health jobs.
Colleagues said she got the job
because of bipartisan relationships on
Capitol Hill, as well as powerful allies,
including past presidents.
Under this administration, she estab-
lished a relationship with Mike Pence,
vice-president, who asked her to lead
the virus task force in late February.
While allies cheered her appoint-
ment, some have expressed concern
about her praise of the president. She
was criticised for claiming at a briefing
last month that there was no “evidence”
yet of a shortage of ventilators, despite
media reports to the contrary, and for
not correcting some of the false state-
ments made by him. She told the Chris-
tian Broadcasting Network Mr Trump
was “so attentive to the scientific litera-
ture and the details and the data. I think
his ability to analyse and integrate data
that comes out of his long history inbusiness has really been a real benefit.”
In late March, when Mr Trump
announced he wanted the country to
reopen for business by Easter, Dr Birx
told NBC that he was “very focused on
what the American people need, both
economically and public health-wise”.
By contrast, Mr Fauci, 79, has been
more blunt, noting to Science Magazine
that he could not “jump in front of the
microphone and push [Mr Trump]
down” when he made a false statement.
Dr Zeitz noted that Dr Birx and Dr
Fauci had different relationships with
the president. “Tony is going back and
forth to NIH [National Institutes of
Health] and doing vaccine research.
She’s there 24/7. Clearly, she was trying
to ingratiate herself with the leadership.
Everyone knows that’s what you have to
do with this president.”
This strategy, he said, seemed to have
paid off for now. Last week, Dr Birx and
Dr Fauci presented Mr Trump with
their projections, which showed an acc-
eleration of Covid-19 infections and pro-
jected fatalities, were social distancing
guidelines to be lifted early. “He looked
at [the models]... and said, ‘I guess we
got to do it’,” Dr Fauci told CNN.
Mitchell Warren, executive director
of Avac, the aids prevention group, who
has known Dr Birx for almost 20 years,
said despite concerns about her praise
of the president, she was probably a risk
worth taking.
“I do actually believe at the end of the
day that Dr Birx and Dr Fauci are willing
to sacrifice their reputation if they do
believe that public health will be pro-
tected and win out, ” he said.N A J M E H B OZO R G M E H R— T E H R A NIran has unveiled a package of state-
backed loans to support the poor and
boost consumer spending as the gov-
ernment prepares to ease some of the
work restrictions it imposed to contain
coronavirus.President Hassan Rouhani said the
measures would include guaranteeing
bank credit of 10m rials ($238) to 23m
families — most of the population — and
low-interest rate loans up to 20m rials to
lower income households.
The package was launched a day after
Mr Rouhani ordered a reopening of
businesses that it considers to be low or
average risk in terms of spreading the
virus. This will initially apply to all prov-
inces outside Tehran from Saturday.
The same restrictions will be lifted in
the capital a week later.
“To stay home remains a principle,
but we are in such a situation that we
cannot say businesses should not work
at all for a long time,” Mr Rouhani said.
“We cannot put aside social distancing,
but should make it smart. If hygienic
issues are not observed, we might fall
into difficult conditions again.”
Many businesses took this as a green
light to start returning to normal life
with Tehran’s highways and metro sta-
tions packed yesterday.
Iran has been one of the countries hit
hardest by the pandemic, recording
about 65,500 confirmed cases and more
than 3,700 deaths.But the government has been reluc-
tant to impose a full lockdown because
of concerns about the impact on the
economy, which was already devastated
by US sanctions. The economy con-
tracted 9.5 per cent last year, according
to the IMF, as the sanctions caused oil
exports to fall from 2.8m barrels a day in
May 2018 to a few hundred thousand.
The coronavirus outbreak is expected
to lead to a further fall in output and
increase joblessness in a country
already struggling with a 17.8 per cent
youth unemployment rate.
With diminishing resources, the gov-
ernment is desperate to maintain social
stability after sporadic anti-regime pro-
tests over the past two years.
Mr Rouhani said the government,
which has requested a $5bn loan from
the IMF, had borrowed $1bn from the
country’s sovereign wealth fund to help
in its battle against Covid-19.
“This $1bn and the bank credit are to
help ease the recession and the poverty
of a few million people who will soon
face a choice between death by starva-
tion or a possible death by coronavirus,”
said Saeed Laylaz, an Iranian economic
analyst. “People’s health is now tied up
to the economy. The poor people in the
suburbs of big cities are like a time bomb
who will surely choose coronavirus to
starvation.”
Families accessing the government-
backed 10m rial bank loans will repay
the debt over two years through deduc-
tions from state benefits.G20 oil ministers to hold emergency talks
Shocks to world demand compel international forum to debate cutting production and supporting prices
Redeployment.Foreign orders
South Korea struggles to meet global demand for test kits
Soaring interest in Covid-
diagnostic products puts
huge strain on supply chain
Iran
Tehran hands loans to poor
and begins to ease work curbs
White House
US task force chief looks to calm angst while fending off critics
At full stretch:
a production
line at Seegene.
The company
is hiring 100
part-time
workers to ease
pressure on
employees
Lee Jae-WonDeborah Birx:
as the crisis has
intensified, she
has become a
household name
but has been
criticised by
the left for her
praise of
the president
Patrick Semansky/AP‘We are
running low
on rawmaterials
due totemporary
delay ofimports
fromabroad’
South Korea is third biggest
producer of tests
Number of companies producing
commercialised Covid- test kits*Sources: Find; FT researchChina
US
South Korea
Singapore
Germany
UK
Spain
Canada
Italy
Vietnam
* Number of companies that have reported
their work on testing products to Find; the FT
has not verified tests. ‘We are
gettingmore than
200 calls aday asking
aboutkits. It is
hard tohandle’
APRIL 7 2020 Section:World Time: 6/4/2020 - 18: 34 User: john.conlon Page Name: WORLD2 USA, Part,Page,Edition: USA, 3, 1