Energy

Russian energy sector gets $20bn Chinese lifeline

28 Oct 2008

The Chinese government is helping stateowned Rosneft with a multibillion line of credit, in exchange for a longterm supply contract. Russia s cashstarved energy majors might prefer to rely on their own government. But they need outside help to repay $70bn of foreign debt.

BG may be better off with second best

28 Oct 2008

The UK gas firm has pounced on smaller Australian gas producer Queensland Gas for $3.1bn after it lost out to Conoco for Origin, the bigger prize. But BG´s second option isn t necessarily second best: it has less downstream, and leaves BG less financially stretched.

Oil prices will cause pain – whatever they do

24 Oct 2008

Rapid global and looming recessions mean even Opec s announced cuts may not stop crude from falling. Even if the cartel holds the line on prices, tottering consumption in importing countries could fall further. But cheaper oil would add to financial market strains.

Expect more opportunistic bids among US utilities

20 Oct 2008

The popping of the energy and debt bubbles hit utilities too hard. Many are now valued below replacement cost. Exelon s $6.2bn bid for NRG will be difficult to pull off, but the economics are extremely appealing. There will be imitators.

How does Google’s green push help shareholders?

2 Oct 2008

The search giant has announced a plan to wean the US off fossil fuels clearly a worthy goal. But it could also prove a distraction for the company s executives. Google should consider its shareholders before trying to save the world.

Sacyr garage sale is in full swing

25 Sep 2008

The indebted Spanish company has slapped a for sale sign on several assets, including 20% of Repsol. But selling the holding won t be easy. Buyers look scarce, even if it could be a stepping stone to taking control of the Spanish oil company.

EDF squares British Energy circle – for the brave

18 Sep 2008

EDF s £12.5bn agreed offer for British Energy gives investors just 1% extra in cash, at 774p a share. The CVRs could boost the value to 1275p, but only on heroic assumptions about prices and output. Not instruments for the fainthearted. Many will take the money and run.

Buffett’s MidAmerican swoops in on Constellation

18 Sep 2008

The regulated US utility became a big energy trader. It depended on credit, but rising leverage undermined its rating. That made it vulnerable to the credit crunch. Warren Buffett s MidAmerican rode to the rescue, driving a hard bargain. It probably won t be his last.

Iraq not quite ready to run with Big Oil

9 Sep 2008

It is making a baby step in a deal with Shell. But the government hasn t yet worked out exactly how it will share the oil wealth with foreign oil companies. Meanwhile, these companies have a long way to go before they will feel secure putting money and people into the country.

Opec tries to anchor oil at $100

9 Sep 2008

Saudi Arabia, the cartel s thought leader and swing producer, believes the world can take tripledigit crude. The roundnumber target seemed mad a year ago, but after a spike to $147 and resignation about inflation it looks almost moderate. This line might hold for a while.

Conoco puts BG under high pressure

8 Sep 2008

The US major has offered A$9.6bn for half of Origin Energy s coal gas assets, trumping BG s offer of $14bn for the whole thing. BG isn t out for the count, since it has cash and certainty on its side. But beating Conoco s offer will be costly.

BP has been punished long enough

3 Sep 2008

The oil giant has deservedly underperformed rival Shell for the last two years. But it has worked hard to fix operational problems, and a resolution to the dispute over its Russian joint venture looks likely. What s more, BP is spending less than Shell to deliver higher growth.

GdF Suez beginnings boosted by high energy prices

1 Sep 2008

With operating profit up 20%, the new French energy giant, born in July from the merger between Suez and Gaz de France, can look ahead with confidence. But investors will need more details about the capex plan and the merger s execution before they can form a serious opinion.

Battlefield Georgia serves Russia’s energy goals

14 Aug 2008

Russian planes did try to bomb the BakuTbilisiCeyhan pipeline, the Wall Street Journal has found. By making Georgia unsafe, Moscow wants to make sure Western countries will think twice before trying to bypass Russia for their energy supplies.

Georgia crisis may not stop oil price drop

11 Aug 2008

How much difference a month makes. In July, crude was about to cross $150 a barrel. Then a Caucasus war would have strewn panic in the market. Now, with oil at $115 and sliding, war has only caused a minor tremor. Unless things change, the bull case for oil is in serious trouble.

OMV wakes up to reality

6 Aug 2008

The Austrian oil and gas group has dropped its $23bn bid for Hungary's MOL after getting a thumbsdown from the EU. OMV shareholders will welcome the end of a long and unwinnable battle. But OMV s record of two failed major deals in as many years looks downright sloppy.

EDF might yet square the nuclear circle

5 Aug 2008

The French power group s offer for British Energy was rejected as too low by some of the UK nuclear generator s shareholders. EDF might be able to bridge the gap with a quirky security the contingent value right. Getting the structure right looks tricky, but not impossible.

Nuclear fiasco shows up flaws in UK energy policy

4 Aug 2008

The collapse of the deal between EDF and British Energy is a symptom of a deeper malaise. UK energy policy is becoming increasingly dysfunctional. That s primarily because the country has drifted into a publicprivate entanglement which hampers longterm policy making.

Centrica’s hand looks weak in British Energy deal

4 Aug 2008

The owner of British Gas might covet a merger with the UK s main nuclear power operator. But it can t pay cash and a paper bid isn't likely to succeed. The trouble is, a backseat role in EDF s rebuffed approach to British Energy doesn t offer a solution to Centrica s problems.

British Energy price demands are unrealistic

1 Aug 2008

The UK nuclear group rejected EDF s £12bn bid as being too low after last minute pressure from shareholders. A higher price relies on heroic assumptions about oil prices and the reliability of British Energy s ageing reactors. It s hard to see EDF returning with a higher offer.